The competition for your Cloud services business has never been more fierce, even as tech behemoth Oracle is charging into the space with aspirations of becoming a top player.
If you’re an Oracle client or even a client of AWS, Azure or Google, you’ve either heard the Oracle sales pitch or it’s coming soon. If you’re weighing a move to the Oracle Cloud Infrastructure, it’s wise to proceed with caution and be sure you know everything you’re signing up for.
There’s been a deluge of media coverage in recent months regarding Oracle Executive Chairman Larry Ellison’s push to become a major player in the Cloud space. The company’s sales reps are driving clients to OCI and its massive Cloud growth has been headline worthy. In March, the company announced its Fiscal Year 2022 Third Quarter results, featuring Cloud services and license support revenues that were up 5% for the quarter. That being said, it should be noted Bloomberg Law reported on May 10 that Oracle and Ellison were facing a class action lawsuit from investors over accusations of being misled about the financial health of its Cloud services business.
To reach this level of growth, both price point and reliability have been used as major selling points vs. competitors such as Amazon. But make no mistake, getting you into the Oracle Cloud is excellent for Oracle. That’s because once you’re there, you’re there for the long haul and there are many ways Oracle can increase your spend – and its revenue – in the coming years.
To that point, look no further than the tactics Oracle is using to muscle existing clients into OCI. Clients with on-premise licenses who are under software license audits are receiving offers to settle by moving to OCI. This sounds like a reasonable offer, especially if you’re staring down the barrel of a potential seven- or eight-figure penalty.
But no matter your situation, there are three key – and not so apparent – considerations to weigh against the potential benefits:
1. On-premise licenses
If you’re the aforementioned subject of an audit and you own on-premise software licenses, a proposed resolution may well include a move to OCI. This means moving to a subscription model with Oracle hardware rather than owning and managing your own, which can sound appealing when faced with a substantial audit finding. You may also be offered discounts for on-premise support fees if you put some items on OCI.
Both tactics are designed to push you into the Cloud and gives Oracle much more control over your footprint. With OCI comes a loss of ownership, and later, a costly endeavor to unwind if things don’t go the way you planned.
2. Price increases
Oracle’s ultimate goal is to move you from a perpetual license that you own – supported or not – to a subscription model where you own nothing. Your data is available only as long as you continue to pay. Once you’re locked in, there’s no guarantee prices won’t increase.
As an example, if you owned Hyperion on-premise and you moved to Oracle’s Cloud EPM product two years ago, you would have purchased what was available then as an enterprise Cloud license. Since that time, Oracle has made the Standard version the same price as the old Enterprise version, so the same amount of money gets you fewer features. So, if you want the product to work the way you originally intended, you now have to upgrade to the Enterprise Cloud license at the higher price tag.
3. Third-party support
If you make the leap to OCI, in a few years you may be looking for savings opportunities, such as a move to third-party support or even dropping support all together. But with OCI products comes forced Oracle support, which is a very lucrative proposition for Oracle. If you move your on-premise licenses into OCI, you’re required to maintain support with Oracle. Even if you decide later you’re going to move to a different platform or software vendor, you may need to keep your old systems up and running for historical purposes. For some, this would mean you no longer need updates and patches as you aren’t using this as a production environment. No matter: if it is hosted in OCI, you have no choice but to remain on Oracle support at the same high price tag with annual uplifts.
Oracle has aggressive Cloud growth goals and that means there is a premium on getting you fully into the Cloud where you own nothing. Oracle has many great products, but know that once you’re in the Oracle Cloud, it will be difficult to ever reverse course.
About the Author
Evan Boyd is vice president of Software Licensing Consultants and has more than 25 years of IT executive management, licensing and consulting experience. He began his career in healthcare and has served as a CIO, director of information systems, network administrator, consultant and HIPAA compliance officer.