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Spotlight: Oracle Pool of Funds

ITAMS’ Oracle licensing team provide an overview on Pool of Funds agreements.

For several years, Oracle has had an active policy to increase the number of Unlimited Licence Agreements (ULAs) signed with customers globally. This type of agreement is not something new, as some of the companies Oracle acquired previously have also used it.

For example, BEA Systems, (before its acquisition), used to offer their customers the possibility to buy licences using AYCE (All You Can Eat) agreements, these were replaced by Oracle ULAs, and PPBD (Prepaid Burn Down) agreements which are now, more or less, Oracle Pool of Funds (PoF).

Oracle decided to diminish the risk of letting customers choose the licences they wanted to use from the software listed in their ULA agreements, re-introducing the so called PoF agreements.

During the past year, the number of PoFs have increased and now, more and more ULA agreements take the shape of a PoF agreement.

So what exactly are Pool of Funds?

The Oracle PoF is a special type of licence agreement. In return for paying an upfront licence fee, end users get the right to deploy a mix of a pre-defined software against a fixed price, for a limited amount of time, until they reach the invested amount. If we refer to the initial agreements (ULAs) from which PoFs are derived, the conclusion is that Oracle dropped the option to select unlimited quantities (which is applicable only for ULAs) for the PoF agreements. This means that they can now, better handle any customers that are using large amounts of software, eliminating the risk of them using more software than what was initially paid for.

Customers must be re-assured that almost all the terms of a PoF deal are negotiable. The larger the company, the higher the discounts they will receive. Nothing is fixed, so more products can be included in the deal and the usage area can be expanded from a certain country to worldwide coverage. There are a lot of factors to take into consideration for this type of deal and they depend on the specific needs of the end-users.

Besides the licence fee, a customer must also pay for annual technical support based on the full PoF credit during each year of the PoF period and beyond. In addition, the PoF ordering document will specify a “Total Support Stream,” which the customer must maintain throughout the PoF period in order to keep the right to burn down the PoF credit until it is exhausted or the PoF period expires. Any failure to maintain the Total Support Stream will result in an early termination of the PoF period, and the customer must immediately declare licences in accordance with the contract conditions.

The Total Support Stream will include:

  • Existing licences for the software programs that are included in the PoF agreement.
  • All support for new licences included in the PoF agreement.
  • Licences for the software programs that are included in the PoF owned by companies that are acquired by the end-user during the PoF agreement period.
  • New licences for the software programs as included in the agreement, and as acquired against a price hold, after the signature date of the PoF agreement.

Usually, customers that have an active Pool of Funds agreement are contractually requested to provide periodical usage reports which are called “Licence Declaration Reports” (the standard term is every 6 months but this may vary from customer to customer). In this way Oracle is using the information from the report and updating their repository with the quantities provided.

An important fact is that, at the end of the contractual period, any unused licence credit will NOT be reimbursed; however, if at any time throughout the contractual period a client’s deployment worth exceeds the initial net credit, a new payment is due.

Furthermore, having a Pool of Funds deal doesn’t mean that Oracle will not conduct an audit during the term of the agreement in order to validate that the declared software listed in the Licence Declaration Report is complete and accurate. That is why our recommendation to customers that own PoF agreements is, to keep track of all licence records internally and if possible, use relevant SAM tools and support services that will ease their efforts.

If you would like to listen to the pre-recorded webinar on Oracle Pool of Funds, please click here. For more information please contact ITAMS.

To support or not to support!


To support or not to support! That is the question…. if you want to save money!

ITAMS’ Lead Consultant Monica warns Oracle users to ensure they check which licences and licence sets are covered in their Oracle Licence and Services Agreements (OLSA) to avoid unforeseen technical support costs.

Acquiring a licence from Oracle goes hand in hand with purchasing support. Cost wise, this is also where Oracle gets most of its revenue, through support renewals. Most customers do not pay careful attention to this but they should. I am not talking about numbers but about market trends. The best example that comes to mind is Enterprise Manager 12c Cloud Control which is free of charge as long as you purchase any licence or support contract. You get something free if you purchase support! This is what we need to keep in mind!

You, as their customer, wanting to keep track with the latest technologies and managing your complex IT environment, definitely need software updates, product patches and the capability to migrate and upgrade your licences. At what costs? Usually the support cost represents 22% of your licence fee. However, depending on what you have negotiated, this may vary.

In case you purchase support, where do you have to pay maximum attention? Well, when you sign your Oracle Licence and Services Agreement (OLSA), under the Technical Support clause, you come across the following, “If you decide to purchase technical support for any licence within a licence set, you are required to purchase technical support at the same level for all licences within that licence set.”

How do you know what this Licence Set is, so you can watch out for it? According to Oracle’s Software Technical Support Policies, it consists of all the licences of a program, including any options or self-service module; all of the licences of a program that share the same source code.

For Crystal Ball programs, the same licences of a program contained on a single order and for Oracle Java Embedded Binary programs, all the distributed units of each unique Java application product licenced pursuant to the Java BLRA agreement between you and Oracle. So you see, it is rather easy for you to purchase licences contained in a licence set and you do not even know about this. Even Oracle, through its Software Investment Guide (SIG), stipulates that you, the end user, has to allocate someone who will be responsible for understanding and managing the agreements you sign.

The Licence Set definition is closely tied to the MSL (Matching Service Level) concept which says that you cannot support a subset of licences within a licence set and that it must be reduced by terminating the unsupported ones. Here you have to carefully calculate the most cost effective solution for you! Shall I get support or not?

This brings me to my next gotcha on my list! That would be represented by a single word: REINSTATEMENT! If you did not initially acquire support for a licence, you have to know that this will for sure alter your planned budget. The conditions are detailed in the Oracle Software Technical Support Policies document and what you need to remember is that this reinstatement fee is 150% of the last annual technical support fee (if you had acquired support in the past), or 150% of the net technical support fee (if you never had it). Together with these pro-rated reinstatement fees you will also have to pay for the lapsed support period AND potential renewal adjustments. Again, carefully plan your needs!

Our advice?

To avoid high unplanned costs, the need for a centralised purchasing model is felt acutely. Many customers need a framework agreement which will incorporate all legal provisions, applicable to all entities in the group, a contract which will clearly highlight your future rights and obligations with Oracle. This being said, remember what a licence set is, most probably you already have it, and, before committing to support, make sure you know this is a long term relationship, similar to marriage if you ask me, a relationship which demands from you time, money and understanding!