The Oracle Pool of Funds (PoF) is:
- A flexible licensing agreement allowing pre-purchase of a specific amount of software licenses for use over 2-3 years.
- Suitable for companies experiencing growth in Oracle software products, uncertain about product mix.
- All products purchased through PoF belong to one Customer Support Identifier (CSI), subject to Oracle’s repricing rule.
- Requires compliance with reporting requirements to avoid license compliance challenges.
- Offers high discounts but also imposes certain limitations and vendor-locking features.
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 customer flexibility, 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 complicate switching to alternative support solutions.
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 purchased against a price hold after the Pool of Funds’ signature date.
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 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
Pros
- 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.
Cons
- 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 the PoF must purchase them 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 essential to 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 ensures Oracle users comply with their agreement terms and only utilize the software programs they have paid for.
Significance of a License Declaration Report
Oracle users must submit a License Declaration Report. Failure to provide an accurate and comprehensive report can result in 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
The report must include every installation of Oracle software programs, regardless of its purpose (production, acceptance, test, development, disaster recovery, etc.).
Even if the end-user decides to stop using or reduce the usage of a particular 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 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 use going forward.
The financial value of the declared licenses is then deducted (“burned down”) from the value of the Pool of Funds agreement.
The customer must purchase additional licenses if an end-user has reached the total Pool of Funds Credit value.
What Occurs When the Oracle Pool of Funds Agreement Expires?
The Final License Declaration Report
As the end-user, you must 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 declared in the different License Declaration Reports.
Additional Software Licenses
Suppose the total value of the agreement is used up before the deal expires, and the end-user deploys 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 contract’s total value (“Pool of Funds Credit”), you are not entitled to any credits or refunds of the licenses or support maintenance fees for the new value.
You will not receive credits or refunds if you have a new value.
Adding Software Programs to the Agreement
Once you have agreed, you are typically not allowed to add other software programs to the contract without paying additional licenses and technical support fees.
If you want to add other software programs to the agreement, you must pay additional licenses and technical support fees.
Conclusion
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 weigh the pros and cons before entering a PoF agreement.
FAQs on Oracle Pool of Funds
What is an Oracle Pool of Funds?
A: An Oracle Pool of Funds is a flexible licensing agreement that allows customers to pre-purchase a specific amount of software licenses to be used on Oracle software products over a certain period, typically 2-3 years.
What are the benefits of an Oracle Pool of Funds agreement?
The main benefit of an Oracle Pool of Funds agreement is its flexibility. It allows companies to adapt to changing needs by enabling them to choose from various Oracle software products without committing to specific products at the outset.
Are there any drawbacks to an Oracle Pool of Funds agreement?
Yes, all products purchased through the Pool of Funds 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.
What is the License Declaration Report in the context of an Oracle Pool of Funds agreement?
The License Declaration Report is a crucial document that outlines the deployment of software programs purchased through the Pool of Funds agreement. It helps ensure compliance with Oracle’s reporting requirements.
How often do I need to submit a License Declaration Report?
Oracle typically requires customers to submit a License Declaration Report annually, but the exact frequency may vary depending on the specific terms of the agreement.
What happens if I don't use all the funds in my Oracle Pool of Funds within the agreed period?
Any unused funds at the end of the agreement period will typically be forfeited. It’s essential to plan and monitor your usage carefully to maximize the value of your Pool of Funds.
Can I add more funds to my Oracle Pool of Funds during the agreement period?
The terms of adding more funds to your Pool of Funds will depend on your specific agreement with Oracle. It is best to discuss this with your Oracle representative or a licensing consultant.
Can I use the funds in my Oracle Pool of Funds for any Oracle product?
Generally, the funds can be used for a wide range of Oracle software products, but there may be some restrictions based on the specific terms of your agreement.
What should I ask Oracle before entering into a Pool of Funds agreement?
You should ask about the specific terms of the agreement, including the products it covers, the reporting requirements, the consequences of not using all the funds, and the implications for future maintenance costs. It’s also a good idea to seek advice from a licensing consultant to ensure you understand all the agreement’s implications.
What will happen when the PoF expires?, and I have not deployed all my credits?
If you have not utilized all of your PoF credits by the end of the agreement term, the remaining credits will be lost, and Oracle will give no refunds.
What is the minimum commitment required to sign a PoF license agreement?
Generally, Oracle requires a net payment of $1 million to sign a PoF agreement. However, there may be exceptions to this rule, and it’s important to discuss your specific situation with Oracle.
Can I choose which products to include in the PoF?
Yes, you can negotiate which products will be eligible for the PoF agreement. It is important to carefully consider which products will best suit your organization’s needs.
Can I renegotiate or add products to the PoF later on?
No, it is not possible to renegotiate or add products to the PoF unless you make an additional payment to Oracle.
What happens if we are late or do not complete the License Deployment Report (LDR) according to the contract?
If you fail to complete the LDR or are late, you will be in breach of contract. Oracle has the right to terminate the PoF period in such cases.
What is the vendor lock-in I should know when signing a PoF.
When signing a PoF, be aware of specific vendor lock-in features. Oracle’s contractual language specifies that customers are not allowed to terminate licenses of the same license set that is part of the PoF.
Additionally, all products deployed from the LDR will be locked into one Customer Support Identifier (CSI), preventing customers from making partial terminations in the future.
Can we sign a Pool of Funds and include non-database products?
You can sign a Pool of Funds and include other Oracle software such as middleware and applications.
How can I ensure compliance with the reporting requirements of the PoF agreement?
Compliance with reporting requirements is crucial to avoid potential license compliance challenges. Organizations should thoroughly understand Oracle’s licensing rules around cloud, virtualization, and disaster recovery to report their deployments accurately.
Additionally, it’s essential to follow Oracle’s reporting guidelines closely and accurately report server configurations and deployed products to avoid potential issues.
Working with an Oracle licensing expert can help ensure compliance with the reporting requirements.
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