Oracle License Management – An Introduction to SAM and ITAM

25 Nov 2019

Home / Expert Advice / Oracle License Management – An Introduction to SAM and ITAM

John Mattinson, Operations Director, Certero
Originally posted in November 2016, revised in November 2019.


An introduction to Oracle License Management and Optimization


If you use Oracle Databases, Middleware and applications like E-Business Suite then the chances are that you use a lot of it and you spend a lot of money on it.

Like any large technology spend, Oracle licensing needs close management if it is to be optimized and not create unacceptable levels of risk, particularly in terms of managing the complex nature of Oracle license compliance.

This article provides a quick five-minute introduction to Oracle licensing and highlights the key areas you need to focus on in your Oracle license compliance and optimization program. If you’re already familiar with the basics, you might want to hear from our Oracle licensing experts on their top tips for Oracle licensing in 2020 in our 25-minute on-demand webinar.


Oracle licensing: big, complex and ugly

Oracle has hundreds of different products on many different platforms, but you can broadly split them into two categories – applications and technology – which are priced and licensed quite differently, as we’ll explore below.

Oracle licensing: the easy part

Across its products, Oracle typically offers both term (or subscription) and perpetual licensing options.

A perpetual license is a one-time license fee that allows continued use of the software program for as long as you comply with all terms of the license agreement. A term license is for a specific, limited period of time, during which you are allowed to access and use the software. In addition, some products may carry a Restricted Use clause where they can only be used under a set of documented conditions, such as with a specified program.

Oracle licensing: where it gets difficult

As mentioned above, Oracle licensing metrics can be complex and vary greatly depending on the product and the use case. It is these licensing metrics that effectively determine how you can and cannot use the products you’ve purchased.

Unfortunately, with Oracle licensing metrics it’s easy to get caught out and unwittingly increase your financial exposure – so getting it right is essential.

Here’s a crash course in Oracle licensing metrics:

Technology product licensing

Oracle’s technology products are primarily licensed using two metrics: Named User Plus and Processor.

  • The Named User Plus metric is used in environments where users and/or devices can be easily identified and counted. All human users and non-human operated devices that are accessing the software must be licensed.
  • The Processor metric is used in environments where the software users cannot be easily identified and counted, like Internet-based applications. It is also used when it is more cost effective than Named User Plus licenses.

To make life a little bit more complicated, Oracle also requires you to factor-in the processing power of the machines being used to run their software. We could write a whole blog on the Oracle Processor Core Factor Table, but the good news is that an advanced SAM tool (or experienced license consultant) will help you manage these in the real world.

Application licensing

Within its applications, Oracle typically uses three models and any one product may be licensed under one, two or all three of these models, depending on the situation.

  • Component pricing – user-based and usage-based metrics
  • Custom Applications Suite (CAS) pricing – custom suite user metric
  • Enterprise pricing – enterprise metrics

This does allow for a high level of flexibility and effectively makes it possible for Oracle customers to ‘mix and match’ different licensing metrics to suit different processes, parts of the business or use cases.

However, that flexibility comes with the cost of complexity, as the more models you use concurrently, the more closely you need to manage them if you want to avoid unexpected costs.


The hierarchy of Oracle Software Licensing Agreements

Oracle uses a combination of written agreements to license its software. The overarching license rights are described in the Oracle Master Agreement (OMA) – this was previously called the Oracle Licensing and Services Agreement (OLSA) or Online Transactional Oracle Master Agreement (TOMA) – and the rights regarding specific products and services are described in the Ordering Document.

Specifically, the OMA is the agreement that details the standard rights granted, ownership, restrictions, warranties, disclaimers, confidentialities, etc., as it relates to all Oracle products and services.

The Ordering Document describes the specific products, types of licenses, number of users, level of support, and discounts (if any), a customer has ordered and will receive.

Oracle Master Agreements and Ordering Documents grant you specific rights to use Oracle software and receive any services you have ordered, and your rights are limited to those rights that are expressly granted. All other rights in the programs are reserved by Oracle.

As your right to use Oracle technology can be very specific to the terms in your OMA and Ordering Documents, it’s essential that any Oracle license management program is built on the exact rights you are afforded, not a generic take on ‘typical’ Oracle licensing. Beware of any SAM tools claiming to support Oracle licensing if all they offer are standardized licensing rules.


Oracle software license reviews and audits

Like all software vendors, Oracle needs to protect its IP, and so within your OMA you will find a specific clause relating to its right to audit. Typically, 45 days’ notice is the standard time you will be forewarned that Oracle intends to audit you, hence the importance of robust and well-maintained Oracle License Management.

The T/OMA audit clause specifies that “reasonable” assistance is required from the customer and that such assistance includes the running of Oracle data measurement tools and then providing the resulting output to Oracle for analysis. If they discover you are non-compliant, you will be asked to purchase extra licenses to remedy this. Typically, you will be charged for these without the discount you were given for your original purchases.

As well as an official Oracle audit, Oracle can also request a license ‘review’. This is not the same as an audit and contractually, you are not obliged to cooperate. However, it would be wise to engage with Oracle to maintain a good working relationship.

Up until mid-2019, Oracle had two internal divisions that dealt with audits and reviews: SIA and LMS; both of which fall under the banner of Global License Management Services (GLAS):

  • Oracle Software Investment Advisory (SIA) provides a customer with “access to the advice, data, and deployment visibility needed to optimize the Oracle assets” and covers such areas as licensing solutions, optimization and entitlement intelligence. SIA’s focus is not on initiating or running Oracle audits however their findings may not rule out an audit approach in future.
  • LMS, or License Management Services, offers a more proactive approach “… that promotes the management, governance and awareness of the proper use and distribution of Oracle systems…”

Oracle LMS is the official auditor and reviewer of Oracle licenses. It’s worth noting that an audit is not the time to try to optimize licensing or negotiate a great new deal with Oracle. LMS has limited powers to offer discounts or to help change licensing agreements. Their job is simply to conduct the audit and identify any shortfalls.


Oracle license management: Not for the faint-hearted

This article only scratches the surface of why managing and optimizing Oracle software licensing is so complicated and how so many organizations get it wrong and end up with millions in unbudgeted Oracle spend.

That’s why those organizations that do manage to control and optimize their Oracle spend typically either invest in having Oracle licensing expertise in-house or contract a partner to help them (any SAM tool that claims to optimize Oracle licensing without the need for expert licensing knowledge is over-selling itself).

If your organization’s investment in Oracle technologies far outweighs your ability to manage and optimize the spend, then you need to consider how best to create a firm understanding of your Oracle licensing position and then how to optimize it.

And ideally you don’t want to do it in isolation. Oracle is just one of the many software publishers you have agreements with. Optimizing Oracle without also considering Microsoft, IBM, SAP, Adobe, Salesforce and others is like checking the fuel level on your car without making sure the tires are pumped up, the battery’s charged, there’s enough coolant in the system and the brakes are working. Your SAM program should be about the key vendors on your estate, not just individual publishers.

If you’d like some help telling your OMA from your ULA, our Oracle licensing experts – and our Oracle specific license management solution – can help. Discover more about our Oracle Effective License Position and Optimization service.

For a more comprehensive guide, download our Oracle License Optimization white paper.

[On-Demand Webinar] Oracle Licensing:

Four gotchas you need to avoid in 2020

On Demand Webinar

Oracle licensing is notoriously complex and catches many customers out every year, potentially adding millions to their already substantial expenditure.

Join Certero’s Oracle licensing experts for 30 minutes of advice, covering important areas such as understanding contractual confusions, moving licenses around the organization, moving to Oracle cloud and licensing rules around Java.

Our experts will show you to how get visibility of all Oracle consumption, to manage false positives and offer advice for what to do in an audit.

Looking for help with your Oracle license management challenges?