Myth 1: Exiting a ULA Increases Maintenance Costs Due to a Higher Declaration of Licenses.

- Reality: Maintenance Costs are Predetermined and Do Not Fluctuate With the Number of Declared Licenses.

Myth 2: Certifying a Higher Quantity of Licenses Results in New License Costs.

- Reality: The Quantity Certified Does Not Affect the Cost of Licenses or Maintenance Fees.

Myth 3: All Deployments Automatically Qualify for the Perpetual License Baseline After a ULA Expires.

- Reality: Specific Terms and Conditions in the Certification Rules Determine What Qualifies as the Baseline License Quantity.

Myth 4: A ULA Guarantees Compliance Throughout Its Duration.

- Reality: ULAs Do Not Guarantee Compliance With Oracle's Licensing Requirements.

- Exclusions May Apply to Certain Options or Packs.

- Misunderstandings Regarding Middleware Can Occur.

Myth 5: Terminating a ULA Automatically Triggers an Oracle Audit.

-  Reality: Audits are Typically Triggered by Discrepancies, Not Simply by Exiting a ULA.

- Mismanagement of Audit Certification and ULA Exit Conversation Can Increase Audit Chances.

- Measures Can Be Taken to Mitigate Audit Risks.

Myth 6: Oracle Is Looking After Customers' Best Interests When Certifying, and Revealing All Information During Oracle ULA Certification Is Beneficial.

- Reality: Only Provide the Information Specifically Requested During Certification.

 - Over disclosure Can Lead to Compliance Issues.

- Do Not Trust Oracle - Understand the Risk of Accepting Oracle's Certification Services.

 - Handle Oracle’s Data Requests Strategically and Push Back on Detailed Data Requests.

Introduction:

Oracle's Unlimited License Agreements (ULAs) are complex contracts and can lead to confusion. It is likely that you were forced to sign one following an Oracle audit, or were proposed and sold into it by an Oracle Sales rep at your regular renewal as a great vehicle to license Oracle software. Many organizations succumb to prevalent myths and misunderstandings about ULAs, resulting in expensive errors/renewals. Oracle loves ULAs as they generate a consistent flow of additional revenue, and sales representatives blinded by their compensation structure may disseminate misleading information to persuade you to renew or enter into an agreement. This blog aims to dispel the most common myths and errors associated with Oracle ULA and the certification process that follows the exit, examine how these misconceptions can affect your financial outcomes, and offer clear advice to help manage your ULA and ULA certification effectively.

Myth 1: Exiting a ULA Increases Maintenance Costs Due to a Higher Declaration of Licenses.

One common misconception about Oracle's Unlimited License Agreement (ULA) is that declaring a higher license quantity will increase yearly maintenance costs. However, this is not the case. Unlike other vendors' unlimited agreements, Oracle operates differently.

Reality: Maintenance Costs are Predetermined and Do Not Fluctuate With the Number of Declared Licenses. 

The yearly maintenance cost is actually set when you sign the agreement. It’s usually a percentage (between 18% and 22%) of the total license cost you contractually agreed on when you started the ULA. This yearly cost stays the same for the whole term of the ULA and often for a certain period after the ULA ends. Depending on your usage, if you declare 2, 2000 or 2 million licenses, the cost does not change when you certify. It might not seem logical, but that is how it works. After all, when does common sense ever work with Oracle licensing, especially if you have been at the opposite end of their draconian interpretation of VMware partitioning counting rules?

Please see an example of fixed maintenance cost from a sample ULA so you can locate your fixed maintenance cost in your contract.

In the above image, the yearly maintenance cost is a percentage of the total license cost. This percentage is usually between 18% and 22%.

Here’s how the calculation works:

So, 22% of the total license cost of 4,714,482.50 is approximately 1,037,186.15.

In this example, the customer must pay $1,037,186 in maintenance, irrespective of the quantity declared, which is already pre-defined when signing your ULA.

Myth 2: Certifying a Higher Quantity of Licenses Results in New License Costs.

This myth suggests that certifying a higher quantity of licenses at the end of an Oracle Unlimited License Agreement (ULA) certification will result in a new, higher license price. Some vendors will ask for a license fee if you declare a higher quantity, but this is not how Oracle ULA certification works. Whether the quantity of usage certified is 5, 500, or 5 million, this will form the baseline, and you will not have to pay any additional license fee. Again, this is counterintuitive to common sense, but it happens to be true.

Reality: The Quantity Certified Does Not Affect the Cost of Licenses or Maintenance Fees.

In reality, the number of licenses you certify at the end of an Oracle ULA does not result in any additional license fees. The certification process is about declaring your usage, not about recalculating costs. I believe customers with an active ULA are sitting on a gold mine. Still, they must certify strategically or seek external help from companies like Licensing Data Solutions to maximize their ULA usage declaration, especially on VMware, leveraging their experience of working with many customers and knowing what passes Oracle’s certification process.

However, it’s important to note that Oracle’s standard annual support fees, which typically increase by 5-8% each year (depending on negotiation) due to the Inflationary Adjustment Rate (IAR), will still apply. These are separate from the ULA cost and are unaffected by the number of licenses you certify.

Myth 3: All Deployments Automatically Qualify for the Perpetual License Baseline After a ULA Expires.

It is a common misconception that customers often assume that all their software deployments will count towards the perpetual licenses baseline at certification.

Reality: Specific Terms and Conditions in the Certification Rules Determine What Qualifies as the Baseline License Quantity.

Strict clauses and fine print govern what deployments count towards your ULA certification baseline, especially in public cloud environments. Oracle customizes this language based on negotiation, so, unfortunately, no single, definitive source explicitly states what is excluded from the perpetual license baseline for Oracle ULAs. This is because the specific terms and conditions can vary depending on the individual ULA agreement and negotiations with Oracle.

Cloud Deployments and Perpetual License Eligibility:

• Oracle's ULA agreements might be silent on deployments in specific public clouds like Google Cloud Platform (GCP), IBM Cloud, Alibaba Cloud, and potentially others. This silence doesn't necessarily guarantee inclusion in every ULA.
• The ULA might explicitly mention that authorized cloud environments like Microsoft Azure and AWS should have continuous deployments for 365 days to qualify for the certification baseline.

Negotiate Early or at ULA Renewal to Avoid Surprises:

This can be a significant “gotcha” for organizations that plan to include non-Oracle cloud-based licenses in their ULA certification. To avoid this pitfall, it's essential to understand and negotiate these terms upfront at the very beginning of the ULA period. By clarifying these limitations early on, you can ensure a smoother certification process and avoid missing potential perpetual licenses.

Certification Process for Cloud

• Upon ULA termination, a pre-defined window (often 30 days) exists for organizations to certify their usage to Oracle
• This certification determines the number of perpetual licenses received.
• Oracle dictates strict rules regarding what deployments qualify for inclusion during certification.

 Recommendations:

• Carefully review the ULA fine print regarding deployment eligibility for perpetual license baselines.
• If public cloud deployments (like GCP) are crucial, negotiate their inclusion explicitly with Oracle during ULA discussions.
• Engage a third-party professional licensing firm, such as Licensing Data Solutions, to assist in counting your licenses deployed across various environments. They can also advise about all your ULA's pertinent terms and conditions and help you plan strategically to maximize your certification baseline.

Myth 4: A ULA Guarantees Compliance Throughout Its Duration.

A common misunderstanding among many organizations is that an Oracle ULA (Unlimited License Agreement) automatically protects them against any potential licensing compliance issues. This is not the case and can lead to expensive errors. This is the most frequent mistake we observe among clients.

Reality: ULAs Do Not Guarantee Compliance With Oracle's Licensing Requirements.

Although a ULA provides broad rights to utilize specific Oracle products, it does not offer an all-encompassing protection against non-compliance. Here are the reasons why solely having a ULA might not guarantee total compliance:

Exclusions May Apply to Certain Options or Packs

ULAs typically cover certain products only. Additional options or packs offering advanced features may require separate licenses not included in the ULA. Complicating this, Oracle, by default, installs all options and packs, which become licensable upon first use—a process Oracle meticulously tracks. Using these features without proper licenses can lead to non-compliance. For example, a customer might have Diagnostic and Tuning included in their ULA, but if they use Advanced Compression, which is not covered in the ULA, they would be non-compliant with Advanced Compression. Moreover, a single option pack could lead to a significant six-figure compliance problem if this compliance issue occurs on VMware.

Misunderstandings Regarding Middleware Can Occur

A common misunderstanding involves technical teams deploying licenses without realizing that a ULA may not cover certain middleware products or that they might install middleware not included in the ULA. Usually, technical admins, due to ignorance, might interpret the term "Oracle Unlimited" too literally. Deploying middleware without the necessary licenses can result in compliance issues. For instance, a customer may have WebLogic Standard in their ULA but could mistakenly deploy the Suite version.

Myth 5: Terminating a ULA Automatically Triggers an Oracle Audit.

A common belief is that simply exiting an Oracle Unlimited License Agreement (ULA) will inevitably trigger an Oracle audit. However, this is not necessarily the case. Oracle sales representatives often use the threat of an audit to pressure customers into renewing their ULA, but just exiting a ULA rarely results in an actual audit.

Reality: Audits are Typically Triggered by Discrepancies, Not Simply by Exiting a ULA.

Here are some elements that might influence Oracle’s decision to initiate an audit:

• Random Selection:

  Oracle may sometimes conduct audits randomly, irrespective of your ULA status.

• Mismanagement of Audit Certification and ULA Exit Conversation Can Increase Audit Chances.

  An Oracle sales representative may nominate a customer if they mismanage the ULA certification communication or process by oversharing details, such as using products not included in ULA, running detailed scripts like LMS Collection Tool or DBA_Feature_Usage, or providing excessive information about their environment by filling out OSW forms. If this oversharing reveals that the customer does not fully understand the licensing rules and declares too little, Oracle may recognize that the customer is likely to be out of compliance and consider an audit worthwhile. However, the chances of being audited are extremely low if the customer accurately declares information and demonstrates a good understanding of the Oracle licensing or certification process. Oracle receives many certifications yearly and cannot audit all ULA certifications, even if a sales representative suggests otherwise. Additionally, these are just nominations, and the Oracle audit team might choose to pursue other accounts instead of following the sales representative's recommendations. Managing Oracle ULA certification strategically is a complex team sport process, and it is highly advisable to hire external third-party help to avoid mismanaging this critical opportunity.

• Recent Mergers and Acquisitions and Weak Contractual Language

  If your company acquires or divests a business that utilizes Oracle products, be aware that Oracle monitors such corporate changes closely. Oracle will likely conduct an audit, as they understand that companies typically allocate substantial budgets for mergers and divestitures.

Insufficient Internal Tracking and Processes for Oracle Software Licensing.

• Significant Compliance Violations Reported to Oracle by Internal Technical Database Staff.

Measures Can Be Taken to Mitigate Audit Risks

Here are some measures to reduce the risk of an audit after leaving a ULA:

Accurate License Tracking: Maintaining consistent and meticulous license tracking throughout the term of the ULA and beyond is crucial.

Detailed ULA Certification: The ULA certification process should be carried out with the utmost accuracy and strategic planning to ensure correct license reporting as per the negotiated ULA.

Cautious Communication With Oracle at ULA Exit: Maintaining cautious communication with Oracle about your ULA exit strategy and providing only the minimum required information can lead to a better outcome and potentially lower audit risk.

Myth 6: Trusting Oracle and Revealing All Information During Oracle ULA Certification Will Result in an Optimal Outcome.

There's a pervasive misconception among organizations that absolute transparency is the gold standard during the Oracle ULA certification process.

Reality: Only Provide the Bare Minimum Information as Part of the ULA Certification Process.

The Oracle (ULA) certification process can be critical for organizations leveraging Oracle software. While the customer negotiates in good faith, unfortunately, Oracle is not; providing excessive information or accepting certain Oracle-sponsored licensing services/assistance can lead to unforeseen consequences.

1. Over disclosure Can Lead to Compliance Issues

License holders must undergo a certification process at the conclusion of the ULA term. Strongly resist Oracle's overreaching requests to run any LMS scripts. Do not provide them with script usage outputs or detailed deployment data, such as filled-out OSW worksheets.

Here's how over-disclosure can be detrimental:

• Uncovering Exceeding Usage: The audit might reveal software utilization exceeding the ULA's bounds, potentially leading to financial repercussions.

• Highlighting Non-Compliance Issues: The data might unveil non-compliance with the ULA's terms, such as using non-authorized territories and opening doors for legal ramifications.

• Effective Strategy: Gain a thorough understanding of the information to be provided to Oracle for the ULA exit certification. Understand your rights that the end of certification doesn’t automatically qualify you for a stealth audit, irrespective of what Oracle’s sales rep communicates. Provide only the bare minimum of data and refrain from elaborating unnecessarily.

• Provide High-Level Final Declaration Numbers to Oracle: Provide only the bare minimum high-level final numbers to Oracle that will form your baseline and push back on any detailed server-level data or script outputs.

2. Beware of Uncritically Accepting Oracle's Certification Services.

Oracle offers certification services and various vendor-sponsored programs designed to assist organizations in navigating the ULA certification process. However, accepting these services without meticulous evaluation can introduce a potential conflict of interest.

Here's why exercising caution is necessary:

• Conflicting Interests: Oracle's primary objective might not necessarily align with the organization's best interests. Oracle wants you to sell the new ULA and software and is not interested in saving you costs. Oracle doesn’t compensate its sales rep for saving you costs; they are only compensated for additional revenue or signing a new ULA.

• Renewal or Upselling Pressure: Oracle will use the certification analysis to find fake or exaggerate compliance issues and exert influence to encourage a ULA renewal or persuade the organization to acquire additional licenses rather than give them a path to optimize environments.

3. Strategically Handling Oracle’s Data Requests

Oracle may request the outcomes of scripts or a comprehensive Oracle worksheet. It’s important to review your ULA certification clause. In many instances, the clause only requires you to provide a high-level figure or is silent on information to be provided to Oracle. In such scenarios, only the final figure should be given. Even if it is not well defined, you should check with your Internal Information Security and push back on Oracle, as you might be revealing confidential or restricted information by running any scripts. We have seen that customers who have refrained from executing Oracle LMS scripts and have not supplied any results have achieved the most favourable outcomes during certification.

ULA certification is a team sport. Don’t try to DIY (Do It Yourself) ULA certification – Get professional help!

Engage a third-party licensing and advisory firm like Licensing Data Solutions. Here’s how we can assist you:

a) Perform an independent review, aka Enterprise License Position(ELP), and scientifically identify and count all your Oracle databases, options and packs, and WebLogic installations using a methodology similar to Oracle LMS.

b) Educate you on various ULA clauses and how Oracle interprets them in case of a certification.

c) Develop a ULA certification strategy tailored to maximize your ULA contract and deployment environment, such as AIX, VMware, Azure, AWS, etc.

d) Manage the Oracle ULA certification and communication process, leveraging their experience with numerous clients to understand effective strategies.

e) Help establish a baseline of entitlements at certification to ensure future compliance and maximize this once-in-a-lifetime opportunity.

f) Prevent potential embarrassment from management when Oracle creates an unnecessary fake drama at certification time to persuade customers to renew the ULA.

Conclusion

In summary, understanding and managing Oracle Unlimited License Agreements (ULAs) requires careful consideration and strategic planning.

By debunking these myths, organizations can more effectively navigate the complexities of Oracle ULAs. It's crucial to grasp the reality that maintenance costs are fixed, certification quantities do not alter costs, specific terms govern perpetual licenses, ULAs do not ensure full compliance, and audits are triggered by discrepancies rather than merely exiting a ULA.

Managing Oracle ULA is a complex process that often requires external expertise. Approaching ULA certification with a well-informed and cautious strategy, seeking external help when necessary, and meticulously managing communication with Oracle are vital steps in minimizing risks and maximizing the benefits of ULAs. As you prepare for ULA certification in 2024, remember that knowledge, preparation, and the right external support are your best allies in achieving a successful outcome. Don't hesitate to contact Licensing Data Solutions at This email address is being protected from spambots. You need JavaScript enabled to view it. to maximize your ULA certification.

Licensing Data Solutions (LDS) is a leading provider of Audit Defense, Software Asset Managed Services, SaaS, and Cloud FinOps Cost-Saving Analysis for major software vendors such as Oracle, IBM, SAP, Microsoft, Quest, Autodesk, VMware, Adobe, Citrix, Salesforce, JAVA and ServiceNow. Our team of 35 analysts comprises former software compliance auditors with expertise in delivering exceptional services. At LDS, our clients benefit from cost savings of up to 30 percent on their software spend and up to 85 percent on their audit findings.