Oracle’s Unlimited License Agreement has risks

Oracle recently announced that its new software license revenue has jumped by 25 percent since last year. It also annoucned an attractive looking Unlimited License Agreement for enterprises. As ever, it is buyer-beware.


It is widely known that Oracle is one of the most popular database solutions for business critical applications among Fortune 1000 companies, and this popularity is growing.

Recently, the company announced that its new software license revenue has jumped by 25 percent since last year. However, the complexity and challenge of Oracle license management for enterprises is well documented too.  

In addition to Oracle’s primary software licensing models – named user plus and processor-based, Oracle offers the Unlimited License Agreement (ULA) for its larger customers. It is aimed to be a convenient “all you can eat” option where enterprises pay a single up-front fee to gain an unlimited license for a pre-identified list of Oracle products for a limited term, which is typically three years.

At the end of this period, there is no true-up, but enterprises must document the deployment of all products obtained under the agreement, as these quantities determine the number of licenses they get at the end of the Unlimited License Agreement term.

On expiry of the Unlimited License Agreement, enterprises must provide a signed document to Oracle that describes how many products have been installed along with pertinent data used to license the Oracle software titles such as number of processors and usage type.  

Oracle Unlimited License Agreement risks

Whilst the Unlimited License Agreement model sounds simple, it carries with it inherent risks from a software licensing perspective.

An Unlimited License Agreement is most attractive when enterprises expect to see significant growth in their usage of Oracle products over the term of the contract. They typically get an attractive discount for this projected usage under an Unlimited License Agreement.

The first risk is that enterprises may not, in fact, realise the expected growth in usage and could therefore over pay for the licenses they actually use during the term.

The second area of risk occurs after the agreement expires, when usage may decline from previous levels – enterprises are still required to pay the same amount of maintenance that was in effect during the Unlimited License Agreement.  

Best practice requires that enterprises have the processes and tools in place to accurately assess their Oracle deployment and usage. This will enable them to provide the necessary data to receive the correct number of Oracle licenses at the end of the Unlimited License Agreement.  

Complexities of Oracle license optimisation

Oracle license optimisation is very complex for the following reasons:

There is no repository listing all Oracle product installations. It’s up to enterprises to have processes and tools in place to track their Oracle deployments and usage.
Some of the Oracle installations may have been done by developers, database administrators or others and may be found outside the datacenter. Hence, it’s necessary to perform discovery and inventory of Oracle instances across the network.

Processor-based licenses require inventory of the underlying hardware platform characteristics. This can be complicated by the use of server virtualisation technologies where the hypervisor may hide the hardware details. Oracle Database products also require a detailed inventory of options in use.

Because licensing models have evolved overtime, different licenses are based on different metrics for same products. Assigning the right license types to installations based on usage is important as this minimises the number of licenses consumed. This again is a difficult exercise.

Terminating licenses can carry a high price. One of the benefits of Unlimited License Agreements is that it helps to consolidate all maintenance associated with all products for purchases made prior to or during the agreement tenure into one single yearly fee. But whilst it offers the convenience of simplifying the number of maintenance transactions, it can lead to significantly high penalties should an enterprise terminate a sub-set of its licenses or modify its support level. This is because Oracle re-pricing applies, which means that all previous discounts can be lost.

To ensure Oracle license optimisation, automation of the software asset management processes is the only fail-proof way. A license optimisation solution addresses the above complexities to allow organisations to avoid over-spend and maintain continuous compliance.

Patrick Gunn, is EMEA Sales Director, Flexera Software, a provider of  Application Usage Management; solutions 

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