Software license auditsare a huge revenue source for Oracle. After they request your Oracle...
Making the wrong Oracle license management decision can have a multi-million dollar financial impact. Out of the licensing models that Oracle offers, the ULA can have the most impact on a customer’s long- term Oracle spend. Despite this financial influence, the ULA is often misunderstood. By becoming better informed about what an Oracle ULA is, you’ll be able to determine whether or not an ULA makes sense for your organization’s needs, and drive stronger value from your Oracle investment.
What is an Oracle ULA?
An Oracle ULA is an “unlimited license agreement”. This time-based agreement usually is set for three years. For a fixed license and support fee, an ULA gives you the right to use an unlimited number of licenses for a specific set of Oracle products. ULAs may also include a combination of unlimited and quantity-based licenses. When the ULA term expires, you have two options:
- Renew the ULA for another term, and make any necessary changes to the license configuration.
- Exit the ULA and certify license usage to determine how many licenses to keep moving forward.
Once license usage has been certified, you will get the rights to perpetual licenses for the usage that has been declared. If you’re found to be compliant, no additional license fees will be required.
However, although additional support fees are not required upon certification, Oracle’s standard 3% Inflationary Adjustment Rate (IAR) will apply. Since ULA support is based on the ULA license fees, your support stream will remain the same regardless of how many (or few) licenses are deployed. This means that it may be challenging to make changes to a support stream if usage of the ULA licenses decreases.
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Exit with Success! How to end your Oracle ULA without unnecessary costs.
Oracle ULA Benefits
So, why would you choose an ULA? The Oracle ULA is a smart option if you expect high growth over the course of the ULA term. There are four key reasons you might select an Oracle ULA:
- Predictability: Your license and support costs are fixed for the term of the ULA.
- Standardization: Architectural costs are reduced as the ULA often retires third party niche products.
- Design Flexibility: Your architecture is no longer constrained by software unit cost. This translates to a faster time to market, increasing innovation and agility while making it easier to allocate DR, secondary data centers, and multicore processors. LOBs can also choose the right business solutions to meet their needs without worrying about the license and support fees involved.
- Productivity: You won’t need to request additional budget during your ULA term. As a result, Oracle license management time is reduced and efficiencies are improved such as:
- Requesting funding for identified projects and/or unforeseen projects
- Monitoring the deployment
Oracle ULA Risks
An ULA can pose risks that may significantly outweigh its benefits, if the ULA is not managed correctly:
You may end up overpaying for actual usage if one of the following circumstances occurs:
- Estimated growth (e.g. of users, product usage) that was forecast when the ULA was signed does not materialize, resulting in surplus licenses.
- The predicted use of certain products does not turn out as expected, and such products ultimately end up unused.
If under-deployment is an issue, you can end up paying for additional ULA licenses. Even if the ULA is exited, under-deployment will remain an issue, unless new demand for the under-deployed or unused products arises. This means that your stable support stream can become a substantial financial burden.
2. Support Costs
At the start of your ULA, support for existing licenses previously purchased on a transactional basis will roll into a single support contract. This causes current Customer Support Identifiers (CSIs) to terminate, with the ULA licenses grouped into a single CSI. Although a single CSI can simplify ULA support management, you also lose the flexibility of being able to drop support for unwanted licenses.
Per Oracle’s support policy, a support repricing on the remaining licenses is triggered when support is reduced. This means that even if you have fewer Oracle licenses, you’ll still be paying the same amount for support.
Pro Tip: Avoid being stuck on one CSI by proactively negotiating for multiple CSIs on the ULA with Oracle. An understanding of how Oracle’s internal approval structure functions can help an organization achieve this result.
3. Oracle Compliance
Even with an ULA in place, Oracle license management is still needed for Oracle deployments. Many customers may have a false impression of deployment rights with an ULA. It’s important to clearly understand which licenses are on the ULA and their associated quantities to avoid deploying their licenses incorrectly, e.g. deploying licenses not on the ULA, or over-deploying quantity-based licenses.
Close coordination between the IT and Software Asset Management (SAM) teams will help you stay compliant, protect against a software compliance audit, and avoid additional license and support costs. Determine what exactly is in use and how much is being used by conducting an accurate environment assessment. Doing so can help identify potential issues before the end of your ULA term, and result in significant cost avoidance.
4. ULA Certification
The ULA certification itself may pose its own risks for customers:
- If you don’t track and actively manage a ULA deployment, you’ll end up having to conduct an inventory, which can be very time consuming and be expensive in terms of human capital.
- The certification is carried out by License Management Services (LMS), Oracle’s audit arm. This means that you can think of the certification process itself as a mini software compliance audit. During this process, you may be asked to run the same measurement scripts that LMS uses during its audit, and the outputs can be used to build a compliance case. If compliance issues are discovered, the ULA may be renewed as a solution, which may not have been the original goal. This means you run the risk of being locked into a less favorable contract.
- Depending on the certification terms, cloud deployment of the ULA licenses may not be eligible for certification. This means that you could be out of compliance once the ULA ends if it lacks the licenses necessary to cover its cloud deployment.
Exiting an ULA
If you’re planning to certify and exit an ULA, it’s crucial to prepare for the certification prior to the ULA end date.
Depending on the size of the ULA footprint, the process of assessing the deployment and addressing identified issues will need to start months beforehand to ensure that there is enough time for all compliance issues have been addressed.
Understanding the benefits and risks of an ULA is crucial to helping determine if an ULA makes sense for your organization’s needs, both in the short and long term for overall Oracle license optimization. If an ULA and its license deployment are properly managed, you can gain a lot of value. However, an Oracle ULA can also end up costing you more than if you had purchased on a transactional basis.
Because the long-term effects of an ULA are substantial, it’s best practice to enlist the support of an Oracle license management team familiar with Oracle’s ULA practices to conduct an assessment and cost-benefit analysis. Engaging such an Oracle licensing specialist can give you the information needed to ensure you get the most value from your Oracle investment.
Daniel joined the USU in 2017 as a Bid Manager and was involved in solution designs for customers. Since 2019 he is one of the USU account managers and supports our customers with his expertise.