Oracle Universal Credits for Cloud
- Flexible Payment Models: Choose between annual commitment or pay-as-you-go.
- Access to Cloud Services: Use credits across Oracle’s cloud services.
- Cost Savings: Discounts are available with annual commitments.
- Ease of Management: Consolidate billing into one payment.
- Scalability: Credits allow for scaling up or down as needed.
What are Oracle Universal Credits?
Oracle Universal Credits is a flexible and cost-effective program offered by Oracle that allows customers to purchase a variety of cloud services in advance.
These credits allow users to use a wide range of Oracle Cloud services, such as Oracle Cloud Infrastructure (OCI) and Oracle Cloud Platform services (PaaS), at their own pace. These services include computing, storage, networking, and databases.
Key Features of Oracle Universal Credits
- Flexible Payment Models: Oracle offers two main purchasing models for Universal Credits, providing different levels of commitment and cost savings:
- Annual Universal Credits: This model requires an annual commitment to Oracle and comes with a discounted rate. It is ideal for businesses that can predict cloud usage and want to save on cloud costs by committing to a longer-term contract.
- Pay as You Go: The Pay as You Go option offers no commitment and is billed monthly based on actual usage. This model is perfect for organizations that need more flexibility and may experience fluctuating demands for cloud resources.
- Comprehensive Usage Scope: Oracle Universal Credits can be applied to a range of Oracle Cloud services, such as:
- Oracle Cloud Infrastructure (OCI): Users can apply credits to virtual machines, compute instances, load balancers, and other OCI components.
- Oracle Cloud Platform Services (PaaS): Credits can also be used for services like databases, analytics, application development, and integration tools.
Benefits of Oracle Universal Credits
- Flexibility in Consumption: One of the key benefits is the flexibility these credits provide. Customers can allocate their credits to any eligible Oracle service as their needs evolve, allowing them to scale their usage up or down without worrying about separate billing for different services.
- Cost Savings: Customers committing to Annual Universal Credits can take advantage of discounted rates, leading to significant cost savings compared to individual service payments. The discount structure is especially beneficial for enterprises with predictable cloud workloads.
- Ease of Management: Customers simplify the management of their cloud expenditures by purchasing credits in advance. Instead of handling multiple invoices for different services, the credit model consolidates everything into one, making it easier to track and budget.
- Pay-as-You-Go Flexibility: For organizations that need more agility and do not want to make upfront commitments, the Pay-as-You-Go model allows them to experiment with Oracle’s cloud offerings without long-term obligations. This makes it easy to manage unpredictable workloads.
Limitations of Oracle Universal Credits
While Oracle Universal Credits offer considerable advantages, they do come with some limitations that customers should consider:
- Commitment Requirement for Discounts: While Annual Universal Credits offer significant cost savings, they require a commitment, which may not be ideal for smaller organizations or startups that lack a clear forecast of cloud needs.
- No Coverage for SaaS Services: Oracle Universal Credits cannot be used for Oracle ERP Cloud or other Software-as-a-Service (SaaS) offerings. This limitation means that customers looking to use Oracle’s SaaS products must purchase those services separately.
Read our article on how Oracle Universal Cloud Credits Work.
Two different contract models for Oracle UCC
Oracle Universal Cloud Credits (UCC) offers customers two distinct contract models to accommodate different needs: the Annual Universal Credits Model and the Pay as You Go Model.
Below, we explore both models to help customers understand which option best suits their business requirements.
Annual Universal Credits Model
- Commitment: Requires an annual upfront commitment for a pool of funds or credits.
- Usage: The credits can be utilized for various Oracle Cloud Infrastructure (OCI) and platform services (PaaS). This makes it easy for businesses to access all the services they need under one contract.
- Billing: Advance invoicing is done for 12 months, meaning customers pay the committed amount upfront.
- Flexibility: The credits can be used anytime during the contract term for any eligible Oracle service, providing broad access to cloud resources when needed.
- Savings: The annual commitment offers cost savings compared to paying for services individually, making it more economical for businesses with steady cloud resource requirements.
- Expiration: One key consideration is that unused credits are forfeited at the end of the 12-month period, which can be a drawback if the business cannot fully utilize its credit pool.
Pay-as-You-Go Model
- Discount Negotiation: Depending on the scale and frequency of usage, customers may be able to negotiate discount rates for Oracle Cloud services. This flexibility allows for cost control even without a long-term contract.
- Commitment: This model comes with no annual commitment, providing maximum flexibility.
- Billing: Customers are billed monthly based on the actual usage of Oracle cloud services. This structure makes it easier for businesses to manage and predict costs, as they only pay for what they use.
- Flexibility: This model suits customers with unpredictable or variable cloud requirements. Businesses scaling up or experiencing fluctuating cloud needs may find this approach more manageable.
- Cost: Pricing is generally higher than the Annual Universal Credits Model, but payments are only for consumed services. This can make it a practical choice for startups, smaller projects, or companies experimenting with cloud services.
That discount is then applied to your burn-down rate card.
Use existing on-premise licenses for BYOL or buy UCC?
When choosing between Oracle Universal Cloud Credits (UCC) and Oracle Bring Your Own License (BYOL), you must evaluate your existing Oracle technology licenses and your specific cloud usage needs.
Here, we compare both options to help determine which is the best fit for your organization.
Oracle BYOL
Oracle Bring Your Own License (BYOL) allows you to utilize your existing, supported Oracle technology licenses, such as Oracle Database Enterprise Edition, on the Oracle Cloud. This option provides several benefits for customers who already have on-premise licenses:
- License Utilization: Customers can leverage their existing Oracle Database licenses to run on Oracle Cloud Infrastructure (OCI).
- Cost Benefits: For each supported Enterprise Edition Database license, Oracle provides two free Oracle Cloud Platform Units (OCPUs) for Oracle platform service and database. For instance, if you have 100 Oracle Database Enterprise Edition processors, opting for BYOL will give you 200 OCPUs of Oracle Database resources (as each processor equates to 2 OCPUs).
- Savings: This option can significantly reduce costs for customers with existing licenses by allowing them to avoid paying for additional cloud licenses.
Example: Suppose an organization currently owns 100 Oracle Database Enterprise Edition processors. By opting for BYOL, they can receive 200 OCPUs of Oracle platform service for free, resulting in considerable cost savings.
Oracle Universal Cloud Credits (UCC)
If you do not have any supported Oracle licenses, Oracle Universal Cloud Credits (UCC) offer a flexible pay-as-you-go approach. Customers can purchase credits in advance and apply them to various Oracle cloud services:
- Cloud Flexibility: UCC allows customers to utilize a wide range of Oracle Cloud services, including Oracle Cloud Infrastructure (OCI) and Oracle Platform services.
- Pay-As-You-Go Model: This model is well-suited for customers who need flexibility or do not want to commit to owning and managing on-premise licenses.
- Cost Example: Running 200 OCPUs of Oracle Database Enterprise Edition would cost approximately $64,000 monthly or $767,000 annually using the UCC model. This model is ideal if you start with Oracle cloud services and prefer to avoid an upfront commitment to on-premise licenses.
Cost Comparison: BYOL vs. UCC
- Oracle BYOL: Opting for BYOL can lead to significant savings if you have existing licenses. In the example above, using BYOL for 200 OCPUs would save approximately $767,000 annually compared to purchasing cloud credits for the Oracle Database Enterprise Edition.
- Oracle UCC: Purchasing Oracle Universal Cloud Credits provides flexibility for customers without existing licenses but is more expensive than using BYOL.
Note for Oracle ULA Customers
It’s important to note that according to Oracle’s BYOL FAQ, customers with an Oracle Unlimited License Agreement (ULA) cannot count deployments on Oracle Cloud towards their ULA deployment exit numbers.
This means that while ULA customers can use Oracle Cloud services, those deployments will not contribute to certifying their ULA usage upon contract expiry.
FAQ: Oracle Universal Credits for Cloud
What are Oracle Universal Credits? Oracle Universal Credits are prepaid cloud credits that allow customers to use various Oracle Cloud services, providing flexibility and cost savings.
How do Oracle Universal Credits work? Customers purchase credits upfront, which can be used for a wide range of Oracle Cloud services. Credits are deducted based on the services consumed, offering scalability and flexibility.
What cloud services are available with Universal Credits? Universal Credits can be used for services such as Oracle Cloud Infrastructure (OCI), platform services (PaaS), databases, networking, and more depending on the customer’s needs.
What are the benefits of using Oracle Universal Credits? Oracle Universal Credits offer predictable budgeting, cost savings through discounts, and the ability to access various cloud services with a single pool of prepaid credits.
Are there different payment models for Oracle Universal Credits? Yes, there are two main payment models: Annual Commitment and Pay-as-You-Go. Annual Commitment offers discounts, while Pay-as-You-Go provides flexibility without a long-term contract.
How do Annual Universal Credits differ from Pay-as-You-Go? Annual Universal Credits require an upfront commitment for discounted rates, whereas Pay-as-You-Go allows customers to pay monthly for the services they use without any upfront commitment.
Can I use Oracle Universal Credits for all Oracle services? Oracle Universal Credits can be used for various Oracle Cloud services but not for SaaS offerings like Oracle ERP Cloud. The credits are mainly intended for OCI and platform services.
How do I manage my Oracle Universal Credits? Credits are managed through Oracle’s cloud management platform, where customers can view usage, allocate credits, and monitor remaining balances to ensure they are effectively using the credits.
Do Oracle Universal Credits expire? Yes, credits purchased through the Annual Commitment model expire after 12 months if unused. Pay-as-You-Go credits are billed monthly, so there is no expiration.
Can I switch from Pay-as-You-Go to Annual Universal Credits? Customers can switch from the Pay-as-You-Go model to Annual Universal Credits for discounted rates. This is often done when businesses have better clarity on their long-term cloud needs.
How are credits deducted for different services? Credits are deducted based on the consumption of services such as compute, storage, and networking. The deduction rate depends on the specific Oracle service used and the amount consumed.
Who should consider using Oracle Universal Credits? Businesses looking for flexible cloud options, predictable budgeting, and access to a wide range of Oracle Cloud services should consider using Oracle Universal Credits. They are particularly useful for enterprises with steady cloud usage.
What is the advantage of the Annual Commitment model? The Annual Commitment model provides discounted rates for cloud services, making it ideal for organizations with predictable cloud usage that want to save costs over a long period.
Is there a penalty for unused credits in the Annual Commitment model? Yes, unused credits are forfeited at the end of the 12-month term. Effective usage planning is important to maximize the value of the credits.
How can Oracle Universal Credits help with scalability? Oracle Universal Credits provide the flexibility to scale cloud resources up or down as needed, making them suitable for businesses with fluctuating cloud service demands.
Oracle’s Annual Flex Agreement: An Expert’s Perspective
Oracle’s Annual-Flex agreement is a strategic choice for organizations with a clear forecast of their cloud usage needs for the upcoming year. This agreement provides several advantages that make it suitable for companies with predictable cloud requirements.
Advantages of Oracle’s Annual Flex Agreement
- Predictable Budgeting: An annual flex agreement allows organizations to secure a discounted rate for Oracle’s cloud services, enabling them to plan their budget effectively for the next 12 months. This predictability is key for businesses that require financial stability and want to avoid surprises in their cloud expenditures.
- Flexibility: Despite the annual commitment, the agreement allows for adjusting service usage over time without incurring additional costs. This flexibility is particularly beneficial for organizations whose needs may evolve or expand annually.
- Avoiding Pay-As-You-Go Uncertainties: The Annual Flex agreement eliminates the unpredictability of a pay-as-you-go model. With an upfront commitment, organizations enjoy a clear budget for cloud services for the entire year, allowing them to avoid unexpected charges.
- Access to Oracle’s Entire Cloud Portfolio: The agreement provides access to Oracle’s full range of cloud services, allowing organizations to purchase credits that can be used across all Oracle services. This offers significant flexibility, as customers can decide which services they want to use at any given point based on changing business needs.
- Ideal for Large-Scale Projects: The Annual Flex agreement allows organizations undertaking large-scale projects requiring significant cloud resources to purchase the necessary resources at a discounted rate and use them as needed as the project progresses. This upfront purchase can translate to considerable cost savings.
Summary: Oracle’s Annual Flex agreement benefits organizations by clearly understanding their cloud usage needs for the upcoming year. It provides cost savings and the flexibility to adjust service usage, making it ideal for enterprises planning substantial cloud initiatives.
Expert Advice on Pay As You Go
A pay-as-you-go contract model with Oracle allows organizations to purchase cloud services every month without any upfront commitment. This model provides certain advantages that make it appealing under specific circumstances.
Scenarios Where Pay-As-You-Go is Advantageous
- Uncertain or Variable Cloud Usage Needs: Organizations with fluctuating or unpredictable cloud needs can benefit from paying only for the services they consume. This avoids the risk of paying extra for unused resources, providing a more cost-effective approach for those with dynamic demands.
- New or Exploratory Cloud Adoption: The pay-as-you-go model is a practical approach for organizations new to cloud services or in the early stages of adoption. It allows them to start with a small-scale adoption and gradually scale up as they gain familiarity with the cloud environment and determine their specific needs.
- Short-Term Commitment: Businesses not ready to commit to a long-term contract can choose the pay-as-you-go model. This option allows short-term agreements, with the flexibility to renew or terminate the contract as required, providing a risk-free way to explore cloud services.
- Avoidance of Long-Term Commitment Uncertainty: Organizations that are hesitant to make long-term financial commitments due to the uncertainties involved can opt for a pay-as-you-go model. This way, they can pay monthly without being tied to a fixed-term contract, retaining full flexibility to adapt their strategy.
- Exploration of Cloud Services: For organizations unsure of their future cloud service requirements, a pay-as-you-go model offers the opportunity to explore different Oracle cloud services without making significant upfront financial commitments. They can experiment with multiple services and only pay for those that align with their needs.
Summary: Opting for a pay-as-you-go contract model with Oracle is ideal for organizations with uncertain or variable cloud usage, those new to cloud services, or those not ready to commit to long-term contracts. It offers the freedom to explore and adapt without the burden of a fixed commitment.
Read more about our Oracle License Management Services.
