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  • February 8, 2019

Putting ZING in your Pricing?

As cloud capabilities expand, it is expected that 80% of Enterprise customers will move all their workloads to the cloud. Oracle offers two unique programs to help preserve your Oracle investments while you upgrade to the cloud.

The first is Bring Your Own License (BYOL) that allow simple transferring of on-premises software licenses to the cloud. The second is Universal Credits that allow easy transferability of an Oracle bank of credits across platforms.  These two work together to make it easy to preserve your investments and do business with Oracle.  But that’s not all, this pricing model is also competitive. Oracle makes a serious claim, “Guaranteed to cut your AWS bill in half.” 

In this article, I’ll illustrate -how our pricing works, -what are the benefits for Oracle customers, and -why competitor cloud services end up being more expensive.

Few workload scenarios

Developer Environments go through frequent provisioning and de-provisioning of services, therefore a high need for multiple server sizes and access to various cloud services. It is hard to predict needs for running volume test suites and dev-ops. So, Flexibility across services and pay-per-use Elasticity are crucial for these workloads. Having a uniform billing vehicle across all services helps reduce effort and time.

Typical over spending looks like this-

Production Environments requires Service Level Agreements (SLAs) and it is much easier to predict needs in a production environment. Having a uniform billing vehicle across all services reduce effort and time. Oracle provides a key incentive on your journey from on-premises to the cloud.

On Premises to Cloud Production involves older investments in software licenses, possibly Unlimited License Agreements (ULAs.) So, customers would experience loss of investments if moving to the cloud. This often delays cloud adoption until end of ULA term.

Challenges

Wouldn’t it be amazing to be able to conduct business with ease, while having investment flexibility and investment preservation without any IT spend lockins? How often are you forced to choose between ‘flexibility and lower costs?’ To get the lowest cost, you need to know precisely what you need before you know it. That’s hard for most development projects.  You must either pay a premium with on-demand/ pay-as-you-go models or you must know the exact shape and size of servers to get lower prices with term contracts.

Dream solution

An ideal solution to these challenges would be a simple and more affordable way to move to the cloud, providing flexibility and choice in –how, -what, and –where to use cloud services. An unrestricted access to all services with a single uniform billing vehicle and license mobility across on-premises and the cloud. Simplified buying and consumption of cloud, unlocking greater value from existing on-premises software investments.

Oracle pricing strategy

What companies really want is a pay as you go model, like this-

How Oracle Universal Credits work

Oracle Universal Credits is a flexible buying and consumption model for cloud with a single set of credits for all current and future PaaS / IaaS services, with one simple contract and lower prices based on monthly dollar commitment and flexibility to upgrade, expand, or move services across datacenters. All services are priced hourly based on a rate card, and Universal Credit pricing starts at $1,000 /month and a discounted Universal Credit pricing starts at $5,000 /month.

Pay As You Go (PAYG) and Monthly Flex are two consumption choices available for customers consuming Oracle IaaS and PaaS.

PAYG offers no upfront commitment and customers pay only for what is used in arrears. It offers a standard list price and best when usage is uncertain with elastic payments based on usage. On the other hand, Monthly Flex includes a 1 year minimum term with an agreed to monthly spend. Monthly Flex offers 33%- >60% savings over PAYG pricing and discounts based on size of deal and term of deal with lowest cost without sacrificing flexibility.

Here is an illustration to show how Oracle Universal Credits compares with other cloud vendor reserved pricing models.                        

Reserved Pricing- Low price but Inflexible              Oracle Universal Credit Pricing- Low price and Flexible

                       

With a Reserved Pricing model, customers get the lowest price, however, they need to know the demand and number of OCPUs to support during their peak seasons. So, shape and size of the server are fixed and cannot change within a contract term.

With Oracle Universal Credit pricing, customers get the lowest price and also have the flexibility to follow the demand curve. So, you do not have to plan ahead for your consumption, and you get billed for only what you use. 

How Bring-Your-Own-License (BYOL) works

BYOL version of a cloud service is activated at the rate of activated cloud service when sufficient supported on-premises licenses exists.

The license types that apply towards BYOL cloud services environment include- Full Use, Limited Use, Application Specific Full Use, and Proprietary Hosting. License ‘type’ retains its ‘type’ when applied towards BYOL cloud service environment (e.g., ‘Full Use’ stays as ‘Full Use’ and ‘Limited Use’ stays as ‘Limited Use’). Licenses applied towards requirements for a BYOL version of a cloud service are deemed deployed and in use and cannot be used on premise. License quantities can be aggregated to meet license requirement for that BYOL cloud service, when multiple program licenses are identified as eligible to apply. Customers with ULAs can benefit the most with BYOL program, as they can make the best use of BYOL pricing to upgrade to cloud without limitations.

Here is a list of different types of BYOL offered by Oracle,

  • BYOL to IaaS has existed for some time and offered by few cloud vendors. Customers can move their infrastructure entitlements to the cloud offered by the same or a different vendor.
  • BYOL to PaaS is new and offered by Oracle to move your on-premises software entitlements to the cloud to access an equivalent service available as a cloud service.
  • License included PaaS allows purchasing new PaaS licenses to access all cloud services. 

Below is an illustration of service level differentiation, whether ‘Oracle managed’ or ‘Customer managed’ for each of these BYOL types.

With BYOL to IaaS, Oracle provides Compute, while Customer is responsible for Software License and Support Management. With BYOL to PaaS, Oracle provides Compute & Automation, while Customer is responsible for Software License and Support Management. And with License included PaaS, Oracle provides all of Compute, Automation, Software License, and Support Management.

BYOL to PaaS helps leverage existing on-premises Oracle software investments via license mobility, reducing up to 95% of License included PaaS price. PaaS automation reduces management & operational costs, significantly lowering TCO for running Oracle on Oracle cloud vs. Oracle on any other cloud.

License mobility via BYOL

On-premises licenses have licensed software, data resides at Customer data center and managed by Customers.

  • Oracle Cloud services can be purchased via BYOL to PaaS. In this case, data resides at Oracle Cloud data center and Oracle managed.
  • Cloud at Customer services can be purchased via BYOL to PaaS. In this case, data resides at Customer data center and Oracle managed.

How BYOL to PaaS program works

Customers can move on-premises entitlements to PaaS- There are many different conversion scenarios to show the mobility of on-premises Oracle Licenses to Oracle Cloud service offerings, I am elaborating two such scenarios below.

Example 1 above shows that Weblogic entitlement can move to Java Cloud Service BYOL, and Example 2 shows that Database Enterprise Edition entitlement can move to -Autonomous Data Warehouse BYOL or -Autonomous Transaction Processing BYOL or -Exadata Cloud service BYOL.

Customers can avail only the licensed features in the equivalent cloud service- An example to show this case would be, when moving the entitlement of on-premises Database Enterprise Edition (DB EE) & Partitioning to the cloud, customer can only use DBEE & Partitioning in PaaS. Licenses can either be deployed on-premises or in the cloud, and customer can continue to pay for license support.

BYOL to PaaS is significantly cheaper than license included PaaS- For example, it is 95% cheaper in the case of Enterprise Analytics License Included PaaS (USD 4.0323**) vs BYOL to PaaS (USD 0.1935**)

Return on Investment measurement

For a new customer, Oracle Database on Oracle PaaS is less expensive than other cloud vendors. The cost of Oracle PaaS is USD 400, which includes license and license support, management (provision, patch, backup, etc.), security & ease of use features. While most other cloud vendors are priced atleast 12% higher, and only include license and license support; customers need to upgrade for management, transparent data encryption, data masking, real application testing, diagnostics and tuning for an additional cost. Most other cloud vendors do not support RAC, data guard, multitenant, database vault.              

For an existing customer, Oracle BYOL to PaaS is less expensive than Oracle on other clouds. Oracle PaaS costs USD 253, which includes cloud services, license support, management, and security & ease of use features. While competitor clouds costs almost 12% higher which most often only include cloud services & license support, customers can upgrade with an additional cost for management, and security & ease of use features.

Customer success

In the past 12 months, 1000s of customers have benefited from Oracle’s Universal Credits and BYOL programs.

Drop Tank, is a loyalty technology and rewards company focused on the fuel and convenience industry in Illinois. They were looking to automate their development and production environments for better usage predictions to prevent unused capacity. Drop Tank succeeded with Oracle Integration Cloud and Autonomous Data Warehouse. With Universal Credits model they achieved the flexibility to spin-up platform services as needed, anytime to scale elastically at the lowest cost.

SAGA, is a large systems integration company headquartered in Serbia and serving in 26 countries. They were looking for speed and flexibility to spin up new development environments fast and at the lowest cost possible. SAGA succeeded with Oracle Cloud, and through Universal Credits they achieved the flexibility to try different approaches to test and develop without exceeding budgets, and innovate faster.

In summary, these Customer First Pricing Programs for buying and consuming cloud services, Universal Credits and Bring Your Own License (BYOL), help customers get more value from existing Oracle software investments with more choice, flexibility, and transparency. These programs offer the ‘Pay-As-You-Go flexibility at the lowest price possible’ to try, buy and succeed with Oracle Cloud services.

** Pricing as of date, reference https://cloud.oracle.com/en_US/ucpricing

Disclaimer:

“The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, timing, and pricing of any features or functionality described for Oracle’s products may change and remains at the sole discretion of Oracle Corporation.”

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