Third Party Support vs Oracle Extended Support: Which Saves More?

Third Party Support vs Oracle Extended Support: Which Saves More?

Managing Oracle legacy systems can be challenging and costly, especially when product versions near their end-of-support dates.

CIOs and IT procurement leaders often face a tough choice: pay for Oracle’s Extended Support (ES) to keep getting updates on an aging system, or switch to a third-party support provider for potentially lower cost and extended life of the software.

This article offers an independent, customer-focused comparison of these options across major Oracle product families (Database, E-Business Suite, PeopleSoft, JD Edwards, Siebel, etc.), examining which approach can save more and under what circumstances.

Oracle Extended Support (ES)

Oracle’s Extended Support is an optional support phase after the standard Premier Support period ends (typically 5 years after a product release). Extended Support comes at a premium price and is offered for a limited duration (usually up to 3 additional years).

During this period, Oracle continues to provide critical patches, security updates, and regulatory fixes for the specific product release.

However, ES is designed to be a temporary bridge, eventually leading to Sustaining Support (which provides no new fixes). Key characteristics of Oracle Extended Support include:

• Additional Fee Uplifts: Extended Support requires an extra surcharge for the annual support fee. This uplift is often around 10% in the first ES year and 20% in subsequent years, on top of Oracle’s standard support cost (22% of license value per year). In practice, a customer might pay roughly 24–26% of the original license cost per year during Extended Support, versus 22% during Premier Support. These uplifts can substantially increase support bills over time.
• Time Limited (Typically 3 Years): ES is only offered for a defined period (generally up to 3 years after Premier Support expires for a given version). After that, the product is relegated to Sustaining Support, where no new updates are provided. In some cases, Oracle may not offer ES for certain older products, pushing customers directly to the minimal Sustaining tier.
• Full Updates (with Conditions): While it lasts, Extended Support provides most of the same services as Premier Support – including new patches, critical bug fixes, and (for applications) tax, legal, and regulatory updates needed to stay compliant. However, customers usually must be on the latest patch level or release update of the product to qualify for ES. Oracle may require applying specific updates (e.g., the latest PeopleTools version for PeopleSoft, or the latest minor release for E-Business Suite) before granting Extended Support coverage. ES also might exclude some new certifications (for example, Oracle sometimes doesn’t certify older versions with new third-party technologies during ES).
• Increasing Costs and Diminishing Returns: Extended Support fees come on top of Oracle’s standard annual increase. Oracle historically applies yearly inflationary increases (commonly 3–8% per year) on support contracts. With ES uplifts added, organizations can pay significantly more each year for an aging system. Meanwhile, as the system ages, new fixes slow and fewer updates are delivered each year, leading to a sense of paying more for less support over time.

In summary, Extended Support allows customers to postpone an upgrade for a few years while still receiving critical updates, but this comfort comes at a steep and rising cost. Eventually, even Extended Support runs out, leaving only Sustaining Support (which continues charging the full fee but provides no new fixes or updates).

Third-Party Support: An Independent Alternative

Third-party support is a service where an independent provider (outside of Oracle) offers software maintenance and support for Oracle products.

These providers support your existing Oracle software licenses once you opt out of Oracle’s own support. The key appeal of third-party support is cost savings and extended longevity of legacy systems.

Characteristics of third-party support include:

• Significantly Lower Cost: Third-party support vendors typically charge much less than Oracle. Organizations often see a 50% or more reduction in annual support fees by switching to a third-party provider. For example, if you pay Oracle $500,000 annually, a third-party firm might charge around $250,000 to support the same systems. This immediately cuts maintenance spend in half, and many providers also promise to cap or minimize annual price increases, providing more budget predictability.
• Support Beyond Oracle’s Timelines: Independent support has no fixed end date – as long as you have a contract, they will support your software version. This means you can keep running older Oracle releases for 5, 10, or even 15+ years without being forced into an upgrade by expiring support. Third-party providers will troubleshoot issues and even develop custom fixes or workarounds for bugs, long after Oracle has stopped issuing patches. They effectively extend the useful life of stable systems indefinitely.
• Scope of Services: Third-party support covers break/fix assistance, technical help, and, in many cases, proactive services similar to Oracle’s offerings. For enterprise applications like E-Business Suite or PeopleSoft, top third-party providers create tax and regulatory updates to ensure customers comply with laws (even though Oracle no longer supplies those updates for older versions). They often offer personalized service with dedicated support engineers and faster response times as a value-add. Third-party support cannot provide official Oracle product upgrades or new Oracle patches, since only Oracle can release those. Instead, they provide solutions to address issues (for example, security vulnerabilities might be mitigated via firewall rules, configuration tweaks, or custom code fixes without an official patch).
• No Forced Upgrades or Changes: Because you are no longer tied to Oracle’s support policy deadlines, you won’t be pressured by support expirations to upgrade your software. You can upgrade on your own timeline (or not at all). Many organizations use third-party support to buy time for a future migration or replacement, or to simply continue operating a mission-critical legacy system that is stable and “good enough” for their needs, without the disruption of an upgrade. This flexibility is a major advantage in environments where upgrades would be costly, complex, or offer little business value.

It’s important to note a few trade-offs. When you leave Oracle’s support, you typically lose access to new patches, certified updates, and the ability to escalate issues directly to Oracle. If Oracle releases a new version or feature, you won’t get it (though many legacy systems are feature-frozen anyway).

Additionally, if you ever wanted to return to Oracle support or upgrade to a new Oracle product version, there could be financial penalties or license considerations (Oracle may require back-support fees or re-licensing for the period you were unsupported).

Despite these considerations, many organizations find that the cost savings and extended coverage of third-party support outweigh the downsides for mature, stable systems.

Cost Comparison and Real-World Examples

From a pure cost perspective, third-party support can deliver dramatic savings compared to Oracle’s Extended Support (ES) fees. Oracle’s ES fees add significant cost to already expensive annual maintenance.

By contrast, third-party support slashes the yearly spend and can stabilize it over time. Let’s illustrate with a real-world style example:

• Oracle Extended Support Cost Example: Consider a company running an Oracle Database with an annual Premier Support cost of approximately $400,000 (this assumes a substantial license investment, as support is ~22% of license value). Once Premier Support ends, moving into Extended Support would immediately add a 10% uplift, bringing the cost to about $440,000, plus any standard yearly increase. By the second year of Extended Support, the uplift jumps to 20%, meaning the annual cost could exceed $500,000 (not including compounding yearly inflation). This organization could pay nearly $600,000 yearly for the same support in a few years, as fees compound. Real customer data shows scenarios where an initial $400k support bill ballooned to over $900k/year by the third year of Extended Support due to cumulative uplifts and annual increases. This is a huge spend for maintaining an aging system, and these costs continue to rise yearly.
• Third-Party Support Cost Example: Imagine the same company chose a third-party support provider instead. If they were paying Oracle $400,000, the third party might charge roughly 50% of that – about $200,000 per year – and freeze that rate (or apply only minimal increases). Over three years, they might spend roughly $600,000 with the third party, versus over $1.5 million with Oracle’s escalating Extended Support. Over a longer horizon (say 5–10 years), the savings compound even more as Oracle’s fees continue to climb, whereas the third-party fees remain far lower. In the example above, the organization paying ~$400k initially could save millions over a decade by switching to third-party support, all while keeping their system running without forced changes.

The cost delta is often not just 10–20% – it can be 50 %+ savings yearly. Additionally, companies avoid the hidden costs of Oracle’s approach, such as expensive upgrades (which Oracle often encourages alongside expiring support).

Third-party support lets you redirect funds to other priorities or innovation projects instead of funneling more budget into maintaining a legacy system.

To clarify the differences, the table below compares the cost and scope of Oracle’s Extended Support vs third-party support for various Oracle product lines:

Cost and Support Scope Comparison by Product Line

Note: The above are general comparisons. Actual costs can vary based on specific contract terms.

Oracle occasionally offers fee waivers or extensions for certain products/releases (for example, Oracle has sometimes waived Extended Support fees for a year to encourage customers to upgrade).

Likewise, third-party support offerings can differ in scope, but the common thread is substantially lower cost and the ability to keep older systems supported beyond Oracle’s official schedule.

Practical Scenarios and Use Cases

Deciding between Oracle’s Extended Support and third-party support often depends on your situation. Here are some common scenarios and how each option might play out:

• Facing Forced Upgrades: If your Oracle software version is nearing its end-of-life date, Oracle will eventually require an upgrade to stay on Premier Support. Extended Support can buy you an extra 2–3 years without upgrading (albeit at a premium cost), delaying the inevitable upgrade. Third-party support allows you to avoid an upgrade entirely for as long as needed. This scenario is common for heavily customized systems where an upgrade would be expensive or disruptive – third-party support can keep the lights on indefinitely. At the same time, you decide on a future path (or wait for a replacement solution).
• Rising Support Costs and Budget Pressure: Many IT leaders are alarmed by maintenance fees rising each year with little added value. Oracle’s annual 22% of license support fee (plus inflation and ES uplifts) can consume a large portion of IT budgets, especially for legacy systems that aren’t evolving. In such cases, third-party support offers immediate budget relief. By cutting support costs by 50% or more, organizations free up funds that can be reinvested in strategic projects or modern alternatives. Over a multi-year period, the savings from switching to third-party support can amount to millions of dollars, which is particularly attractive if your IT budget is flat or shrinking.
• Minimal Patch Needs for Stable Systems: Some legacy Oracle environments are extremely stable – they’ve been running for years with minimal issues, and the business isn’t looking for new features. These systems might not have applied a new patch or upgrade in a long time. For such a “steady state” system, paying Oracle for full support (with the expectation of regular patches and updates) may not provide much tangible benefit. If you need someone to call in case something breaks, third-party support can handle that at a much lower cost. Meanwhile, if you don’t plan to apply new patches, Oracle’s Extended Support (which provides patches) might be overkill. Third-party providers will still help troubleshoot and fix issues that arise, even without official patch releases.
• Extending the Life of Legacy Applications: Companies sometimes need to keep an old Oracle application (EBS, PeopleSoft, etc.) running for additional years for business or compliance reasons. It could be to avoid disrupting operations, to wait until a new ERP/cloud system is ready, or simply because the old system meets all requirements. Extended Support might extend the life a bit, but usually has a hard cutoff (after which no more updates). Third-party support shines in this scenario – it can keep an application viable far beyond Oracle’s support window, ensuring things like payroll, tax, and compliance updates still occur. This helps CIOs maximize the ROI of their existing software and avoid premature capital spend on replacements.
• Complex Customizations and Niche Issues: Organizations with highly customized Oracle environments often find Oracle’s support less helpful for issues that involve custom code or integrations (Oracle may say they only support the standard product). Third-party support firms will typically troubleshoot and support issues in customizations or integrations as part of their service. If your environment has unique configurations, a third-party provider might resolve problems faster and more completely, whereas Oracle might simply recommend upgrading or re-implementing to fix an issue. In this scenario, third-party support saves cost and can improve the quality of support for your specific setup.

Recommendations for CIOs and Procurement Leaders

Choosing between Oracle Extended Support and third-party support requires careful consideration.

Here are some recommendations for IT leaders and procurement professionals to make the best decision:

• Assess Your Roadmap and Support Needs: Start by mapping out the future strategy for each Oracle system. Will you keep it for over a couple of years without major changes? Is an upgrade or migration to a new platform (perhaps cloud or a different software) on the horizon? If a system is phased out or replaced in 2–3 years, paying Oracle’s high Extended Support fees during that interim may not be worth it – third-party support could bridge the gap at a lower cost. Conversely, if you plan to stay on Oracle long-term and adopt new versions, you might prefer to stick with Oracle support to ease eventual upgrades. Align the support choice with how long you need that system to continue running.
• Compare Total Costs and Savings: Perform a detailed cost comparison for at least a 3- to 5-year. Include Oracle’s support fees (with known uplifts/increases for Extended Support) versus a third-party support quote for the same period. Factor in any upgrade costs you’d incur if staying with Oracle (since Extended Support only buys time before an upgrade or move is required). Many CIOs find that third-party support offers 50 %+ annual savings and avoids costly upgrades, resulting in a much lower total cost of ownership (TCO) over the analysis period. Present these numbers to executive management to build a financial case.
• Evaluate Risk and Vendor Dependency: Consider the risk tolerance of your organization. Oracle Extended Support is the “safe” choice because you continue with the official vendor and get any official patches if a serious security issue or bug emerges. Third-party support, while very capable, means relying on a non-Oracle entity for fixes and not receiving Oracle’s official updates. Many companies have successfully used third-party support for years, but getting comfortable with this model is important. Check references of third-party providers and perhaps start with a less critical system as a trial. Ensure your security and compliance teams are aware and on board, especially if your industry has regulations about software support or if you must demonstrate sound risk management.
• Leverage Timing and Negotiation: The decision point for Extended Support is an opportunity to negotiate with Oracle. If you’re leaning toward third-party support due to cost, sometimes informing Oracle of this can lead them to offer concessions. For example, Oracle has been known to waive Extended Support fees for a limited time or offer discounts on future licenses if a customer agrees to upgrade. While you should never assume a discount, opening a dialogue is wise. At the very least, ensure you’re only paying for licenses/modules you use; eliminate shelfware from your support contract to reduce costs if staying with Oracle.
• Plan the Transition (If Switching): If you decide to move to third-party support, plan the cutover carefully. Align the switch with the expiration of your Oracle support period to avoid any gap. Ensure you have downloaded any Oracle documentation, patches, or software versions you are entitled to while still under Oracle support (since access may be restricted afterward). Work closely with the third-party provider on a transition plan – they often offer onboarding processes to document your systems, apply any last needed Oracle patches before cutover, and set up monitoring for your environment. A well-managed transition will make the switch seamless to your end-users.
• Maintain License Compliance: Even if you leave Oracle’s support, you must remain compliant with your Oracle license agreements. Third-party support does not mean you stop paying attention to licensing – you still own the licenses and must use the software within the terms. Avoid making changes (like upgrading to a new Oracle version or adding users/modules beyond your license) that could trigger compliance issues, since you won’t have Oracle’s direct guidance. Conducting a license review before leaving Oracle support is advisable to ensure everything is in order, and then use the software within those bounds going forward.

In conclusion, third-party support can offer significant cost savings and flexibility for organizations with Oracle legacy systems, especially when those systems are stable and the business wants to avoid costly upgrades.

While providing peace of mind with official updates, Oracle’s Extended Support comes at a high price and is a short-term solution. CIOs and procurement leaders should weigh the financial trade-offs alongside the operational needs of their Oracle estates.

Often, a mix-and-match approach works too – for example, keeping Oracle support for applications you plan to upgrade soon, but using third-party support for older, end-of-life systems you intend to eventually decommission.

By taking a customer-centric approach and thoroughly evaluating options, you can strike the right balance between cost savings and risk, ensuring your organization gets the support it needs without overspending.