Oracle recently launched a new program selling ocean-front property in Arkansas. Bonus! North of the Arctic Circle in Alaska, they also have land available for purchase. Rewards and Credits! The deal is that for every acre you buy in Alaska, you get a credit toward your Arkansas property! Sounds like a good deal, right? Except however, when you fully understand that Arkansas is not on the ocean, and you have zero need for land in Alaska (no offense meant to Alaskans).
Yes, they are not really selling land, but in classic Oracle fashion, they have put together a ‘rewards’ program that purports to lower your support costs but is mostly predicated on additional investments in OCI (Oracle Cloud Infrastructure).
Said another way, Oracle wants to discount the ‘thing’ you really need, but only if you buy the other ‘thing’ you may not really need. So, in the end you are paying 75% more than you planned on for both ‘things’.
Proceed with Caution
Our math says that you can end up spending up to 75% more than you intended. Let’s break it down into the simplest terms with this example. Today you spend $1.00 with your on-premise support bill. The sales pitch is that the support bill can now be reduced to $0.75 with an OCI investment. That is a nice reduction. However, you also need to invest that $1.00 in OCI. So, you have increased your total spend from $1.00 to $1.75. Except in your example, it may be several million.
There may be some circumstances this scenario can work for you short-term (i.e. you're buying OCI anyway) but know that the point of this and other similar programs from Oracle, is to grow their Cloud revenue.
Remember, Oracle’s goal is NOT to save their customers money on Oracle. The endgame is to ultimately increase your costs and 'lock-in' with their recurring Cloud revenue stream.
Oracle Margin and Revenue Update
Think we are exaggerating Oracle’s endgame? Fiscal year-end 2021:
- GAAP Operating Net Income up 9% to $15.2 BILLION
- GAAP Operating Margin was 47%
“Our Q4 performance was absolutely outstanding with total revenue beating guidance by nearly $200 million, and non-GAAP earnings per share beating guidance by $0.24,” said Oracle CEO, Safra Catz.
All the above is to underscore that Oracle’s endgame is about Oracle profit, not saving you money. Proceed accordingly.
Real Cost Reduction
There are strategies that exist to reduce your overall Oracle spend, but this ‘Rewards Program’ is probably not it. Multiple factors go into building a strategy for cost reductions (and even elimination) of your Oracle spend. We have been executing on Oracle cost savings programs since 2002, and its without doubt we can do it for you as well. Let’s start a discussion soon on the best path forward to savings.
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