Somewhat recently underwent an acquisition by Oracle. A very few meager retention bonuses were given out (on the order of 5% of engineers). An immediate exodus of most of the engineers, including those offered retention bonuses, began.
It seems counterproductive, but the trick was this: Oracle gained ownership of our contracts with other companies. Now, you might say, how the hell are you going to keep our products running if everyone who knows anything about them has left and they're all falling apart?
The answer is: this is upside for Oracle, not downside. They're big enough that they can ream customers by forcing them to pay for overpriced consultants to fix the problems Oracle itself caused.
Switching costs to individual decision makers are perceived as high, justifiably.
Imagine you're a decision maker, and you have the chance to either (a) stay on with Oracle or (b) go with some set of startups that provide everything Oracle does. Which is, to be clear, a whole fucking lot, even if it does them badly.
Best case scenario (which is hard to pull off), there are no hiccups and you end up saving your company millions or tens millions of dollars per year. You get some reward for it, but definitely not one ongoing or even close to commensurate with the value you just provided.
Most likely, you run into significant hiccups. Maybe one of the startups you chose was a bit optimistic for what necessary features they could deliver in time for the Oracle switchoff. Maybe it's unreliable and all the users hate it. Maybe it takes way more time than expected to retrain the staff to use all the new things. Maybe Oracle drags its feet about helping you stop being their customer. Individually these are all perhaps evitable, but you're likely to run into some issues. Then you have egg on your head. And even if Oracle was just as bad in all those things, because you were the one who rocked the boat, the blame is on you, instead of "well, that's just the state of life."
You might say, "well, why not do things piecemeal?" And you can try that. Indeed, you are ethically obligated to employees and shareholders to do that instead of introducing huge risk to everyone because of an understandable anti-Oracle vendetta. But the way Oracle structures its sales and legal strategies makes it much less financially beneficial to you to do that than to cut them off whole hog. So you scale down the risk, but the potential benefit scales down even more so. And of course, who knows if Oracle won't just acquire the company you switched to a year or so down the road. And then you're stuck where you were originally.
I think, practically, once Oracle has its claws in your company, you're stuck with the parasite. The only solution is to categorically cut off Oracle from consideration for any vendor-supplied solutions. If it acquires one of your vendors, you make it a priority to transition off of it as soon as possible. If there are no other options, you start a new company to fill that niche.
No, they understand deeply how much it costs to transition to an alternate solution and price accordingly.
When I sold computers at retail in high school in the 90s, I'd hang out near the return desk and deal with angry customers. Angry customers actually want to attract somebody's attention (biggest problem a salesperson has) and needs a problem solved.
In my case, the solution usually involved a better computer and a service contract. Literally 9/10 times, once you spoke to these folks respectfully and calmed them down, they were the best customers. In Oracle's case, they upsell all sorts of crap and end up in a position where they can set the agenda because with the money involved, things must work. The IT decision maker becomes dependent on them.
The life in Russia is the great source and reference for it :) I really don't know that is the original source of it. That is what google brings, first link exactly discusses your question (all in Russian) :
>> But aren't the customers going to leave Oracle in the long run?
Maybe. Some of them won't/can't switch.
The goal is you buy a services company for $X with Y customers spending $Z per year. Doesn't take long for Y * $Z to be much greater than $X and you just string the customers along until they leave.
The trick is to acquire services where the data is valuable AND hard to export (think Student Information Systems or other enterprise software) -- so in the short term it's cheaper for the client to pay for consultant than to pay for migrating the data to an alternative.
> But aren't the customers going to leave Oracle in the long run?
In my anecdotal experience (n=1), yes. At my workplace, every Oracle product we use besides Java (that I know of) is being replaced for new projects and re-engineering efforts. Oracle BPM is getting dropped for Activiti, Oracle Database is forbidden for any project that will be deployed to AWS (due to licensing costs) etc.
It seems counterproductive, but the trick was this: Oracle gained ownership of our contracts with other companies. Now, you might say, how the hell are you going to keep our products running if everyone who knows anything about them has left and they're all falling apart?
The answer is: this is upside for Oracle, not downside. They're big enough that they can ream customers by forcing them to pay for overpriced consultants to fix the problems Oracle itself caused.