Hosted Named User – Oracle SaaS Licensing
Executive Summary: Hosted Named User (HNU) is an Oracle SaaS licensing model in which each named individual user requires a subscription to access Oracle Fusion Cloud services.
This advisory explains how HNU licensing works, its cost implications, and strategies for IT Asset Management (ITAM) professionals to optimize usage and avoid common pitfalls in enterprise environments.
Understanding the Hosted Named User Model
The Hosted Named User model assigns licenses to specific named individuals for Oracle’s cloud services (such as Oracle Fusion ERP, HCM, or CX Cloud).
Unlike usage-based models, HNU licensing is based on authorization – every user you authorize to access a cloud service must have a license, whether they actively use it or not.
This model is common across Oracle SaaS offerings, ensuring that organizations pay per user rather than for unlimited access.
Key characteristics of HNU licensing:
- Per-User Licensing: Each unique user account needs its license (licenses aren’t shared).
- Module-Specific: Licenses are tied to specific cloud modules (e.g., Financials, Procurement), so if a person needs multiple modules, they require a license for each one.
- Authorization Over Usage: Counts are based on provisioned (authorized) users, not actual logins, so strict access management is needed.
- Non-Transferable: Licenses can be reassigned when someone leaves, but they cannot be shared by two people simultaneously.
For example, if 20 finance employees need access to Oracle Financials Cloud, the company must acquire 20 Hosted Named User subscriptions for that module (one per user).
Oracle often also enforces minimum license quantities (e.g., a minimum of 10 users for a given service), so even a small implementation incurs a baseline cost. This user-based approach makes it critical to carefully control who is granted access.
ITAM teams should align user provisioning with licensing — ensure a license is allocated whenever a new person is onboarded, and reclaim licenses by promptly removing access when staff leave or change roles.
Cost Drivers and Pricing Considerations
Costs can vary widely by module and volume. Oracle sets a list price per named user for each cloud service (often with a minimum quantity requirement).
High-value modules carry higher fees per user, while limited self-service features are much cheaper.
The table below illustrates a few examples of per-user pricing across different services:
| Oracle Cloud Service | License Metric | Indicative Price (per user/year) |
|---|---|---|
| Oracle Financial Reporting Compliance Cloud | Hosted Named User | ~$175 USD |
| Oracle Procurement Cloud | Hosted Named User | ~$625 USD |
| Oracle Self-Service Procurement | Hosted Named User | ~$10 USD |
Table: Example pricing range for Oracle SaaS user licenses. High-value modules are more expensive per user, while limited self-service features are significantly less expensive.
Key cost factors include the number of named users (the cost scales directly with the user count) and the specific modules or services licensed (each with its price). Oracle’s price list also typically imposes minimum user counts (setting a floor on costs) and uses multi-year subscription terms, meaning you commit to a certain number of users for the contract duration.
Enterprise customers can negotiate discounts based on volume or multi-service bundles, which significantly affect the total cost.
Key Challenges and Pitfalls
Organizations often struggle with compliance and cost issues under HNU licensing. Compliance gaps can occur if an unlicensed person is accidentally given access; Oracle will flag this in audits and require back payment.
Shelfware is another risk – paying for user licenses that sit unused because some employees never actually log in.
Finally, the model can be inflexible mid-term: you generally cannot reduce the number of licenses until renewal, so overestimating needs means you’re stuck paying for excess users. Diligent user management and careful contract planning are required to avoid these pitfalls.
Negotiating and Planning Your SaaS License Contract
When setting up or renewing an Oracle SaaS agreement under HNU, prepare and negotiate carefully to ensure a smooth process. Forecast your user needs accurately to avoid overbuying.
Try to include contractual flexibility (like the ability to add users at the same discounted rate) so you can adjust as needs change. Leverage your total volume to secure better pricing, and ensure the contract covers all required modules (so you don’t get hit with surprise add-on costs later).
Also, clarify the process for adding users mid-term (pricing and co-terming) in writing to prevent billing surprises.
Recommendations
- Track Authorized Users: Maintain an up-to-date record of every Oracle SaaS user and the licenses that cover them. This ensures no one is left unlicensed or double-counted.
- Clean Up Unused Accounts: On a regular schedule (e.g., quarterly), remove accounts for users who no longer need access. This ensures you’re not paying for unused licenses.
- Right-Size Before Renewal: Before renewing, analyze your actual usage and drop any excess licenses, ensuring you only renew what you need. Use this data to negotiate terms if your needs have changed.
- Negotiate User Additions Upfront: Plan for Potential Mid-Term Growth. Negotiate in the contract how additional users will be priced (e.g., at the same discounted rate) to avoid surprise costs later.
- Leverage Self-Service Tiers: Use Oracle’s lower-cost license options for casual or self-service users whenever available. Avoid assigning full-cost licenses to users who only need limited functionality.
Checklist: 5 Actions to Take
- Inventory Your Users: Compile a current list of all Oracle SaaS users (by module) and ensure each one has a corresponding license. Address any unlicensed user accounts.
- Review Contracts & Policies: Read your Oracle Cloud Services agreement and policy documents. Confirm the metrics, minimums, and restrictions outlined in your contract, and note key terms such as renewal dates or clauses regarding user additions.
- Set Up Access Control: Implement formal processes for provisioning and deprovisioning Oracle SaaS users, tied into HR onboarding/offboarding. No account should be created or left active without proper license assignment.
- Analyze Usage Data: Use Oracle’s admin reports or a SAM tool to see how often each user uses the services. Identify low-usage licenses that could be reduced or users who could move to a lower-cost option (if available).
- Plan for Renewal: Well before your renewal date, analyze your current usage and decide if you need to increase, cut, or reallocate licenses. Prepare a data-driven report and negotiation strategy for the renewal discussions.
FAQ
- Q: What is a Hosted Named User in Oracle’s cloud licensing?
A: It means one subscription is tied to one specific user; each person authorized to use an Oracle Cloud service needs their license, even if they rarely log in. - Q: Can two people share one Hosted Named User license?
A: No — each HNU license is tied to one user and cannot be shared; even if two people use it at different times, each needs their license. You can only reassign a license when a user leaves. - Q: What if we have more users than licenses?
A: You would be out of compliance; Oracle will require you to buy licenses for all those extra users retroactively (often at full list price, plus penalties). Always reconcile user accounts with purchased licenses to prevent this. - Q: How can we reduce costs for infrequent users?
A: Limit or remove access for infrequent users; if possible, use lower-cost license tiers or read-only reports for those who don’t need full functionality. - Q: Are there alternatives if we need to cover all employees?
A: Yes — Oracle offers other metrics, notably Hosted Employee, which charges for all employees rather than per user. If nearly everyone needs access, a per-employee model can be more cost-effective than buying hundreds of HNU licenses.
