John Mattinson, Operations Director, Certero
Originally posted in November 2016, revised in November 2019.
An introduction to Oracle License Management and Optimization
Oracle have hundreds of different products on many different platforms but broadly split them into two categories – technology products and applications. Whilst there are many categories of technology products, for the purposes of this article Certero will be looking at the implications of licensing Oracle products based upon the most common scenarios.
What are the definitions in Oracle Licensing?
Oracle offers both term (sometimes referred to as subscription) and perpetual licenses for all its products. A perpetual license is a one-time license fee that allows continued use of the software program for as long as you comply with all terms of the license agreement. A term license is for a specific, limited period of time, during which you are allowed to access and use the software. In addition, some products may carry a Restricted Use clause where they can only be used under a set of documented conditions, such as with a specified program.
License metrics are selected carefully to reflect the functionality the product offers and the value the customer receives from utilizing that functionality. Essentially, a license metric determines how the software usage is being measured when Oracle licenses a product to a customer.
How is Oracle Software Licensed?
To master Oracle License Management you need to develop your understanding of how Oracle’s technology products and applications are licensed differently.
Technology product licensing
Oracle’s technology products are primarily licensed using two metrics: Named User Plus and Processor.
- The Named User Plus metric is used in environments where users and/or devices can be easily identified and counted. All human users and non-human operated devices that are accessing the software must be licensed.
- The Processor metric is used in environments where the software users cannot be easily identified and counted, like Internet-based applications. It is also used when it is more cost effective than Named User Plus licenses.
To calculate the number of required licenses, you need to multiply the total number of cores of the processor by a core processor licensing factor specified on the Oracle Processor Core Factor Table.
To provide flexibility and predictability, all application products are available under at least one of the following three licensing models:
- Component pricing – user-based and usage-based metrics
- Custom Applications Suite (CAS) pricing – custom suite user metric
- Enterprise pricing – enterprise metrics
These enable customers, in a single order, to mix and match licenses that best fit their operating environment.
Types of Oracle Software Licensing Agreement
Oracle uses a combination of written agreements to license its software. The overarching license rights are described in the Oracle Master Agreement (OMA) – this was previously called the Oracle Licensing and Services Agreement (OLSA) or Online Transactional Oracle Master Agreement (TOMA) – and the rights regarding specific products and services are described in the Ordering Document.
Specifically, the OMA is the agreement that details the standard rights granted, ownership, restrictions, warranties, disclaimers, confidentialities, etc., as it is relates to all Oracle products and services. The Ordering Document describes the specific products, types of licenses, number of users, level of support, and discounts (if any), a customer has ordered and will receive.
Oracle Master Agreements and Ordering Documents grant you specific rights to use Oracle software and receive any services you have ordered, and your rights are limited to those rights that are expressly granted. All other rights in the programs are reserved by Oracle.
Oracle software license reviews and audits
Like all software vendors, Oracle needs to protect its IP, and so within your OMA you will find a specific clause relating to its right to audit. Typically, 45 days’ notice is the standard time you will be forewarned that Oracle intends to audit you, hence the importance of robust and well maintained Oracle License Management.
The T/OMA audit clause specifies that “reasonable” assistance is required from the customer and that such assistance includes the running of Oracle data measurement tools and then providing the resulting output to Oracle for analysis. If they discover you are non-compliant, you will be asked to purchase extra licenses to remedy this. Typically, you will be charged for these without the discount you were given for your original purchases.
As well as an official Oracle audit though, Oracle will also request a license ‘review’. This is not the same as an audit and contractually, you are not obliged to cooperate. However, it would be wise to engage with Oracle to maintain a good working relationship.
Up until mid 2019, Oracle had 2 internal divisions that dealt with audits and reviews: SIA and LMS; both of which fall under the banner of Global License Management Services (GLAS):
- Oracle Software Investment Advisory (SIA) provides a customer with “access to the advice, data, and deployment visibility needed to optimize the Oracle assets..” and covers such areas as licensing solutions, optimization and entitlement intelligence. SIA’s focus is not on initiating or running Oracle audits however their findings may not rule out an audit approach in future.
- LMS, or License Management Services, offers a more conciliatory approach “… that promotes the management, governance and awareness of the proper use and distribution of Oracle systems…”
However, LMS is the official auditor and reviewer of Oracle licenses, but cannot offer discounts if you need to purchase additional licenses as a result of their audit or review findings.
Oracle License Optimization white paper
For a more comprehensive guide, download our Oracle License Optimization white paper.
[On-Demand Webinar] Oracle Licensing:
Four gotchas you need to avoid in 2020
On Demand Webinar
Oracle licensing is notoriously complex and catches many customers out every year, potentially adding millions to their already substantial expenditure.
Join Certero’s Oracle licensing experts for 30 minutes of advice, covering important areas such as understanding contractual confusions, moving licenses around the organization, moving to Oracle cloud and licensing rules around Java.
Our experts will show you to how get visibility of all Oracle consumption, to manage false positives and offer advice for what to do in an audit.