If you’re a customer of Oracle Cloud Infrastructure services, you’ve likely heard of Oracle’s Universal Credits subscription model. Oracle introduced it back in 2017 to better compete with increasingly flexible consumption and pricing options offered by IaaS and PaaS leaders like AWS. While Oracle still trails behind AWS, Microsoft and Google in terms of market share, NPI has seen an increasing number of clients that are investing in OCI services and using the Universal Credit model to purchase these services.
What is Oracle’s Universal Credits model?
This program allows customers unlimited access to all current and future Oracle OCI services (PaaS and IaaS services) based on their need. However, instead of paying for specific services, this is a flexible buying and consumption model for cloud services where customers pick the services they would like to use and use the credits as payment. Oracle typically includes a rate card for the OCI services.
What are the benefits of Oracle Universal Credits?
The benefits of this model include flexibility to use any Oracle IaaS or PaaS services, predictable bills, lower cost (if using the monthly flex model) and ability to use OCI service in any region using the universal credits.
What can you “buy” with Universal Cloud Credits?
Customers can purchase any Oracle Infrastructure or Platform Cloud Services (IaaS and PaaS) that are available on the rate card. The exception to this is Enterprise Analytics Services in North America, which has a separate Universal Credits SKU.
What are the available purchase models for Oracle Universal Credit pricing?
There are two payment methods:
- Pay as You Go – Billed in arrears and based on usage.
- Annual Universal Credit – Billed in advance for a minimum of 12 months for a certain number of credits. Unconsumed credits are lost. Pricing is approximately 66% of Pay as You Go. Most enterprise clients use this model with a certain number of credits per year to spend on the items in the rate card. Oracle Universal credits must be used during the service period and will expire at the end of the year. Any prepaid unused amounts are nonrefundable.
What discounts can customers expect for OCI services?
Oracle is still figuring out its discounting/pricing strategy for various cloud service products. NPI has seen some of the largest variations in discounting for this model that we have ever seen for Oracle Cloud Services – especially in competitive situations.
Oracle lowered the list pricing on OCI services in 2019 and subsequently in August/September 2020 to make it more competitive based on market pricing from Amazon and other providers. Oracle also changed its discount structure to correlate with the lowered list prices. Since October 2020, we have seen Oracle offer comparatively lower discounts which is largely based on volumes.
I’m considering entering a Universal Credits contract with Oracle. What advice do you have?
As mentioned before, we’re seeing greater interest in Oracle’s Universal Credit model. But it’s not for everyone. NPI recommends customers have a solid understanding of what subscriptions fall under the Universal Credits program and the expected usage across their organization. It’s also important to understand which payment method best suits the organization’s requirements. Annual Universal Credit billing may sound attractive, but not if you’re left with unconsumed credits. Also, it’s possible (and encouraged) to negotiate a tiered discount structure based on volumes.
Keep in mind that when an IT vendor attempts to “simplify” consumption or pricing, there is often a trade-off in pricing transparency. For this reason, NPI strongly encourages Oracle customers to request full pricing transparency for all services, including unit list price, unit net price, overage net price and discounts. Performing price benchmark analysis will ensure the customer is paying a best-in-class rate for each service.
Looking for ways to improve Oracle contract negotiation outcomes? Contact NPI today – our Oracle licensing specialists can help.
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