Oracle Support Rewards

Oracle launched a new program on 22 June 2021 with two aims:

1. Increase adoption of its cloud services?
2. Address the on-going concerns customers have regarding support costs

In particular, annual support costs are a continual source of ‘pain’ for customers and we have many conversations with customers about how best to reduce or optimise costs. Oracle have a number of policies and mechanisms to protect these support streams which can cause frustration for customers.

This article will give a quick overview of the new offering, some thoughts about what this means and what to watch out for.

The Oracle Support Rewards scheme is offered purely on support associated with licensed products -?Software Update License and Support (SULS).

Key points

• Credits are based on consumed Universal Credits; i.e. the actual services provisioned and running: not your spend on Universal Credits. Best practice around cloud spend / estate optimisation will directly counter these savings. Longer term this will allow Oracle to report %age increased usage of their cloud rather than the older 'buy it but not use it' situation some customers found themselves in.
• Applies only to OCI based on Universal Credits (i.e. most ‘modern’ OCI agreements); generally anything under the Universal Credits model. SaaS is not included.
• Only applies to new / renewed Universal Credit agreements.
• The OCI service can be performing any function, including IaaS not running Oracle. If the OCI service includes some third party functionality (e.g. Microsoft) which you are paying Oracle to provide, this is not included.
• Cloud at Customer is included.
• Credits are calculated on monthly consumption and issued in arrears.
• Credits are valid for 12 months and are on a ‘use it or lose it’ basis.
• Functionality / visibility of credits is reported (by Oracle) to becoming available in the admin console towards the end of this year.
• Credits ‘earned’ before November 2021 will accumulate until that point and then become available to offset support renewals from that point.
• There are no limits to the credit amounts you can receive, besides your support bill—though you will have to work hard to reach this level of spend.
• You ‘accumulate’ these credits and when your support bill comes in, and apply the accumulated credits against the invoice, paying the balance.

To reiterate the offering:

For each $1.00 consumed by OCI services, Oracle will provide a credit of $0.25 against your annual support. If you have a ULA (and therefore usually a larger consumer of Oracle services), Oracle have set this credit to $0.33 per $1.00 of consumption.

Critically, this appears to be focussed on getting customers to increase their consumption of Universal Credits---if you have unused Universal Credits you are unwittingly paying for but not using, it makes sense to change this and consume as close to all of your credits as possible to get the most benefit--at least until your committed spend runs out.

Given the fact that credits will only be available for consumption from November this year, and that functionality to measure and view rewards will only be available to view from autumn 2021, it goes without saying that there will need to be a lot of process adjustment and system integration (cloud billing and support system) at the ‘backend’ for Oracle to be able to make this all work smoothly and to take into consideration of OCI purchasing entity vs support / license entity. Needless to say it is likely there will be issues to iron out which will be key to understanding the viability of exercising these credits.

Using these credits may not be simple; ensure you agree the mechanisms, rights and applicability of credits before committing to a new OCI agreement

Examples

Financially, how does all this stack up? The principles are simple:

• If you do not have a ULA, Oracle will give you $0.25 credit against your support bill for every $1.00 of OCI consumption
• If you have a ULA, Oracle will give you $0.33 credit against your support bill for every $1.00 of OCI consumption – this rate applies even to non-ULA; thankfully Oracle are not trying to create a mixed credit rate

Let’s take a simple example to illustrate the sort of spends involved:

If I spend $500k on annual support and have OCI consumption of $10k per month (let’s assume this to be static to keep it simple), I will get $2,500 credit (for each month of consumption). The cumulative effect of this is $30k per year: 6% reduction of support. For that, of course, I’ve had to spend $120k on OCI – and so a net increase of $90k. Perhaps this is acceptable if I needed to use OCI and have gained the benefits—it’s an added bonus in that case.

Oracle states here that it is possible for a customer to eradicate their support bill entirely (“this means that a ULA customer with an Oracle technology license support bill of $500,000 could eliminate that bill entirely by migrating $1.5M of workloads to OCI”) --- this is an interesting theory, but we can’t think of many customers spending $500k on annual support who would suddenly be willing to spend $1.5M per year on OCI.?

Another example given shows an annual support bill of $1M being written off by spending $4M on OCI: that’s $333k PER MONTH on OCI: about 17,500 OCPUs-worth of processing power --again, it is hard to imagine !

CONCLUSION

How it works for your estate is very much dependent on your OCI consumption; at the risk of stating the obvious, if you don’t use much, you won’t save much on your support. We are advocates of people having optimal cloud, license and support spend: this is what we do every day and have been helping customers with for over 20 years. For the purposes of cost saving, it is much more important to get your cloud spend correctly?sized before you commit to it and under-consume. I suspect this will lead people to commit to lower Universal Credit spends but trying to negotiate pricing for ‘overages’ to be charged at the same rate as committed spend.

If you want to use OCI, there will be a fine balance to be struck between getting best value for money and ‘right-sizing’ your OCI spend and the potential savings to be made from the Support Rewards scheme. This scheme, though unlikely to radically change most customer’s support bills, at least shows a potential increased flexibility from Oracle and some acceptance of the pain felt by customers.

Balancing your cloud spend, cloud consumption, cloud-sprawl and support costs will be key. This needs to be done in advance of any committment. As with any cloud services, reduction in cloud spend and consumption should be your #1 goal.

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References

Press Release

Oracle Support Rewards

FAQ --this has some good insights