Amazon and Microsoft are still the big players in today’s public cloud services. Oracle is running behind but is trying to get in the front. So what can Oracle do to increase its market share?
Oracle recently announced its Oracle Support Rewards program in which you can reduce your annual support spend for database and middleware (technology programs) to 0 USD!! Sounds good, right?
But like they often say: if it sounds “to good to be true”, then it typically is “to good to be true”.
So let us explain to you what Oracle’s Support Rewards program is all about.
What is your typical challenge?
Annual Support Fee Increase:
In the past you bought Oracle licenses for Oracle Database and/or Middleware programs. The annual support fee is (as a standard) calculated at 22% of the net license fee you paid. This annual support fee is (as a standard) increased, year over year. This annual inflation rate historically was 3-4% year over year, today we already see support renewals with an increase of 6% compared to the year before. And the expectation is that this will only go up, going forward.
In the past you bought Oracle licenses for Oracle Database and/or Middleware programs. Your license requirements however change over time, meaning that you most likely have licenses being part of your support contract you don’t longer use. You want to stop the maintenance for these licenses, but Oracle refers you to its “repricing” policy. In short, you most likely will just renew the support for all of your licenses (including your shelf-ware licenses), since the repricing is not resulting in a cost saving.
Your annual support stream goes up each year. You don’t see any additional value for it and you continue to pay support for licenses you are not using.
What is the Support Reward Program about?
To create more value for you. At least that’s how Oracle positions it.
In essence it is nevertheless a program to boost Oracle’s Cloud Infrastructure (“OCI”) services revenue.
The program can be leveraged by any Oracle customer that is having database or middleware (technology) licenses with an active support contract who is willing to purchase OCI services.
- If you have an Unlimited License Agreement (ULA) for database and/or middleware programs, then you are eligible to an accrual of 33%
- If you have don’t have an Unlimited License Agreement (ULA) for database and/or middleware programs, then you are eligible to an accrual of 25%
So how does this work in practice?
Lets have a look at two examples:
- You don’t have an Unlimited License Agreement
- Your annual support spend for technology programs is 1 M USD.
- You are willing to purchase 2 M USD in OCI Cloud Services
Your annual support spend for technology programs is reduced with 25% of the value you invest in OCI Cloud Services (25% of 2 M USD = 500K USD). Your annual support spend for database and middleware programs is reduced to 500 K USD, but…. your total spend (on premise support and OCI Cloud) is going up from 1 M USD to 2.5 M USD.
- You do have an Unlimited License Agreement
- Your annual support spend for technology programs is 1 M USD.
- You are willing to purchase 4 M USD in OCI Cloud Services
Conclusion: Your annual support spend for technology programs is reduced with 33% of the value you invest in OCI Cloud Services (33% of 4 M USD = 1.3 M USD). Your annual support spend for database and middleware programs is reduced to 0 USD, but…. your total spend (on premise support and OCI Cloud) is going up from 1 M USD to 4 M USD.
What restrictions are applicable?
Premier Support Renewals only:
Oracle’s support reward program is only allowed to be used for renewals of premier support. In other words, rewards are not applied for the first year of premier support (as typically bought with the initial purchase of your on-premises licenses) and cannot be used for any other support offering (e.g. extended support, advanced customer support).
Oracle’s support reward program can be used by you if you already bought Oracle Cloud Infrastructure (OCI) services but only if you renew your OCI order or if you purchase additional OCI services. The support reward program is not applied for you if you already bought OCI services (i.e.. you purchased cloud services in the past to get higher discounts on your on premise licenses)
- If you as an existing OCI customers have received a higher discount than the standard volume discount, then Oracle will move you to the (lower) standard volume discount when a new OCI order is placed.
- If you as an existing customers have received a lower discount than the standard volume discount, then Oracle will keep the (lower) discount unchanged when a new OCI order is placed.
ULA 2 Cloud:
In the last years, many of you may have entered into a ULA 2 Cloud contract. The Oracle Support Reward program is however not allowed to be used in combination with a ULA 2 Cloud contract. You are only allowed to enroll into the Support Reward program if you are willing to place a new OCI order, without the ULA 2 Cloud terms.
Oracle’s Support Rewards program is a new incentive program that is mainly introduced by Oracle to boost its OCI Cloud Services revenue. The option is an interesting option to further explore, if you are willing to make an (additional) investment in Oracle’s OCI Cloud Services, and if you take the different restrictions into account.
But…. keep in mind that if you want to reduce your existing annual support for Oracle Database and Middleware (technology) programs, and you are not willing to make an investment in Oracle’s OCI services, then there are many other options you have, to reduce your annual recurring support spend.
Reach out to your SoftwareONE contact to schedule an appointment with our global team of experts to find out more! We guarantee you the results you are looking for since… your success is our success!
About the Author
Richard Spithoven is the Global Lead for Oracle License and Commercial Advisory Services at SotwareONE. Before his current role, Richard was one of the managing partners at B-lay. Richard brings more than twenty years of relevant license management experience to his role, having previously served as Regional Director of License Compliance at Oracle Corporation. Richard uses his knowledge of enterprise software vendors to educate, equip and enable software end users in their challenges regarding proper software license management. Richard holds a master’s degree in IT, from the University of Amsterdam in the Netherlands.