Oracle Pool of funds is still being utilized by enterprise companies and we wanted to provide a high level overview how the agreement model works. PoF can be an alternative to Unlimited Agreements or a large volume purchase.
What is Oracle Pool of Funds?
Oracle Pool of funds is an enterprise software license agreement where the Oracle customer makes a pre-purchase of software licenses that needs to be spent for 2-3 years.
The POF agreement specifies which Oracle software products that the customer can spend the committed amount upon and there is a discount attached to each product.
The customer is contractually bound to report deployments using a LDR template and Oracle will then assign you with licenses.
The customer should burn-down pre-payment amount until it reaches zero or the Pool of Funds agreement expires. If any pre-payment amount is left when the agreement expires, the amount is lost, and no refunds are given by Oracle. Below is a screenshot of the agreed price to use to burndown the credit.
Pool of Funds – When to consider ?
When there is a growth in Oracle software products, but the product mix is uncertain.
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.
What is not so good with Oracle Pool of Funds?
All products that you purchase off the committed amount will belong to one CSI and subject to Oracle repricing rule, which makes it difficult to reduce future Oracle maintenance.
During the Pool of Funds – Oracle always includes a clause specifying that you will during the Pool of Funds be unable to terminate other support contracts that includes any of the products that are part of the Pool of Funds.
If you need additional products outside of the Pool of Funds, those will need to be purchased with additional investment from the end customer.
If you do not spend the full amount, you will still pay the same technical support after the Pool of Funds expire.
Pool of Funds – What are the risks ?
Pool of Funds have a reporting mechanism, and customers need to report to Oracle deployments every 6 months. If you report incorrect you can have a license compliance challenge.
Oracle licensing rules around cloud, virtualization, disaster recovery needs to be mastered by the person who is reporting the deployments to Oracle.
Below is a picture of the reporting requirements.
Oracle Pool of Funds – Pros and Cons
In return for making the pre-payment in software licenses, you are usually able to negotiate a much higher discount rate than you would normally be able to do.
If you are uncertain about what software licenses that you will need to purchase, but you know that you have Infrastructure projects involving Oracle. Pool of Funds provides a flexibility for you to pick which products you need. Remember that it only covers the products that are part of the Pof license agreement.
There is a vendor-locking in terms of every product that is part of this support contract, will be bound by Oracle technical support policies and prevent you from partial termination of support and license reductions.
All PoF agreements will also prevent you from during the contract term to terminate other license and support agreements outside of the CSI. For example, if your PoF agreement contains database products then you will not be able to terminate other database license agreements.
It is not unlimited like the Oracle ULA agreement is, but it does also not have the same lock-in where all existing support contracts become one CSI.
Pool of Funds can be the right vehicle for companies that knows they want to invest more in Oracle software licenses, but are uncertain about which products they need and want to obtain a higher discount rate than normal. The reporting structure can cause problems for companies who dont know Oracle licensing that well. As you need to report to Oracle server configurations and products deployed. If you misreport what you are using such as products or even miscalculate processor licenses can cause Oracle to believe there is a larger non compliance in your company and you might face an Oracle audit. Try to negotiate a longer Pool of Funds, 3 years to avoid having time running out and you have not yet deployed all the software licenses that you need.
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Thanks for reading, if you are considering an Oracle Pool of Funds agreement or have an existing one and want help to manage and report correctly. Schedule an consultation to find out more about our services and how Redress Compliance can help.