With an unusual financial incentive system, Oracle wants to make its cloud more attractive. If you buy resources in Oracle Cloud Infrastructure, you get a discount on the maintenance fees of your on-premises software. […]
With a rewards program, Oracle lures its customers into the cloud. As part of the Oracle Support Rewards, the clientele will receive a discount on their maintenance fees for on-premises software if they move workloads to Oracle Cloud Infrastructure (OCI) in return. For every dollar invested in OCI Universal Credits, there is a support premium of 25 cents. Customers with an Unlimited License Agreement (ULA) should even get a bonus of 33 cents. A ULA customer with a $ 500,000 support bill could completely zero it if they booked resources in the Oracle cloud for $ 1.5 million, the database specialist’s executives predict.
“OCI is Oracle’s fastest-growing business,” said Larry Ellison, Oracle’s founder, chairman, and chief technical officer (CTO). The manager highlighted Generation 2 of Oracle’s own cloud infrastructure, saying it can run the most demanding business-critical workloads faster, more reliably, and more securely than Oracle’s own on-premises systems. “We want to empower more customers to take advantage of our Gen 2 Oracle Cloud Infrastructure,” Ellison said. “With Oracle Support Rewards, customers can easily reduce their software support spend while increasing the speed of their cloud adoption.“
Stefanie Kemp, Country Manager of Oracle Germany, emphasizes that the switch to the cloud must be driven forward in all companies – also so that digital innovations can be implemented more easily. However, companies often lack the budget for this – “a considerable challenge, especially in times of thin staff ceilings and tight project durations”. The Oracle Support Rewards program is designed to help accelerate migration to the cloud and reduce the cost of software license support. “The principle behind the program is similar to the bonus concepts for frequent flyers.“
To help customers keep track of their cloud bookings and related rewards, Oracle plans to release an update to its OCI console this fall. There, the support rewards should be added automatically every month. Users could have these rewards added to their maintenance fees at any time. According to Oracle, there is no limit to the number of Oracle Support Rewards a customer can earn. However, they must be consumed within twelve months.
However, if you want to use the Oracle Support Rewards Program, you should pay attention to the details. The rewards are only available to customers who purchase and use Annual Universal Credits for Oracle Cloud. This is a kind of cloud credit that users have to pay in advance. This is valid for 12 months and must also be used up in this time frame. Every month, the cloud services used are debited from the booked Annual Universal Credits. Unused credits expire.
Oracle also offers to Pay as you Go (PayG), a usage-based pricing option for its cloud. Here, the fees are charged every month retrospectively for the cloud service actually used. There is no upfront commitment and no minimum term. The catch: PayG customers are currently not eligible to use the Support Rewards program.
Oracle also grants the discount on on-premises maintenance fees only on its infrastructure software, i.e. on database and middleware licenses. Business applications such as the adopted Peoplesoft ERP remain outside. Rewards are also only available for the use of Oracle’s Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). Third-party services such as VMware or Microsoft or from the Oracle Cloud Marketplace will not be counted towards the maintenance discount. There are also no reward points for using Oracle’s own Software-as-a-Service (SaaS)offerings.
Despite the limitations, the move is remarkable and, most importantly, unusual. According to insiders, internal questions had arisen – certainly not meant very seriously – whether everything was OK with Larry. “A lot of people in our store don’t post prices and discount levels. That’s something you negotiate with your seller,“ Ellison said at the launch of Support Rewards. “We are moving away from this: we are lowering prices and published price lists, as well as standard volume discounts.”CIOs demanded that discounts be transparent so they know what they’re negotiating,” the Oracle founder said.
Oracle is trying to reinvent itself for the cloud era, says Roy Illsley, chief analyst at Omdia. “Oracle has looked at what its customers are saying and responded in a very Oracle-atypical way. These loans are generous, ” he said. From the perspective of Dave McCarthy, research vice president for cloud and edge infrastructure services at IDC, Oracle has left its comfort zone. The group has recognized that it has to think differently from its cloud competitors in order to accelerate the acceptance of OCI. Oracle is far behind in cloud market shares but is taking the right steps to be noticed, according to McCarthy. “They’re getting more aggressive, targeting general-purpose workloads, and even siphoning off some cloud-native workloads from the big three.“
According to Gartner, the global infrastructure-as-a-service (IaaS) market grew by more than 40 percent year on year to $ 64.3 billion in 2020. in 2019, it was still $ 45.7 billion. Amazon remains the leader in the IaaS market with a large lead and a market share of almost 41 percent, followed by Microsoft (19.7 percent), Alibaba (9.5 percent), Google (6.1 percent), and Huawei (4.2 percent). Together, the top five control around four-fifths of the global IaaS market. Oracle ranks as one provider among many in the field with the remaining fifth.
Oracle has long overslept its entry into the cloud era and now needs to catch up. However, whether the focus on classic IaaS and PaaS services is the right one is questionable. “The days of CIOs investing in Cloud IaaS and Platform as a Service (PaaS) are long gone,” said Gartner analyst Sid Nag. The cloud market will continue to grow. However, there would be real opportunities for providers, especially in cloud-related technology markets such as Edge, 5G, and AI. “CIOs want to invest in technologies that address their complex and emerging use cases.“
At the very least, the Support Rewards Program could lower the barriers to entry into the Oracle cloud. “The Oracle Support Rewards Program is a good financial incentive, which is very unusual for Oracle, to reduce support costs for on-premises customers when they bring their workloads to the Oracle cloud,” said Björn Bröhl, CEO of the German Oracle User Group (DOAG). But, the user representative limits, in addition to the incentive to use Oracle Cloud Services, users have long wanted better quality support. “It remains questionable whether Oracle will be able to ensure this if revenue for it is reduced.“
* Martin Bayer: Spezialgebiet Business-Software: Business Intelligence, Big Data, CRM, ECM und ERP; Betreuung von News und Titel-Strecken in der Print-Ausgabe der COMPUTERWOCHE.