Oracle cloud at customer

Future of Oracle Cloud@Customer: Licensing to Consumption

Future of Oracle Cloud@Customer: A Shift from Perpetual Licensing to Consumption-Based Models

The world of software licensing is undergoing a significant transformation. Gone are the days when organizations would make a one-time purchase for a perpetual license and then pay an annual support fee based on volume, be it processors or user-based licenses.

Oracle, a giant in the software industry, is at the forefront of this change with its Oracle Cloud@Customer offering.

But what does this mean for businesses, and how should they navigate this new landscape?

The Rise of Oracle Cloud@Customer

Future oracle cloud at customer

Oracle Cloud@Customer represents a paradigm shift in how businesses access and pay for Oracle’s suite of tools and services.

Instead of purchasing a license granting them perpetual use, organizations rent a server housed within their data center.

This server comes loaded with Oracle software, but instead of a traditional licensing model, businesses pay for what they consume. There is no network latency vs. the public cloud. There are also divided responsibilities between Oracle and the customer.

There are clear advantages to this approach:

  1. Flexibility: Organizations can scale their usage up or down based on their needs without significant upfront investment.
  2. Cost Efficiency: By paying for what they use, businesses can better align their software expenses with their actual needs, potentially leading to cost savings.
  3. Access to the Latest Features: With the Cloud@Customer model, Oracle ensures that businesses always have access to the latest features and updates, eliminating the need for manual upgrades.

Given these benefits, it’s easy to see why many predict a surge in the adoption of Oracle Cloud@Customer in the coming years.

Potential Risks for Customers

However, this new model is not without its risks. One of the most significant concerns is the potential loss of control for businesses. By moving away from perpetual licenses:

  1. Dependence on Oracle’s Offerings: If Oracle were to discontinue a particular product or service, businesses would be at the mercy of Oracle’s new offerings. They would no longer have the security of their perpetual license to fall back on.
  2. Pricing Vulnerabilities: With the consumption-based model, Oracle can adjust pricing. If they were to increase prices, businesses would have little recourse, especially if deeply integrated into the Oracle ecosystem.
  3. Loss of Leverage: Owning a perpetual license gives businesses leverage when negotiating terms or seeking support. They may lose some of this bargaining power by moving to a consumption-based model.

Considerations for Oracle Customers

Given these potential risks, businesses should cautiously approach the shift to Oracle Cloud@Customer.

One strategy to consider is retaining some of their perpetual licenses. By doing so, they can ensure they have a safety net to fall back on should Oracle make unfavorable changes.

This approach provides businesses with the flexibility and benefits of the Cloud@Customer model while retaining some of the security and leverage of traditional licensing.

Conclusion

The shift from perpetual licensing to consumption-based models, as seen with Oracle Cloud@Customer, represents a significant change in the software industry.

While this approach has clear benefits, businesses must also be aware of the potential risks. By understanding these risks and taking proactive steps, such as retaining some perpetual licenses, businesses can position themselves for success in this new era of software licensing.

Author

  • Fredrik Filipsson

    Fredrik Filipsson brings two decades of Oracle license management experience, including a nine-year tenure at Oracle and 11 years in Oracle license consulting. His expertise extends across leading IT corporations like IBM, enriching his profile with a broad spectrum of software and cloud projects. Filipsson's proficiency encompasses IBM, SAP, Microsoft, and Salesforce platforms, alongside significant involvement in Microsoft Copilot and AI initiatives, enhancing organizational efficiency.