Oracle’s support rewards program: is it really reducing your annual spend?

It’s no secret that Amazon and Microsoft are the big players in today’s public cloud services. Oracle is running behind but is trying to get in the lead. The question is: what can Oracle do to increase its market share?

Oracle recently announced the Oracle Support Rewards Program with which customers can reduce their annual support spend for Database and Middleware (technology programs) to $0. Sounds good, right? But like they often say: if it sounds 'too good to be true,' then it typically is 'too good to be true.' In this article, we’ll provide insights into 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 was (as a standard) calculated at 22% of the net license fee you paid. This annual support fee was (as a standard) increased year-over-year. Historically, this annual inflation rate was 3-4% year-over-year, while today we also see support renewals with an increase of 6% compared to the year before. And the expectation is that, going forward, they will only go up.

Shelfware licenses:

In the past, you bought Oracle licenses for Oracle Database and/or Middleware programs. Your license requirements, however, changed over time meaning that you most likely had licenses in your support contract you no longer used. If you wanted to stop the maintenance for your unused licenses, Oracle would refer you to its “repricing” policy. In short, you most likely just renewed the support for all licenses (including your shelfware licenses), since the repricing would not result in cost savings.

In short: your annual support stream went up each year. You didn’t see any additional value for it and you continued to pay support for unused licenses.

What is the support reward program all about?

The goal of the program is to create more value for you - at least that’s how Oracle positions it. In essence, it is a program meant to boost Oracle’s Cloud Infrastructure (OCI) services revenue.

The program can be leveraged by any Oracle customer that has Database or Middleware (technology) licenses with an active support contract and is willing to purchase OCI services.

• If you have an Unlimited License Agreement (ULA) for Database and/or Middleware programs, you are eligible for an accrual of 33%
• If you have don’t have an Unlimited License Agreement (ULA) for Database and/or Middleware programs, you are eligible for an accrual of 25%

How does this work in practice?

Let’s have a look at two examples:

Example 1:

• You don’t have an Unlimited License Agreement
• Your annual support spend for technology programs is $1M
• You are willing to purchase $2M in OCI Services

Conclusion: Your annual support spend for technology programs is reduced by 25% of the value you invest in OCI Services (25% of $2M = $500K). Your annual support spend for Database and Middleware programs is reduced to $500K, but… your total spend (on-premises support and OCI) is going up from $1M to $2.5M.

Example 2:

• You do have an Unlimited License Agreement
• Your annual support spend for technology programs is $1M
• You are willing to purchase $4M in OCI Services

Conclusion: Your annual support spend for technology programs is reduced by 33% of the value you invest in OCI Services (33% of $4M = $1.3M). Your annual support spend for Database and Middleware programs is reduced to $0, but… your total spend (on-premises support and OCI) is going up from $1M to $4M.

What restrictions are applicable?

Premier Support Renewals only

Oracle’s Support Rewards 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).

OCI customers

Oracle’s Support Rewards Program can be used 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 program is not applied if you already bought OCI services (e.g. you purchased cloud services in the past to get higher discounts on your on-premises licenses).

In addition:

• If you, as an existing OCI customer, have received a higher discount than the standard volume discount, Oracle will move you to the lower standard volume discount when a new OCI order is placed.
• If you, as an existing customer, have received a lower discount than the standard volume discount, Oracle will keep the lower discount unchanged when a new OCI order is placed.

ULA 2 Cloud

In the last few years, you may have entered into a ULA 2 Cloud contract. However, you are not allowed to use the Oracle Support Rewards Program in combination with a ULA 2 Cloud contract. You are only allowed to enroll into the Support Rewards Program if you are willing to place a new OCI order without the ULA 2 Cloud terms.