Licensing / Oracle licensing

Experts on Oracle PAH License Model: Complete Guide 2024

The Oracle PAH License Model is:

  • Known as Oracle Proprietary Application Hosting License.
  • Replaces Oracle’s earlier generic hosting licenses.
  • Available only to Oracle ISVs (Independent Software Vendors).
  • Allows use of all Oracle technology software, including databases and middleware.
  • Suitable for creating SaaS environments.
  • Restricted to one solution/service.
  • Requires IP ownership of the software using Oracle technology

What is an Oracle PAH License?

What is an Oracle PAH License?

Oracle PAH, or Oracle Proprietary Application Hosting License, was introduced to replace Oracle’s generic hosting licenses from early 2000 to 2010.

Eligibility for Oracle PAH

This license excludes Oracle Independent Software Vendors (ISVs) who develop their Intellectual Property (IP) on Oracle technology.

Applications of Oracle PAH

  • Utilizes all Oracle technology software, including databases and middleware (e.g., WebLogic).
  • Enables companies to establish Software as a Service (SaaS) hosting environments.

Key Features of Oracle PAH

  • Limited to a single solution/service.
  • Permits third-party access to Oracle software.

Contracts and Usage

  • Suitable for systems opening Oracle technology to third parties.
  • It offers contracts like volume purchases and the Oracle Unlimited License Agreement (ULA).

Oracle PAH License vs Full Use License: A Simplified Explanation

oracle pah vs full use

Full Use Licenses

  • Purchased by Oracle’s end customers.
  • Used strictly for internal business operations.
  • No application-specific restrictions.
  • The Oracle Master Agreement specifies use solely for internal business operations.
  • Limited to the company on the Oracle Ordering Document.
  • External parties cannot use these licenses.

The Oracle Master Agreement (OMA) states the following about Full Use Licenses:

“Upon Oracle’s acceptance of your order, you have the limited right to use the programs and receive any services you ordered solely for your internal business operations and subject to the terms of this agreement (…).”

In simpler terms, this means:

  • Full Use Licenses can only be used by the company listed on the Oracle Ordering Document.
  • External parties cannot use these licenses.

Oracle PAH licensing limitations

oracle pah license limitations

Oracle PAH Licensing Limitations

  • License Ownership: Owned by the Oracle ISV, with no need for end-customer licensing agreements.
  • Intellectual Property Requirement: Must own the IP using Oracle software, not for third-party applications.
  • End Customers Requirement: Designed for one or multiple end customers, unsuitable for 1:1 hosting.
  • Specific Solution/Application Limitation: Tied to a specific solution or application defined in the Oracle APRF within the licensing agreement.
  • Commercial Availability: The solution must be commercially available to multiple end customers. End customers should be cautious about replacing old licenses with new PAH licenses to avoid non-compliance.

Incorrectly purchasing the Prop Hosting License Model.

Incorrectly purchasing the Prop Hosting License Model.

Oracle sales teams have aggressively contacted customers and offered to re-purchase their Oracle licenses under this Oracle Prop hosting license model.

However, this model is often the wrong license model, and you are exposing your company to financial risk.

Oracle hosting licenses - 10 questions your Oracle rep wont answer

Oracle Contracts and Hosting Language

Internet Hosting Variation

  • Mentioned in the Oracle Ordering Document.
  • Extends usage rights for internal and external entities.
  • Enables hosting Oracle products on your infrastructure for external users.

Oracle Proprietary Hosting Variation

  • Becoming an Oracle ISV and entering partnership agreements with Oracle, including completing the APRF form.
  • Grants the right to offer Oracle products as part of your hosted solution.
  • Allows you to provide a comprehensive package to customers.

Important Note: Each variation comes with specific requirements and obligations. A careful review of the terms is essential.

What is proprietary hosting?

The Oracle proprietary hosting license model is one-to-many, ideal for companies like Company A creating a Software as a Service (SaaS) offering with their IP using Oracle technology, such as a database.

In this model, the hosting entity and the solution software owner purchase the licenses instead of each company doing so individually.

oracle hosting license

Qualifying for Oracle PAH License Model: A Checklist

Qualifying for Oracle PAH License Model: A Checklist

To qualify, you must:

  • Own the Intellectual Property/Application: You must be the rightful owner of the IP or application used with these licenses.
  • Commercial Availability: Your application must be commercially available to other end customers.
  • Availability to Multiple End Customers: Licenses should be for external customers, not just for internal use. These customers must have a purchasing agreement with your company.

Meeting these conditions is essential.

FAQ on Oracle PAH License

Is the pricing for Oracle hosting licenses the same as for Oracle full-use licenses?

The pricing for Oracle proprietary application hosting licenses may be slightly higher than for standard internal use licenses. However, this is negotiable with Oracle.

The Oracle account team wants us to buy Oracle hosting licenses and replace our old licenses to lower my support fees over a few years. What should we do?

It is not advisable to rely solely on the information provided by the Oracle account team. Instead, it is important to review the licensing terms for PAH licenses yourself.

The account team may collect their sales commission and leave Oracle, but your company will face legal and financial risks if audited. Ultimately, it is up to you to sign the contract and decide whether your company can use the Oracle PAH license model.

What is Oracle Proprietary Application Hosting?

This license model is for organizations that want to host Oracle-based solutions to other end customers. The software hosted must be their IP, such as Software-As-A-Service Offering.

Do I need to license my test and development environments if I am developing an application that will go into production in the future?

No, if you are an OPN member, you can prototype and test your applications. However, all test and development environments must be licensed when your solution is in production.

What is Oracle Application Registration Form (APRF)

This is the description that you, as an ISV, need to submit to Oracle as part of your PAH hosting agreement. It defines which applications and products that can be used.

What is your advice on how to complete the Oracle APRF?

It is best to be as vague as possible when completing the APRF. Providing too many details, such as the application version, may require negotiating a new APRF agreement with Oracle if you make any changes or further develop your application.

Keeping the APRF vague provides flexibility for future updates. If you are an Oracle ISV and require expertise, we are available to help.

How do the licensing metrics work with Oracle hosting licenses?

The licensing metrics for Oracle hosting licenses are the same as for Oracle standard licensing, such as named user plus and processor-based.

However, the difference lies in the contract and how the licenses may be used, as defined by the license model and APRF form.

Can I convert my full-use licenses to PAH licenses?

Yes, but it requires negotiation with Oracle. You must sign an amendment and pay Oracle to grant these extra rights. With extended usage rights, the full-use license is generally kept.

Can I sign a proprietary hosting Unlimited License Agreement (ULA)?

Yes, you can, but Oracle usually imposes more restrictions on proprietary hosting ULAs than on normal ones, and you will need to undergo a complex exit process.

What are the most common mistakes that organizations make with PAH agreements?

Organizations often don’t fully understand the license model. Oracle sales reps may encourage customers to buy the PAH license model to reduce support fees by terminating their old full-use licenses.

However, this is a mistake in 9 out of 10 scenarios, and the end customer is liable.

Does Oracle audit PAH customers?

Yes, Oracle actively audits ISVs who host PAH more than regular end customers.

Are there any other Oracle database hosting options?

No, this is the only license model that Oracle is currently offering.

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  • Fredrik Filipsson

    Fredrik Filipsson brings two decades of Oracle license management experience, including a nine-year tenure at Oracle and 11 years in Oracle license consulting. His expertise extends across leading IT corporations like IBM, enriching his profile with a broad spectrum of software and cloud projects. Filipsson's proficiency encompasses IBM, SAP, Microsoft, and Salesforce platforms, alongside significant involvement in Microsoft Copilot and AI initiatives, improving organizational efficiency.

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