Oracle Pool of Funds is a unique licensing agreement offering flexibility and high discounts for growing Oracle software users.
- When to Consider Oracle Pool of Funds
- Potential Drawbacks of Oracle Pool of Funds
- Grasping the Total Support Stream in PoF Agreements
- Annual Technical Support Fees
- Consequences of Non-Compliance
- Oracle Pool of Funds: Pros and Cons
- Understanding the License Declaration Report
- Contents of a License Declaration Report
- Post-Submission of a License Declaration Report
- What Occurs When the Oracle Pool of Funds Agreement Expires?
- The Final License Declaration Report
- Additional Software Licenses
- Unused Value of the Pool of Funds Credit
- Adding Software Programs to the Agreement
- FAQs on Pool of Funds
- How Redress Compliance Can Assist You
What is Oracle Pool of Funds?
The Oracle Pool of Funds (PoF) is a licensing agreement that allows customers to pre-purchase a specific amount of software licenses. These licenses can be used on Oracle software products over 2-3 years. The contract specifies the products covered and provides discounts for each product. The PoF agreement is suitable for companies experiencing growth in Oracle software products but is uncertain about the product mix. It’s also an alternative to an Unlimited Agreement (ULA) or a large-volume purchase.
When to Consider Oracle Pool of Funds
- The product mix is uncertain when there is growth in Oracle software products.
- When you do not want to commit to an Oracle ULA and migrate legacy support into one CSI.
- When you want to achieve very high discount rates for on-premises software.
Potential Drawbacks of Oracle Pool of Funds
While the Oracle Pool of Funds can offer benefits such as high discount rates and flexibility for customers, it also has limitations. All products purchased through the PoF agreement will belong to one Customer Support Identifier (CSI) and be subject to Oracle’s repricing rule. This can make it challenging for customers to reduce future Oracle maintenance costs.
Furthermore, during the PoF agreement, Oracle includes a clause preventing customers from terminating other support contracts that contain any of the products the PoF covers. This can limit customers’ flexibility and make switching to alternative support solutions challenging.
Grasping the Total Support Stream in PoF Agreements
The Total Support Stream is a crucial PoF (Pool of Funds) agreement component. It encompasses the support maintenance for various licenses:
- Existing Licenses: These are the licenses for software programs already included in the Pool of Funds.
- New Licenses: These are licenses for software programs added to the Pool of Funds during the agreement period.
- Acquired Licenses: These are licenses for software programs that are part of the Pool of Funds and are owned by companies that the end-user receives during the agreement period.
- Additional New Licenses: These are new licenses for software programs included in the agreement and purchased against a price hold after the signature date of the Pool of Funds.
Annual Technical Support Fees
End-users are obligated to pay annual technical support fees. These fees are calculated based on the total amount of the Pool of Funds agreement for the duration of the contract. This implies that even if the end-user does not deploy any of the software programs during the first year of the deal, they are still required to pay the support maintenance fees from the start.
Consequences of Non-Compliance
If an end-user fails to maintain the Total Support Stream, the Pool of Funds period terminates immediately. The end-user must then declare their current deployment through a License Declaration Report. Non-compliance with these requirements can lead to penalties or contract terminations.
Oracle Pool of Funds: Pros and Cons
- In return for making the pre-payment in software licenses, customers can usually negotiate a much higher discount rate than they would generally be able to.
- PoF allows customers to pick which products they need, covering only those parts of the PoF license agreement.
- All products purchased off the committed amount will belong to one CSI and be subject to Oracle’s repricing rule, making it challenging to reduce future Oracle maintenance.
- The PoF agreement prevents customers from terminating other support contracts that include any products part of the PoF.
- Customers needing additional products outside of the PoF must be purchased with further investment.
- Customers will still pay the same technical support after the PoF expires if the total amount is not spent.
In conclusion, the Oracle Pool of Funds can be a good option for companies experiencing growth in Oracle software products and seeking high discount rates for on-premises software. However, the PoF agreement also has limitations and vendor-locking features that may not be suitable for all customers.
It is important to carefully weigh the pros and cons before entering a PoF agreement.
Understanding the License Declaration Report
A License Declaration Report is a crucial document that outlines the deployment of software programs, the types of licenses deployed (such as Processor, Named User Plus), the number of licenses deployed, and the total license value of the declared licenses. This report is designed to ensure Oracle users are in compliance with their agreement terms and are only utilizing the software programs they have paid for.
Significance of a License Declaration Report
Submitting a License Declaration Report is mandatory for Oracle users. Failure to provide an accurate and comprehensive report can lead to financial penalties and potential legal action. Therefore, Oracle users must understand what is required when submitting a License Declaration Report.
Contents of a License Declaration Report
Every installation of Oracle software programs must be included in the report, regardless of its purpose (production, acceptance, test, development, disaster recovery, etc.). Even if the end-user decides to stop using a particular software program or reduce the usage of a specific software program, it still needs to be included in the report if it was installed and/or used during the agreement period. The report should only include new software licenses deployed since the last declaration (apart from the first declaration since the start of the agreement). Any software programs or license types that are not included in the Pool of Funds agreement cannot be declared.
Post-Submission of a License Declaration Report
After an end-user submits the report to Oracle, Oracle will fix the quantity of the declared software licenses as perpetual licenses that the end-user can then use going forward. The financial value of the declared licenses is then deducted (“burned down”) from the value of the Pool of Funds agreement. If an end-user has reached the total Pool of Funds Credit value, the customer must purchase additional licenses.
What Occurs When the Oracle Pool of Funds Agreement Expires?
The Final License Declaration Report
As the end-user, you are obligated to provide your last and final License Declaration Report within 30 days after the agreement expires. This report is essential to declare your final software installations and/or use under the Pool of Funds agreement. The absolute quantity of software program licenses acquired under the Pool of Funds agreement is the total of all software licenses as declared in the different License Declaration Reports.
Additional Software Licenses
Suppose the total value of the agreement is ultimately used up before the deal expires, and the end-user is deploying more software programs. In that case, the end-user is required to purchase these additional software licenses. This implies that if you need more software licenses than initially agreed upon, you must buy them separately.
Unused Value of the Pool of Funds Credit
If the agreement expires and you have not used up the total value of the contract (“Pool of Funds Credit”), you are not entitled to any credits or refunds of the licenses or support maintenance fees for the unused value. This means you will not receive any credits or refunds if you have any unused value.
Adding Software Programs to the Agreement
Once you have entered into an agreement, you are typically not allowed to add any other software programs to the contract without paying for additional licenses and technical support fees. This means that if you want to add any other software programs to the agreement, you will have to pay for additional licenses and technical support fees.
It is crucial to be aware of the process that follows after your Pool of Funds agreement expires. You can ensure a smooth and hassle-free transition by providing your final License Declaration Report, purchasing additional software licenses when necessary, and being mindful of the new value and other software programs.
The Oracle Pool of Funds can be suitable for companies experiencing growth in Oracle software products and seeking high discount rates for on-premises software. However, the PoF agreement also has limitations and vendor-locking features that may not be suitable for all customers. It is essential to carefully weigh the pros and cons before entering a PoF agreement.
FAQs on Pool of Funds
How Redress Compliance Can Assist You
Redress Compliance provides a comprehensive Oracle Pool of Funds license optimization service to help organizations manage their PoF agreement effectively. Here’s how our service can benefit you:
Determining the Right Agreement for You
Suppose you’re looking to invest more in Oracle software licenses but are uncertain about which products you need and want to obtain a higher discount rate than usual. In that case, we can help determine if the PoF agreement is the right choice for your organization.
Managing the Reporting Structure
Oracle’s licensing rules can be complex and challenging for unfamiliar organizations. Our service ensures accurate reporting of server configurations and deployed products, helping you avoid potential license compliance challenges.
Avoiding Risks of Misreporting and Miscalculations
Misreporting and miscalculating processor licenses can lead Oracle to believe there is a more significant non-compliance issue, resulting in an Oracle audit. We help you avoid this risk.
Negotiating a Longer Pool of Funds Agreement
We can assist you in negotiating a more extended Pool of Funds agreement, ideally for three years, to avoid the risk of running out of time before deploying all the necessary software licenses.
At Redress Compliance, we offer personalized consultation to help organizations optimize their PoF agreement and achieve compliance with Oracle’s licensing rules. Our services include a comprehensive review of your PoF agreement, detailed reporting, and ongoing support to ensure compliance throughout the agreement term.
If you are considering an Oracle Pool of Funds agreement or have an existing one and need help managing and reporting correctly, schedule a consultation with Redress Compliance today to learn more about how we can help optimize your license agreement.