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.


Oracle ULAs

When discussing an Oracle Unlimited License Agreement (ULA) with customers, there’s one issue that’s never a surprise – confusion around the pros and cons of this Oracle licensing model. Many customers don’t understand the potential benefits and return on investment that such an agreement can hold.

The initial lure of the ULA concept is having the perceived freedom to deploy Oracle products at will over the term period. And even more so the set amount to be paid upfront which includes a fixed agreement on support and maintenance over the term period of the ULA and beyond. All things considered, it certainly sounds like an easy fix to a complicated problem, but it’s not always a win-win situation for every organisation.

The initial evaluation stage of an ULA agreement is key to making the right decision, so ask yourself – Do you know the growth ambitions of your organisation?  Are you going to grow organically or acquisitively?

An Oracle ULA is ideal if you plan to increase your usage.  It is not if you don’t grow as fast as planned.  Additionally, mergers and acquisitions, divestment and changing the structure of your organisation can bring about more complications when you’re tied to a ULA.

Knowledge is key in the negotiation game with Oracle.

In terms of ULAs, knowledge is your bargaining tool.  Providing you have a very clear view of your expected growth pattern over the next few years, you should be able to negotiate effectively with Oracle.  It is not uncommon for large enterprise organisations to get independent advice and guidance on negotiation strategies that can enhance contract terms, commercial arrangements and products within the agreement, to name a few. Your entry point into the ULA is of critical importance to realising your business case ROI at the end of the term – effective negotiation is essential to achieving that.

You’ve signed on the bottom line and are now enjoying the benefits of your ULA.

Avoid the temptation to deploy your Oracle products at will by creating an effective Software Asset Management methodology to measure your deployment and usage.  This must be clearly communicated throughout the entire organisation to prevent widespread misuse of Oracle.  If you let the kids into the sweetie shop for 3 years, it’s not easy to back track.

Understanding your license position at any given point in time during the ULA term will also provide greater insight into whether you are making the best possible use of the agreement.  Under deploying will not deliver value for money whereas deployment much larger than expected can be viewed as an unfavourable outcome by Oracle.

End of term

The step where many organisations falter is at the end of the term when your organisation is required to declare to Oracle on the amount of products deployed.  Suffice to say, if you have been managing your estate over the term of the contract effectively and are in a position of knowledge, then you will be able to make the right choices at this very important stage.  If you are unprepared and unsure of your deployment therefore cannot verify whether your ULA has met your ROI and profitability target, how will you be able to make an informed decision that’s best for your business?

Ensuring the successful achievement of your initial ULA business case objectives means that you need to know your organisations’ future business growth strategy. It also means that your organisation will have to adopt an appropriate methodology to audit and track all Oracle deployments and monitor usage over the term of the agreement. All these elements combined will lead to a positive outcome and the realisation of your ROI.

When it comes to Oracle ULAs, knowledge is power and something that Rocela brings to every customer’s table.

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