Licensing / Oracle licensing

Experts on Oracle PAH License Model: Complete Guide 2023

Oracle PAH License Model Explained: A Brief Overview

The article provides a comprehensive guide on the Oracle PAH license model (Proprietary Application Hosting), designed for Independent Software Vendors (ISVs) who develop their IP running on Oracle technology.

Key Insights:

  • Understanding Oracle PAH License: Oracle PAH license model allows ISVs to create hosting environments (SaaS) using Oracle technology, including Oracle database and Oracle middleware products.
  • Oracle PAH vs Full Use License: Full Use Licenses are for internal business operations and follow a 1:1 license model, while Oracle PAH is designed for one to multiple end customers.
  • Oracle PAH Licensing Limitations: The Oracle PAH license model is tied to a specific solution or application and should be commercially available to multiple end customers.
  • Common Mistakes with PAH Agreements: Organizations often misunderstand the license model, leading to potential financial risks if audited by Oracle.

What is an Oracle PAH License?

oracle hosting license

What is Oracle PAH?

  • Oracle PAH stands for Oracle Proprietary Application Hosting License.
  • This has replaced the generic hosting licenses that Oracle used to resell in early 2000-2010.

Who can use Oracle PAH?

  • Oracle PAH is available only to Oracle ISVs.
  • It is designed for ISVs or companies that build and develop their IP running on Oracle technology.

What can Oracle PAH be used for?

  • Oracle PAH license model can utilize all Oracle technology software.
  • This includes Oracle database and Oracle middleware products such as WebLogic.
  • Companies can create hosting environments (SaaS) using this license model.

Critical Characteristics of Oracle PAH

  • Oracle PAH can only be used for one solution/service.
  • It is a license model that allows third parties to access Oracle software.

Understanding Other Oracle License Models

  • Oracle Full Use: This is for your internal business operations and follows a 1:1 license model.

When to Use Oracle PAH?

  • Oracle PAH is the license model you need to open a system using Oracle technology to third parties.

Contracts available for PAH

  • Contracts available for PAH include volume purchase and Oracle ULA.

Oracle PAH License vs Full Use License: A Simplified Explanation

oracle pah vs full use

Let’s break down the differences between Oracle PAH (Proprietary Application Hosting) Licenses and Full Use Licenses:

Full Use Licenses

Oracle’s end customers purchase these. Here are some critical points about Full Use Licenses:

  • They permit the end customer to strictly use the Oracle software licenses for their internal business operations.
  • Generally, there are no restrictions on which applications you can use the Oracle licenses for.

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
  1. License Ownership: The license for Oracle ISV is owned by the Oracle ISV itself. This means the end customer doesn’t need to sign any licensing agreements.
  2. Intellectual Property Requirement: The Oracle PAH license model can only be used if you own the intellectual property (IP) that uses Oracle software. This implies that you can’t use this license model for third-party applications.
  3. End Customers Requirement: The Oracle PAH license is designed for one to multiple end customers. It’s important to understand that this isn’t the appropriate license model for 1:1 hosting.
  4. Specific Solution/Application Limitation: The Oracle PAH license model is tied to a specific solution or application. This solution or application is defined in the Oracle licensing agreement between Oracle and the Oracle ISV. It’s often referred to as an Oracle APRF and is part of the licensing agreement that the Oracle ISV signs with Oracle.
  5. Commercial Availability: The solution that relies on Oracle PAH licenses should be commercially available to multiple end customers. A word of caution for end customers: If Oracle approaches you to purchase new PAH licenses to replace old internal use licenses, take a moment to consider the implications. You should be cautious about buying licenses that might make you non-compliant.

Incorrectly purchasing the Oracle PAH license model.

oracle prop hosting

Oracle sales teams have aggressively contacted customers and offered to re-purchase their Oracle licenses under this Oracle PAH 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

In Oracle contracts, you might come across two primary types of hosting language.

Both offer different benefits and obligations, so it’s crucial to understand them before committing.

  1. Internet Hosting Variation

    This variation includes “Internet hosting” in the Oracle Ordering Document. Here’s what it means for you:
    • It extends your usage rights, allowing you to use full licenses for both internal operations and external entities.
    • It allows you to host Oracle products on your infrastructure and make these available to external users.
  2. Oracle Proprietary Hosting Variation

    This second variation involves you becoming an Oracle Independent Software Vendor (ISV) and going into partnership agreements with Oracle. It also requires completing the APRF form. Here are the benefits:
    • You get the right to offer Oracle products as part of your own hosted solution.
    • This allows you to provide a comprehensive package to your customers.

Remember, each variation has its specific requirements and obligations. It’s highly recommended to carefully review the terms and conditions associated with each variation before making any commitments.

What is proprietary hosting?

Oracle prop hosting license model is a one-to-many license model. The ideal scenario is when company A wants to create a Software as a Service offering with their IP and use Oracle technology, such as a database.

Instead of every company purchasing its licenses, the hosting and the owner of the solution software buy the licenses.

oracle hosting license

Qualifying for Oracle PAH License Model: A Checklist

If you’re considering Oracle’s Proprietary Application Hosting (PAH) license model, here’s what you need to know.

There are specific criteria you must meet:

  1. Own the Intellectual Property/Application: You need to be the rightful owner of the intellectual property or application you intend to use with these licenses. Using these licenses for a third-party application is not allowed.
  2. Commercial Availability: Your application must be commercially available – meaning it should be for sale to other end customers. Evidence of this could be a price list or sales material related to your application.
  3. Availability to Multiple End Customers: The licenses should not just be for internal use within your organization. They need to be available to multiple external customers. These customers must have signed a purchasing agreement with your company to qualify for the use of the licenses.

Remember, meeting these conditions is essential to use Oracle PAH licenses. Carefully consider each of these points before you proceed.

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, reviewing the licensing terms for PAH licenses yourself is important. 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, for example, 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.

Oracle ISV License Optimization Service: Enhancing Your Licensing Experience

Our Oracle ISV License Optimization service is designed to review and optimize your Oracle licenses comprehensively.

We focus on aligning your licensing model with your business needs and goals, ultimately helping you achieve maximum efficiency and cost savings.

Here’s what we offer:

  1. Oracle Partner Agreements Review: We meticulously review your Oracle partner agreements to ensure they best fit your business needs.
  2. Licensing Deployments Review: We examine your Oracle licensing deployments to identify potential issues.
  3. Strategic Advisory: We offer recommendations and advice to optimize your license usage.
  4. Issue Resolution: We actively assist in resolving any licensing issues that we uncover.
  5. Cost Reduction Guidance: We provide expert advice on how to lower support costs and evade financial risks associated with non-compliance.
  6. Alignment with Business Goals: We strive to align your licensing model with your business needs and objectives.
  7. Application Package Registration Form (APRF) Review: We meticulously review your APRF to ensure it accurately mirrors your application architecture and usage.
  8. Negotiation Assistance: We offer expert advice on negotiating licensing agreements with Oracle..

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  • Fredrik Filipsson

    Fredrik Filipsson possesses 20 years of experience in Oracle license management. Having worked at Oracle for 9 years, he gained an additional 11 years of expertise in Oracle license consulting projects. Fredrik has provided assistance to over 150 organizations worldwide, ranging in size and tackling various Oracle licensing challenges, including Licensing Assessments, Oracle audits, Oracle ULAs, and more.