January 18, 2021 - Blog

Understanding the Full Oracle ULA Lifecycle

Jason Pepper, SAM Practice Head, Version 1

Oracle Unlimited License Agreements

Oracle Unlimited License Agreements (ULA) are still a common licensing mechanism used by Oracle Sales and represent a significant revenue generation stream for the vendor.  When effectively deployed, they can also represent significant commercial value for a ‘savvy’ customer.

However, Oracle ULAs are a very complicated licensing agreement and to fully benefit, you need to understand what you are signing up for and what investment you will have to make, both commercially and operationally.  Even though ULAs have been around for almost a decade, confusion remains about how these agreements work and how to get the most from them.

This post will help highlight what a ULA is, what you need to consider when buying one, how to manage it during its term and how to declare successfully.

What is an Oracle Unlimited License Agreement?

An Oracle ULA gives you the right to deploy an unlimited amount of a fixed set of products, for a fixed amount of time (typically 3 years but can be between 2 and 5 years – and usually called the Unlimited Deployment Period or UDP) for a fixed amount of money and fixed ongoing support. That last phrase is especially important!

At the end of the unlimited deployment period, you can either negotiate another ULA or declare your usage of the products.  This becomes your perpetual license: your usage effectively ‘crystallises’ as these declared numbers and you then retain the right to use that many licenses as you would any other normal Oracle perpetual license. You do not ‘renew’ a ULA as such – if you decide to take out another ULA at the end of your unlimited deployment period, this will be a totally separate contract with additional cost.

Back to that important phrase about support – You pay a one-off fixed license cost plus fixed ongoing support, under a set of master terms and conditions, and restrictions. So even after declaration your support costs are fixed at the amount set during ULA purchase – they are NOT affected by the size of declaration.  Typically, Oracle ULAs only apply to Oracle technology products and not applications.

Considerations for purchasing an Oracle ULA

ULAs are of benefit to enterprises who have planned periods of extensive growth (or have been subject to unarguable large compliance deficits), however, there are a few things to consider if you are thinking about entering into one.

  • The license fee: if you ask Oracle to provide you with a quote for a ULA, expect them to ask about and consider everything they know about your roadmap and planned usage of Oracle software. Oracle will make some internal projections against your plans and create a commercial framework for discussion.
  • Inevitably, ULAs are almost always multi-million pound/dollar deals. Consider carefully how much you are expecting to spend – include the initial outlay and the annual support – both during the unlimited deployment period and post declaration: this can be a significant challenge considering the unlimited deployment term is typically three years and your ‘lifetime’ of use is likely many more years after that.
  • Cloud considerations – include your cloud strategy and plans in negotiation and operational calculations. Oracle’s cloud policy states you can use a ULA to cover Oracle use in authorised clouds, but not declare it at the end of the UDP. This policy is non-contractual, but you should be aware of it, and understand how it affects your decisions and usage.
  • 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.
  • Include considerations of NOT achieving your strategic plans or timeline – what is the point of having an unlimited right for a product that ends before you have had a chance to fully optimise and implement that use?
  • The license fee is a one-off capital payment. Support and maintenance as ever is linked to the initial license fee, and as in normal license purchases, is OPEX paid annually and typically subject to retail price index. Where ULA support fees differ is that any existing support being paid for products to be included in the ULA will be rolled into that support stream – increasing it above the standard 22% ratio.
  • So, the revenue stream will always ratchet upwards. It will never ever go down. The only way the Oracle revenue stream in a ULA or indeed generally anywhere will go down is if you effectively get rid of all your Oracle software.
  • What happens to my old licenses? – As an example, if you take out a ULA that has database in it and you previously had some database licenses, they are terminated, in other words, cannot be used anymore. You would not use them anyway because you now have a ULA!
  • Fixed list of subsidiaries. A ULA will generally have a fixed set of subsidiaries that are included in the unlimited deployment.  You, therefore, need to be really careful if you acquire another company after you’ve taken out a ULA as that company generally does not have the right to use the product in the ULA in an unlimited fashion unless you have a conversation with Oracle – which will usually be a commercial one.
  • Restrictions – watch out for restrictions which might limit product use within a ULA to a specific territory. Some restrictions may say that you are allowed to use a product unlimited in the US but not in Europe. Restrictions also carry forward after the unlimited deployment period.  If you have a set of restrictions that says that you can only use the licenses in a specific territory, then once you have declared those licenses, they will still most likely be tied to that territory.
  • Similarly, watch out for application or usage restrictions – e.g. disaster recovery only, or for a specific named project.
  • You can use as much of the products on the list as you like. Most ULAs are for several 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 internally during the ULA term which you would not be entitled to use under this agreement. Unlimited does not mean unlimited product types. Make 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.

Managing your Oracle ULA

On-going management of your software deployment during a ULA is even more important than with ‘normal’ licensing, largely to ensure that you are getting the value you expect out of your investment and additionally so that you can accurately declare your usage of the ULA products when the unlimited deployment period has finished if that is what you choose to do.

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 in the run-up to the declaration date: doing so may mean you ‘miss’ installations (and hence they are not licensed) or you count incorrectly.

Having a ULA does NOT mean you can ignore licensing for the Unlimited Term – arguably it puts more focus on managing, optimising, and preparing for declaration during this period.

Declaring your Oracle ULA

This is not a trivial exercise and needs time and resource. Allow for at least 9 months to ensure that you prepare for your declaration if that is the option you have gone for.

Measuring for an Oracle ULA is not quite the same as for ‘normal’ Oracle licensing—there are some small but important differences you will need to be aware of and manage. If you also have some standard licenses not covered by a ULA, it is even more fun!

Once you have measured your deployment (and let’s be honest, tracking and counting Oracle software accurately can be difficult at the best of times), you need to fill in a declaration form: this is what Oracle will use as the basis for your perpetual license. This needs to be signed by a C-Level executive and so due diligence around this document and ensuring its accuracy is paramount.

It is worth bearing in mind that there is a potential for a vendor 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 to justify your declaration, and you should be prepared to share this with them to the extent that you are contractually obliged to do so. This is another reason to make sure you invest in the overall process and that you thoroughly understand your estate and the terms of the ULA.

So, to summarise:

  • ULAs can be a very powerful and beneficial 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 subject to terms and conditions.
  • Cloud usage should be considered carefully.
  • There is no true-up (in the Microsoft sense): the OPEX and CAPEX are set from the start.
  • Education and ‘awareness raising’ within your business about the ULA is key to it being used correctly.
  • On-going usage tracking and management are even more important with a ULA.
  • ULA product declaration is a non-trivial exercise, so plan and prepare in plenty of time.

Version 1’s Oracle License consultants are experts in all stages of the Oracle ULA lifecycle: whether 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 a declaration or negotiating a new purchase. Version 1’s expertise in this complex licensing area can help you achieve optimum commercial benefit from your Oracle ULA.

For more information to help you demystify Oracle Unlimited License Agreements visit our webpage below, view our webinar or contact us.

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