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Oracle ULA 2 Cloud

How Does It Work?

Oracle ULA 2 Cloud: How Does It Work?

  • 03 decembrie 2020
  • 5.25 minutes to read

Even if the name suggests otherwise, the Oracle ULA is limited and one of those limitations is also time bound. In our previous article we started to discuss the options that you have at the end of a ULA agreement: renewing or certifying the ULA.

When considering if ULA renewal is a viable option, it is important to determine your future license requirements. For example, if you transition from on premises deployments to a (public) cloud provider like Amazon EC2 or Microsoft Azure, there will be a period of time in which there will be an increased license requirement. During the transition period - in which the Oracle programs are installed both on premises and in the (public) cloud - Oracle requires you to license each (virtual) server on which the Oracle programs are installed and/or running.

There are of course different cloud solutions that you want to evaluate before transitioning to the cloud. Publishers like Oracle are trying to influence your decision in their favor, by making their public cloud solution commercially more attractive than their competitors’ solutions. They do this by applying different terms and conditions for different cloud providers and by introducing new commercial models. Oracle introduced its “ULA 2 Cloud” program, but what does this actually mean and how does it work?

Repurpose Technical Support

In case you enter into a standard Unlimited License Agreement, you will pay a license fee (CAPEX) and the associated support maintenance fee (OPEX). The ULA 2 Cloud program results in a situation where you get the option to “repurpose” your support maintenance fee. What does this mean?

During a defined period of time (the so called “Repurposed Support Period”) you are allowed to repurpose (or convert) the technical support fee to its equivalent Oracle Cloud Service (e.g. Oracle IaaS or Oracle PaaS Cloud Services). Be aware though this doesn’t apply to all Oracle programs, but only to the support fees paid for the use of on premises Oracle licenses included in your ULA. The programs which you are allowed to convert are called “Eligible Programs” and the order through which you convert parts of your technical support fee into its equivalent Oracle Cloud Service is called an “Eligible Cloud Service Order”.

Repurposing your technical support fee can be done by executing a Eligible Cloud Service Order, but only as long as

  • the Cloud Service is obtained for at least one year and the Cloud Service chosen is made available for production use (to avoid that end users are repurposing technical support for Cloud Services that Oracle may make available in the future)
  • the repurposed support fee shall not be more than 50% of the total Cloud Services order (in other words, you need to additionally pay 50% of the total cloud fees at all times)
  • the amount of repurposed support may cumulatively (i.e. across all Eligible Cloud Service Orders) not exceed the lesser of either:
    • a) the net total support fee paid for the Oracle programs which are eligible and part of your ULA, or
    • b) the net total license fee paid for the Oracle programs which are eligible and part of your ULA.
  • you do not assign the Eligible Cloud Service Order to another legal entity. In this way Oracle avoids that end users use this option to reduce their annual technical support fees by assigning licenses to another legal entity
  • you only repurpose your technical support for one Oracle Cloud Service per Oracle Fiscal Year, meaning you are not able to convert your technical support to multiple Oracle Cloud Services.

At the end of the period in which you are entitled to repurpose your technical support paid for your on premises licenses to Oracle Cloud Services (the end of the Repurposed Support Period) you are NO longer entitled to repurpose your annual technical support for Cloud Services. The amount of the repurposed support will become (again) part of your total technical support fees paid for your (on premises) ULA programs.

Let’s look at an example to make this more specific:

An end user enters into a 2-year ULA for a Net License fee of USD 10 M and an associated annual net support maintenance fee of USD 2.2 M. The total costs in the first year would then be USD 10 M Net License fee + USD 2.2 M Net Support fee.

In the second year of the ULA, the end user decides to start using Oracle Cloud by making an investment of 500K USD in Cloud Services as well as to repurpose 500 K USD of the annual support maintenance fee for Cloud Credits. The total costs in the second year would then be USD 2.7 M, consisting of USD 2.2 M for 2nd year support (assuming that no support indexation is applied) + USD 500 K. Apart from the benefits of technical support, the end user would receive a value of USD 1.0 M Cloud Credits, consisting of USD 500 K repurpose of support + USD 500 K new investment).

In case the consumption of the Cloud Credits remains stable, the end user is no longer eligible to repurpose technical support in the 3rd year after signing the 2-year ULA. The total costs in the third year would thus be USD 3.2 M, comprised of USD 2.2. M for 3rd year support (assuming that no support indexation is applied) plus USD 1.0 M USD to cover the total consumption of the Oracle Cloud Services.

Conclusion

Many organizations are in the process of defining their cloud strategy. The question usually is not if they will move to the (public) cloud, but when they will do so and what cloud provider should they choose. In order to determine the best option, companies should at all times determine their requirements from a functionality, performance and security perspective.

Your transition to the cloud should always starts with having a complete and accurate understanding of the deployment and use of your software programs as well as the associated licensing terms. Once this is clear, it is important to investigate what licensing models are available and the cost of the models offered by different cloud vendors.

Be aware that repurposing your technical support fee(s) for the use of Oracle Cloud Services can have an impact on your total costs. Making an informed business decision based on facts requires expert knowledge which we could help you with.

Looking for More?

If you want to know more about our ULA Services, reach out to us and let’s have a conversation about how we can support you.

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