Oracle Licensing Models

Oracle Licensing Models

• Named User Plus (NUP): Licenses users accessing Oracle software.
• Processor-Based Licensing: Based on the number of processor cores.
• Unlimited License Agreement (ULA): Unlimited deployments for a fixed term.
• Bring Your Own License (BYOL): Use existing licenses in cloud environments.
• Enterprise License Agreement (ELA): Customized bundles and pooled licenses.

All Oracle Licensing Models

Oracle On-Premises Licensing

Oracle offers a range of licensing models to suit enterprises’ diverse needs. The Named User Plus (NUP) and Processor-Based models are two primary models for on-premises Oracle software licensing.

Understanding these models helps organizations manage their software investments effectively and maintain compliance with Oracle’s licensing requirements.

Named User Plus (NUP)

The Named User Plus model licenses Oracle software based on the number of authorized users, which includes both human and non-human devices that operate Oracle software.

Unlike other user-based licensing models focusing only on concurrent usage, the NUP model includes all users authorized to access Oracle, regardless of whether they actively use the software at any given moment.

User-Based Metrics and Minimums

Oracle uses specific metrics to define minimum licensing requirements for the NUP model:

• Enterprise Edition (EE) requires 25 Named User Plus licenses per processor. The minimum number applies even if the actual number of users is lower.
• Standard Edition 2 (SE2): A minimum of 10 Named User Plus licenses per server is required, providing a simpler licensing option than the Enterprise Edition.
• The License Count must cover the greater of the minimum requirements or actual users. This ensures that organizations cannot under-license their environments, even with fewer than the minimum users.

Counting Authorized Users

Proper counting of users is critical to maintaining compliance with Oracle’s NUP licensing. The following are key considerations for counting authorized users:

• Direct and Indirect Users: All users who directly or indirectly access Oracle software must be counted. This includes users accessing through a third-party application or other middleware.
• Batch Processing: In scenarios involving batch processing between computers, front-end users are not required to be counted as long as they do not have interactive access.
• Multiplexing: Organizations must count all users accessing the front-end system when using multiplexing hardware or software—a technique that consolidates multiple user connections. Multiplexing does not reduce the number of user licenses required.

Processor-Based Licensing

The Processor-Based licensing model is ideal for environments where it is impractical to count users or where the application is available to an indefinite number of users.

This model requires that organizations count processor cores and apply Oracle’s core factor to determine the correct licensing requirement.

Core Factor Calculations

Oracle uses core factors to calculate the required number of processor licenses. The core factor varies depending on the type of processor used and helps to account for the differences in computing power between various processor architectures.

• Organizations must multiply the number of cores by the applicable core factor listed in Oracle’s core factor table to determine the number of processor licenses.
• The core factor for Intel processors used in on-premises environments is 0.5, meaning only half a license is required per core.
• All fractions resulting from this calculation must be rounded up to the next whole number, ensuring full compliance.

Hardware Considerations

The specifics of hardware configurations play a key role in determining licensing requirements under the processor model:

• Multi-Core Chips: All cores on a multi-core chip must be licensed, regardless of the number of cores. Oracle licensing mandates that each core contributes to the overall license count.
• Standard Edition: When licensing Standard Edition Oracle software, the count is based on the number of processor sockets. Each occupied socket counts as a single processor.
• Multi-Chip Modules: In multi-chip modules, each chip is considered to occupy a separate socket, thereby requiring its own processor license.

Example Calculation

Consider an 8-core Intel processor server using Oracle Enterprise Edition:

• Eight cores multiplied by a 0.5 core factor equals 4 processor licenses required. This method ensures that organizations correctly license their environments based on hardware specifications.

Oracle Cloud Licensing Models

As organizations shift to the cloud, Oracle provides a set of cloud licensing models that facilitate flexible deployment and usage of Oracle Cloud services.

These models include the Universal Credits, Pay-as-you-go, and Annual Flex Model.

Universal Credits

The Universal Credits model is a flexible payment system that allows organizations to purchase cloud credits that can be used across multiple Oracle services, including Oracle Cloud Infrastructure (OCI) and Platform as a Service (PaaS).

• Flexible Usage: Universal Credits can be used across different cloud services, providing versatility in managing cloud resources.
• Limitations: These credits cannot be used for Oracle ERP Cloud or other Software as a Service (SaaS) products with separate licensing models.

Pay-as-you-go Model

The pay-as-you-go model is designed for organizations that prefer not to make upfront commitments:

• No Annual Commitment: There is no need for an annual contract, which offers complete flexibility.
• Monthly Billing: Organizations are billed every month based on actual resource usage.
• Higher Pricing: The pay-as-you-go model typically comes at a higher per-unit price than annual commitments.

Annual Flex Model

The Annual Flex Model is a subscription-based plan that requires an upfront financial commitment in exchange for reduced rates and other benefits:

• Minimum Commitment: A minimum of $100,000 in annual commitment is required to qualify.
• Discounts: Provides upfront discounts on services, which can lead to cost savings if the projected usage aligns with the commitment.
• Expiration of Credits: Any unused credits expire after 12 months, requiring careful planning to avoid waste.

Oracle Public Cloud Licensing

Oracle’s public cloud licensing also supports deployments on authorized third-party cloud platforms such as AWS and Azure.

These public cloud environments offer Oracle’s services under different licensing structures, enabling organizations to utilize Oracle products alongside their existing cloud infrastructure.

AWS Deployments

When deploying Oracle software on Amazon Web Services (AWS), specific licensing rules apply based on the Virtual CPU (vCPU) configurations:

• Multi-Threading Enabled: Two vCPUs are counted as one Oracle processor license when multithreading is enabled.
• Multi-Threading Disabled: One vCPU is counted as one processor license when multi-threading is disabled.
• Standard Edition Limits: Standard Edition deployments are limited to 16 vCPUs.

Azure Deployments

Microsoft Azure is also recognized as an authorized public cloud platform for deploying Oracle services. Licensing guidelines for Azure deployments include:

• vCPU Calculations: Similar to AWS, two vCPUs are one processor license when multithreading is enabled.
• Constrained vCPU Options: Azure offers constrained vCPU options that allow organizations to optimize licensing based on workload requirements, potentially reducing the number of licenses needed.

Database@Azure

Oracle’s Database@Azure is a unique offering that combines Oracle database services with Azure infrastructure:

• BYOL or License-Included Options: Depending on their existing investments, organizations can bring their own Oracle licenses (BYOL) or opt for a license-included model.
• Integrated Billing: Billing is handled directly through the Azure platform, simplifying financial management and allowing organizations to leverage existing Azure agreements for Oracle services.

Private Cloud Licensing for Oracle

VMware Environments

Oracle’s licensing in VMware environments demands careful attention to the architecture and the specific VMware version.

Oracle Private Cloud Licensing requirements differ based on how virtualization is configured and the version of vSphere ESXi or vCenter Server being utilized:

• vSphere ESXi up to 5.0: All physical cores within clusters that share storage must be licensed. This means every core in any cluster connected to shared storage needs a valid Oracle license.
• vSphere ESXi 5.1+: Licensing is required for all cores within the same vCenter Server Instance. This expands the licensing scope compared to previous versions, necessitating broader coverage.
• vCenter 6.0+: All vCenter Server Instances must be licensed, requiring organizations to license all potential physical cores in any connected vCenter deployment.

Hard Partitioning and Resource Allocation

Hard partitioning is an important concept that allows for sub-capacity licensing, which can be applied to technologies such as IBM LPAR and Oracle VM. However, when using VMware, Oracle considers it soft partitioning, which means that all physical processors must be licensed, regardless of the number of virtual machines on which Oracle software is installed.

• Sub-Capacity Licensing: Applies only to approved hard partitioning technologies, enabling more granular control over licensing costs.
• Full Capacity Licensing for VMware: Since VMware is classified as soft partitioning, all physical processors in a VMware host must be licensed, even if Oracle is installed on only a few virtual machines. This distinction is crucial for VMware organizations and affects the overall licensing cost.

Oracle Subscription-Based Models

Term-Based Licensing

Subscription licensing provides flexible access to Oracle software for 1 to 5 years, with recurring fees covering software updates and support services.

• Predictable Budgeting: By spreading out costs over the subscription term, organizations can better predict their IT budgets.
• Continuous Updates and Features: The subscription includes access to the latest software updates and new features, keeping the infrastructure current.
• Renewal Flexibility: At the end of the term, organizations have the option to renew, adjust terms, or discontinue, offering greater financial and operational flexibility.

Flexible Usage

The subscription model also provides significant scalability and adaptability for changing business needs:

• Pay-as-you-go Options: This allows organizations to adjust their subscriptions according to cloud services usage.
• User Count Adjustments: The model enables adjustments to user counts based on organizational changes.
• Billing Cycles: Customers can opt for monthly or annual billing cycles, providing choices for payment timing and cash flow management.

Cost Management

Organizations can take advantage of several cost-saving mechanisms under the subscription model:

• Volume-Based Discounts: Longer commitments often come with discounts, providing savings for organizations that can commit to multi-year terms.
• Flexible Payment Structures: Payment terms can be tailored to suit an organization’s financial preferences, allowing deferred payments or spreading costs over multiple intervals.
• Usage Monitoring: Regular monitoring of license usage helps optimize costs by identifying opportunities for adjustments in user count or service levels.

Oracle Licensing for Containerized Environments

Docker Containers

Licensing in containerized environments requires organizations to be vigilant in tracking how Oracle programs are deployed, particularly with Docker containers.

Once an Oracle program is pulled into a Docker container, it triggers significant licensing requirements:

• Licensing All Physical Cores: All cores on the physical container host must be licensed, even if Oracle runs on a single container. This means the entire server hosting the container must have licenses for each processor.
• Partitioning Policy Guidelines: Organizations must carefully follow Oracle’s partitioning policies to ensure compliance when deploying virtualized hosts.
• Resource Allocation Management: Managing how resources are allocated across container hosts helps control the scope of licensing and avoid unintended licensing exposures.

Kubernetes Clusters

Deploying Oracle in Kubernetes environments brings additional considerations for licensing compliance. Each node capable of running Oracle software requires appropriate licensing coverage:

• Node Licensing: Every node that pulls Oracle program images must be properly licensed. This means that all nodes in the cluster, whether they currently run Oracle or have the capacity to run Oracle, must be accounted for.
• Node Labels and Selectors: These Kubernetes features can help control where Oracle containers run, potentially limiting the number of nodes that need licenses by defining specific nodes for Oracle workloads.
• Container Mobility: Licensing requirements apply to any node that can run Oracle software. If containers move across nodes within a cluster, organizations must ensure proper licensing coverage for all potential container hosts.

Compliance Management

Effective compliance management is essential to ensure that Oracle licensing is properly maintained in containerized environments:

• Tracking Image Pulls: Organizations must track all instances where Oracle program images are pulled across nodes and clusters to ensure compliance.
• Monitoring Container Movement: Containers can be highly dynamic, and their movement between hosts must be monitored to maintain accurate licensing records.
• Ensuring Proper Licensing for All Hosts: All hosts that may potentially run Oracle software must be appropriately licensed, whether containers are running or simply have the capacity to do so.

Oracle ULA Licensing Model

Agreement Structure

The Oracle Unlimited License Agreement (ULA) allows organizations to deploy unlimited quantities of specific Oracle products for a fixed period, generally three to five years. Organizations with large-scale, dynamic deployment needs often use this type of agreement, designed to simplify expanding Oracle environments.

• Defined Product Sets: ULAs cover specific sets of Oracle products, giving organizations the right to deploy unlimited quantities of these products.
• Fixed Term Duration: Typically, ULAs run for 3-5 years, during which unlimited deployment rights are granted.
• Territory and Entity Coverage: The agreement specifies the geographic territory and legal entities that can benefit from the deployment rights. This ensures that all covered business units are aligned under the licensing terms.

Certification Process

At the end of a ULA term, organizations must undergo a certification process to document their deployments and convert them to perpetual licenses.

• Deployment Documentation: Organizations must document all installations and instances of Oracle software to demonstrate compliance.
• Convert to Perpetual Licenses: Once deployments are documented, they are converted into perpetual licenses, allowing continued use beyond the ULA term.
• Certification or Renewal: At the end of the ULA, organizations must choose between certifying their deployments to move forward with perpetual licenses or renewing the ULA for additional flexibility.

Oracle BYOL Model

License Mobility

The Bring Your Own License (BYOL) model allows organizations to utilize their existing Oracle licenses in cloud environments, offering greater flexibility and value for current Oracle investments.

• Transfer On-Premises Licenses: Organizations can transfer licenses purchased for on-premises use to cloud platforms, avoiding acquiring additional licenses.
• Support Contracts: Existing support contracts can be applied to cloud deployments, ensuring that organizations continue to benefit from Oracle’s support services in a cloud environment.
• Compliance Maintenance: When moving to the cloud, it is critical to maintain license compliance, as BYOL allows for cross-environment usage.

Cost Optimization

Using the BYOL model, organizations can significantly lower the cost of migrating to the cloud by effectively using their existing licenses.

• Avoid New Purchases: Reusing existing licenses minimizes the need to buy new cloud licenses, reducing upfront costs.
• Right-Sizing Instances: Organizations can right-size cloud instances to ensure optimal licensing utilization, which helps manage costs better.
• Favorable Terms with Oracle Cloud: Deploying licenses on Oracle Cloud Infrastructure (OCI) often provides better pricing and support terms compared to third-party cloud vendors, adding value to the BYOL approach.

Oracle Enterprise Agreements: A Diverse Group of Licensing Models

Agreement Types

Oracle Enterprise Agreements encompass various licensing structures to accommodate business requirements and deployment needs. This group of agreements offers a spectrum of flexibility and scalability options.

1. Oracle ULAs (Unlimited License Agreements)
   • ULAs allow organizations to deploy unlimited quantities of specific Oracle products for a fixed term, typically three to five years. These agreements provide broad scalability for dynamic environments.
2. Oracle PULA (Perpetual Unlimited License Agreement)
   • The PULA is a ULA that never ends, granting perpetual, unlimited deployment rights for the specified Oracle products. It is suitable for organizations requiring ongoing scalability without a defined endpoint.
3. Oracle ELA (Enterprise License Agreement)
   • The ELA can be considered a capped ULA, providing unlimited deployment rights up to a specific cap. Organizations can deploy Oracle products freely, but there is a maximum limit (e.g., a specific number of processors) to the deployments allowed.
4. Oracle Hybrid ULA
   • A Hybrid ULA offers unique flexibility at the end of the term. Organizations can certify zero licenses, meaning that after the ULA term ends, no perpetual licenses need to be certified, and the support fees return to standard levels, giving greater financial flexibility.
5. Oracle Pool of Funds License Agreement
   • The Pool of Funds License Agreement is a prepaid agreement in which an organization commits to a set amount for Oracle products, which can be deployed over three years. This allows for more fixed product deployment while offering flexibility regarding which Oracle products are deployed during the term.

Management Requirements

Effective management of Oracle Enterprise Agreements requires diligent monitoring, optimization, and a clear understanding of the diverse models available to ensure compliance and cost efficiency.

1. Compliance Monitoring
   • Regular internal reviews are necessary to confirm that usage stays within the agreed terms and to prevent non-compliance. This is especially critical for agreements like ULAs and ELAs, where tracking actual deployments against allowed quantities is essential.
2. Usage Optimization
   • Organizations should actively seek opportunities to optimize their Oracle deployments. This may involve tracking underutilized licenses, reassigning resources, or consolidating workloads to ensure the most efficient use of the available licenses.
3. Detailed Reporting
   • Maintaining detailed records of license usage helps ensure compliance and provides data-driven insights for future contract negotiations. Accurate reporting is critical to making informed decisions about renewal, certification, or transitioning to a different licensing model.

Licensing Model Comparison

Cost Factors

Oracle’s various licensing models have different cost implications based on initial and ongoing expenses.

1. Perpetual Licenses: Involve a one-time purchase cost for indefinite use, followed by annual support fees (typically 22% of the original license cost). This model provides stability but requires a larger upfront investment.
2. Subscription or Cloud Usage Fees: Agreements like ULAs or cloud subscriptions involve recurring fees, which can be easier to budget but require careful usage monitoring to avoid overcommitting and overpaying.
3. BYOL (Bring Your Own License): Allows organizations to migrate existing on-premises licenses to the cloud. This model leverages existing investments, helping reduce costs when transitioning to Oracle Cloud or third-party cloud environments.

Flexibility Analysis

Each licensing model offers varying degrees of flexibility, making them suitable for different business scenarios.

1. Oracle ULA: Provides unlimited deployment within the agreed term, making it ideal for organizations with dynamic growth or large-scale needs where predictable costs and broad scalability are critical.
2. Oracle PULA: Offers perpetual, unlimited deployment, which provides a high level of scalability for organizations that want continuous expansion without term constraints.
3. Oracle Hybrid ULA: This option allows users to certify zero licenses at the end of the ULA term, reducing long-term financial obligations and providing a unique exit strategy if continued unlimited usage is not required.
4. Oracle Pool of Funds Agreement: The pre-paid approach allows organizations to deploy fixed Oracle products over three years, providing the flexibility to adapt to specific business needs without the constraints of traditional licensing models.
5. Enterprise Agreements (ELA): These provide a more customized solution for specific business requirements, offering pooled licenses and custom product bundles that closely align with organizational objectives. This model benefits businesses with well-defined usage needs but also want some flexibility.

Best Practices

License Management

Effective license management is crucial to maximizing value and maintaining compliance.

• Regular Internal Audits: Conduct regular audits to ensure that license usage aligns with agreements and identify areas for optimization.
• Automated Tracking Systems: Implement automated systems to track license usage, which will help reduce manual errors and streamline management.
• Compliance Monitoring Tools: Use compliance monitoring tools to ensure the organization adheres to all license terms and avoids unnecessary penalties.

Cost Optimization

To optimize licensing costs, organizations should implement strategic cost management practices.

• Regular License Usage Assessment: Continuously assess how licenses are used to identify underutilized assets and reallocate them as necessary.
• Resource Allocation Planning: Plan the allocation of licenses to ensure resources are used efficiently and align with business needs.
• Strategic Deployment: Make deployment decisions based on potential cost benefits, such as utilizing BYOL for cloud deployments or leveraging pooled licenses within an ELA.

Oracle Licensing Models FAQ

What is Named User Plus (NUP) licensing? Named User Plus licensing counts the number of authorized users accessing Oracle software, regardless of whether they are actively using it. This model is ideal for environments where the number of users is well-defined and controlled.

How do processor-based licenses work? Processor-based licensing is based on the number of processor cores used. Each core is multiplied by a core factor specified by Oracle, which varies depending on the processor type. The resulting count is rounded up to determine the license requirement.

What is the Oracle Unlimited License Agreement (ULA)? The Oracle ULA allows organizations to deploy unlimited quantities of specific Oracle products for a fixed term, usually 3-5 years. At the end of the term, deployed quantities are certified and converted into perpetual licenses.

How does Oracle’s BYOL model work? Bring Your Own License (BYOL) allows organizations to use their existing on-premises Oracle licenses in cloud environments. This can help reduce costs and leverage existing investments when migrating to Oracle Cloud or third-party cloud platforms.

What are Enterprise License Agreements (ELAs)? Enterprise License Agreements (ELAs) provide customized licensing solutions to meet business needs. These agreements may include pooled licenses, custom bundles, and usage-based deployment rights.

What are the benefits of Oracle’s ULA model? The ULA model allows unlimited deployment of specific Oracle products during the contract term, providing flexibility for expanding environments. It simplifies licensing and can lead to cost savings if the organization grows significantly during the agreement period.

How can BYOL help reduce cloud migration costs? BYOL allows you to reuse your existing Oracle licenses, avoiding the need to purchase new cloud licenses. This approach reduces upfront costs and helps organizations transition to the cloud cost-effectively.

What is the certification process at the end of a ULA? Organizations must certify all Oracle software installations and usage at the end of a ULA. Once certified, the deployed quantities are converted to perpetual licenses, allowing continued use without further ULA payments.

Can Oracle licenses be used in public cloud environments like AWS and Azure? The specific requirements depend on whether multi-threading is enabled, and organizations must ensure compliance with Oracle’s cloud licensing policies.

What are pooled license arrangements in an ELA? Pooled license arrangements allow organizations to share licenses across different departments or entities within the organization, providing greater flexibility in deployment and potentially reducing the overall number of licenses required.

How do volume-based discounts work in Oracle subscription licensing? Oracle offers volume-based discounts for subscription licensing, especially for longer-term commitments. This means the more services you subscribe to or the longer your contract term, the greater the discount offered.

What is the difference between NUP and Processor-Based licensing? NUP licensing is based on the number of users accessing Oracle software, while Processor-Based licensing is based on the hardware—specifically, the number of processor cores. NUP suits user-restricted environments, while Processor-Based licensing is ideal for broader deployments.

How does Oracle manage licensing in containerized environments? Oracle requires that all cores on container hosts be licensed. This means that whether Oracle runs in Docker containers or Kubernetes clusters, the entire host must be licensed if Oracle software is pulled onto it.

What are the key considerations for licensing in VMware environments? Oracle requires full capacity licensing for all connected hosts within a vCenter in VMware environments. Soft partitioning, like VMware, does not reduce the licenses needed, meaning all physical cores must be licensed regardless of allocated resources.

How can organizations manage Oracle licenses effectively? Effective management involves regular internal audits, automated tracking systems, and compliance monitoring tools to ensure that licenses are correctly allocated, minimizing costs and avoiding penalties.