Oracle Unlimited License Agreements – considerations for prospective buyers

By Paul Bullen, Senior License Consultant

In the vast and complicated world of Oracle licensing, you may have heard about Oracle Unlimited License Agreements (commonly known as ULAs). Not many people fully understand how these license agreements work and often we see businesses using ULAs who do not know how to get the most from them, or who have fundamental misunderstandings about their licensing.

This is the first in a series of blog posts based on Oracle ULA’s. Over the next few posts, we will describe what a ULA is and how to manage and declare one successfully. It should be noted that ULAs and Oracle licensing in general are very complicated and expert advice should be sought if you are considering, managing or declaring a ULA.  In addition to these blog posts, we have also just launched our Video Blog series on Oracle ULA’s.

So, what is a ULA?

A ULA allows you to use an unlimited amount of a defined set of products, for a specific period. At the end of the specified period, you declare your amount of usage which becomes your perpetual license – you end up with exactly the same type of license as you would if you had purchased ‘normal’ perpetual licenses.

So, you pay your license fee upfront (your support cost is always based on this license fee), you use as much of those products as you like, declare your usage and then own that number of licenses. This type of licensing is different from Enterprise License Agreements and typically Oracle ULAs only apply to Oracle technology products (not applications).

Let’s re-iterate some important points here:
1) You pay the license fee up-front, there is no ‘true up’, ever. Your annual support and maintenance fee is based on this license fee
2) You may use as much of the defined products as you like, without limit (you do occasionally see ‘capped’ ULAs but these are less common than truly unlimited ULAs)
3) You declare your usage and own that number of perpetual licenses
4) Your annual support and maintenance fees are based on the original license fee
5) There is no true-up (have I said that enough?)

Sounds good, doesn’t it? However, there are a few things to consider if you are thinking about choosing an Oracle ULA. Let’s take a look at a couple of the above key points in more detail:

The license fee: if you ask Oracle to provide you a quote for a ULA, expect them to take into account everything they know about your roadmap and planned usage of Oracle. Additionally, remember that you are going to be paying for the luxury of deploying as much software as you like, and this will attract a premium.

Inevitably, ULAs are almost always multi-million pound/dollar affairs – don’t expect to get one for £50k. You need to consider how much you are expecting to spend over the term: this can be a significant challenge considering the term is typically three years. Building a business case to justify spending £5m now rather than a total of £8m piecemeal over three years takes some foresight. You may know you have significant project plans in the pipeline, or your estate may be woefully out of date and ready for a wholesale capacity boost or technology refresh. More on this in a later blog post

Support fee: this is an interesting and key part of ULAs. It’s important to realise that any existing support for the products included in the ULA will be added to your new ULA support fee. Support and maintenance is, as ever, linked to the initial ULA license fee and the first year is paid up front. The license fee is a one-off capital payment. Support and maintenance, like normal perpetual licenses, is opex paid annually and typically subject to retail price index (RPI). So if your current Oracle Database Enterprise Edition support and maintenance cost is £200k per year, and your ULA (just for DB EE) costs £4m (support at 22%, giving £880k per year), your total new annual support will be £1.08m. This leads us nicely into…

What happens to my old licenses? Any licenses for products on the ULA will be ‘converted and replaced’- i.e. you have no rights to use these after your ULA starts. Not a problem: you have a ULA!

Use as much as you like: Really? —you can use as much of the products on the list as you like. Most ULAs are for a number of products: getting this requirement sorted at the time of negotiation is very important. Plus, you need to be aware that new products may be introduced during the course of the ULA which you would not be entitled to use under this agreement.

You need to think about your Oracle strategy: will your upgrade to and management of 11gR2 benefit in the long term with some of those shiny extra cost options or management packs? Does your Oracle strategy involve newer Oracle products?

The really tricky part is making sure that everyone who downloads, installs and uses Oracle software across the business only uses software that is part of the defined list of products. Whilst using the software, it is vital you track its deployment. We’ll come back to this in another post—it is a critical part of owning a ULA.

In the next post, we look at an example ULA, explain it further and we’ll review other considerations. In the meantime, please feel free to ask any questions below!

For more information, go to our website or listen to our short video blog.

Software License Reviews – Are you ready?

by Kenny Wilson, Group Commercial Director

With Oracle’s Q3 FY13 nearly done and dusted, and its full year point only a few months away, it’s not uncommon to see Oracle reaching out to its client base with requests for license reviews. This can often provide a useful insight into this industry giant’s performance going into Q4 – however more compelling, usually prompts considerable consternation and discomfort in the marketplace, even more so with those particular organisations under the spotlight.

Even if you believe you have a fully managed and controlled license estate, this type of vendor communication can set the heart racing of even the most experienced IT professionals. On the flip side, if you have always struggled as an organisation to maintain your software asset management process, then a request for a license review can cause untold stress, disruption and expense.

So, ask yourself – is your organisation ready for an Oracle license review? Would you know where to start? Where would you go to find the information the vendor is looking for and do you fully understand the implications of being over or, more worrying, under licensed.

In our day-to-day working with large enterprise organisations with expansive Oracle estates, we have witnessed the chaos a request for a vendor audit can cause. Our deep understanding of Oracle and its licensing complexities, including Unlimited License Agreements, has enabled us to assist with the entire process and ensure the best possible outcome for all parties. Our publication, ‘9 Critical Steps in Planning an Oracle Software License Review’ which is based upon many years of working with clients with complex licensing arrangements, will offer you an insight into how to prepare for a license audit and the first steps to take should you receive a request from the vendor.

As experts in Oracle licensing, optimisation and Oracle Software Asset Management, our Rocela Control™ service can also help you manage your Oracle estate on-going, thus minimising the stress and inconvenience of a future vendor audit and ensuring value for money in your software investment.

So, if you are under threat of an Oracle license audit and require independent Oracle advice, read our publication and contact us for assistance.

Declaring an Oracle Unlimited License Agreement – Part II

Paul Bullen, Senior License Consultant, Rocela

My previous blog entry discussed the importance of making sure your staff understands what an Oracle ULA means to them and how they use Oracle software. I also mentioned that on-going management of your software deployment during a ULA is even more important than ‘normal’ licensing.

One of the reasons I mentioned tracking your software deployment during the entire term of the ULA was to ensure that you are getting the value you expected out of your investment. The other reason is so that you can accurately declare your usage of the ULA products when the Unlimited Deployment Period has finished.

To recap, with a ULA, you buy the right to use as much of the defined product as you wish during a set period (typically 3 years, but can be between 2 and 5 years), at the end of this period, you declare your usage of the product and this should become your perpetual license: your usage effectively ‘crystallises’ at this declared number and you then own that many licenses to do with as you would any other normal Oracle perpetual license.

If you do not track your usage throughout the term of the ULA, you may find yourself frantically undertaking an Oracle audit of your own usage on the run up to the declaration date: doing so may mean you ‘miss’ installations (and hence they are not licensed) or you count incorrectly. Measuring for an Oracle ULA is not quite the same as for ‘normal’ Oracle licensing—there are some small but important differences between the definitions.

Once you have measured your deployment (and let’s be honest, tracking and counting Oracle software accurately can be very difficult), you need to fill in a declaration form: this is what Oracle will use as the basis for your perpetual license. However, it is worth bearing in mind that there is a potential for audit at this point—understandably, Oracle need to be reassured you are actually using the software you are declaring to them and not just making up a number: they may ask to review your inventory and you should be prepared to share this with them. This is another reason to make sure you invest in this process and that you thoroughly understand your estate and the terms of the ULA.

As this is the last in the series of blog posts for ULAs, I’ll try and summarise:

• ULAs are a very powerful and beneficial (usually) way of licensing Oracle. They are significant purchases that require assessment and planning.
• You may use as much of the software as you like during the period of the ULA
• There is no true up, the opex and capex are set from the start
• Education and ‘awareness raising’ about the ULA is key to it being used correctly
• On-going usage tracking and management are even more important with a ULA
• ULAs are a significant investment and should be negotiated, managed and declared with expert advice

If you are considering a ULA and need to understand the basics, have a ULA and require assistance managing, or are approaching your ULA expiry and need help deciding on declaration or new purchase, then contact us for assistance. As you have been reading, we know a great deal about ULA’s and can steer you in the right direction.

Declaring an Oracle Unlimited License Agreement – Part I

Paul Bullen, Senior License Consultant Rocela

Last time we took a very high-level view of what you need to consider if you are weighing up purchasing an Oracle Unlimited License Agreement (ULA). Let’s now assume that your projections and the cost of a ULA make it worthwhile and you’ve gone ahead and entered into a ULA: well done! So what now?

Firstly, you must communicate the ULA purchase internally and what it allows the appropriate software users (anyone who can influence the amount of Oracle software your business will deploy) to do. It is important that full details of what the terms of the ULA and the products involved are passed on. Forwarding a copy of the Ordering Document to the DBAs is definitely not the best way to do this: DBAs generally won’t have the inclination to read the details of commercial documents! Instead, you must distil the content and tell people what products are available for unlimited deployment, and for how long they remain unlimited.

This seems obvious, but from our extensive experience working with customers who own ULAs, it is clear that often over 30 pages of ordering document can sometimes dangerously be interpreted as:

“Use as much Oracle software as you want!”

There’s a real danger that the actual allowance and detail of the ULA gets lost between those who negotiated it and those who ultimately use the software (this is a problem outside of ULAs as well, but the potential risk when the belief that all Oracle software is available for unlimited use is bigger).

So, assuming your staff know what products they can use and for how long, do you wait until a month before the ULA declaration date and then start preparing to declare? If anything, owning a ULA means you have to pay more attention to SAM and the amount of software you deploy and use: you need to know that you are following or exceeding your forecast – there is little point in having a ULA and not gaining the return you expected. In fact, there is a danger that you deploy far less of the software than forecast (e.g. change of product choice, cancellation of a project) and suddenly the whole business case for the ULA is no longer valid.

Your ULA is a massive investment for your company: it is worth putting effort and time into ensuring it is being used properly as well as having your methods and usage reviewed by an independent expert such as Rocela.

There have been a number of occasions where we have seen clients with a ULA who do not fully understand how to use them. I’ll keep repeating the same message:

A ULA allows you to deploy an unlimited amount of a set of products for a one-off upfront capital cost upon which the support is based. There is no true up; there is no change to the support fee (excluding RPI).

So, to summarise:

• Ensure your software users understand what the ULA allows them to use, and how

Track your Oracle software deployment: not just the ULA products but related products

• Ensure you compare your usage against your ULA business case

• ULAs are huge investments and should be properly managed and reviewed during their course

• Use your ULA: understand and take advantage of its features

Next time we’ll take a look at declaring your ULA in more detail. In the meantime, please ask any questions or leave any comments below.

Oracle Unlimited License Agreements – considerations for prospective buyers Part II

Paul Bullen, Senior License Consultant Rocela

Last time we looked at the basic principles of an Oracle ULA: for an up-front license fee, you can use as much product as you like, declare your usage at the end of the agreement and then own that amount of perpetual license. This time we’ll look at bit more at specifics for considering a ULA.

How much will it cost/is it worth it? Unsurprisingly, this is a very weighty question! This next bit will sound obvious: the key consideration is how much of the unlimited product you are expecting to use, and how much that would cost if you bought ‘normal’ perpetual licenses. Doing this requires some insightful modelling—we’ll look at a relatively simple example here.

Let’s assume we are embarking on a major business-changing programme. We have a basic but large requirement for Oracle Enterprise Edition Database and the Partitioning option. For the sake of clarity, it’s easier here for us to work with a small number of products at high volumes rather than a large number of products at lower volumes, though this may be slightly less realistic.

In order to be able to consider a ULA, I need to know what the likely total cost would be for these products and the volumes. After some calculations for ‘normal’ perpetual licenses, and applying a suitably appropriate discount, I have a potential bill of £1.3m license (capex) to cover this project’s requirements. Of course, if I could get a ULA for £1m, this would be a ‘no-brainer’, otherwise I need to start ‘hedging’ my bets – £2m could still be attractive if there are other quantifiable and realistic requirements in other areas of the business. Remember, the £2m capex would attract an annual support cost, let’s say 22%, of £440k per year – but for this £440k, we could actually use well over £2m worth of licenses. So, how do I build the business case to spend the £2m upfront?

There are a large number of variables to consider here:
• Likely cost of ‘normal’ incremental purchase
• ‘Known’ versus ‘unknown’ license requirements
• How much potential is there is fully utilise the ‘Unlimited’ component of the ULA?
• What degrees of certainty are there that certain projects will go ahead and make use of the products to the level forecast?
• Is there any chance of under-utilising the ULA?
• Discount levels for incremental purchases
• How much is the ULA likely to cost? (A fairly critical question!)
• What products need to be included in the ULA? How might your Oracle strategy change over the term?
• As with all Oracle licensing, working out the licensing requirement and purchase is dependent on both technical expertise (ensuring the correct license requirement is calculated) as well as commercial and financial expertise
• An absolutely critical point about a ULA is that your support cost is based on the license fee paid up front – NOT the amount you actually use

In order to answer all these questions accurately, we’d need input from a number of people within the business, from technical to strategy to architects to commercial stakeholders.

Do not let the number of variables put you off here: think about the potential value of a ULA and the flexibility and savings it could provide your business. Oracle ULAs are an excellent way to gain control of your Oracle licensing quickly and to provide your business with a clear strategy without worrying about additional licensing costs. Remember: you pay a ‘flat fee’ to use as much of the Oracle ULA products on the agreement as you like without any impact—no change to support costs, no additional capex.

Buying a ULA is not a trivial task – it is a significant purchase which needs proficiency in understanding Oracle licensing. It is well worth having the independent expertise of Rocela’s consultants to provide insight, lead you through the process, ask all the right questions and evaluate the ULA properly. Rocela’s consultants work with complex Oracle licensing situations every day and have helped many clients understand and manage the complexities of ULAs thoroughly.

Next time we’ll look at what happens once you have a ULA, and the associated management of licenses provided by a ULA. Please feel free to leave any comments below.

Oracle experts Rocela events for 2012

Rocela’s Oracle experts have been involved in a considerable number of client side activities this year – from assisting large enterprise organisations declare their Oracle ULA to helping a global utilities company upgrade to Oracle R12.

Our website, twitter and blog all try to educate, deliver value and convey our deep knowledge of ‘all things Oracle’ however there is nothing better than looking us in the eye and asking us the difficult questions.

That is why we are planning a Roadshow of events for 2012 – taking us all around the UK (Edinburgh, Aberdeen, London, Manchester) to talk to large enterprise organisations on;

• Oracle Thought Leadership – a peer to peer ‘behind closed doors’ session discussing Oracle trends, product roadmap, Cloud, ULA’s, Virtualisation, Strategic Vendor Management to name a few.
Rocela Control ™ Session – a presentation on the complexities of Oracle license management and how our proven SAM methodology, Rocela Control ™ can help. This will also include a client case study, where one of our customers will present on their situation, what problems and impacts this was causing and how engaging with Rocela benefited.
• R12 Sessions – presentations and peer to peer discussions on how we can help assess whether Oracle R12 is best for your organisation and how its new features/functions will benefit.

We have run a number of these sessions before which have prompted the following comments;

“Great to hear from other contacts in the industry and how they have tackled the same sort of issues we are facing.” IT Director, Retail Company

“(This session) has helped us consider whether Oracle R12 is the right move for us.” IT Manager, Public Sector Organisation

“Rocela has given me an invaluable insight into the benefits and pitfalls of Oracle’s ULA’s – many of which I was not aware of before!” License Manager, Financial Institute

If you are struggling with the complexity of Oracle licensing, need to reduce risk and cost or need advice on Oracle R12, then please email Linda Anderson on linda.anderson@rocela.com with your contact details and highlight which event you would be interested in attending.

Have a Merry Christmas and a Prosperous 2012.

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