Oracle ASFU license model – explained 2023

What is an Oracle ASFU License?

• What is it? Oracle ASFU (Application Specific Full Use) license is a model that Oracle OEM partners can resell.
  
• How can it be used? ASFU licenses are specifically designed to be used with third-party applications.
  
• What’s the cost? Oracle offers heavy discounts on the ASFU license model. (60%+)
  
• Need help? You must go through the Independent Software Vendor (ISV) if you need Oracle support.
  
• What about audits? With the ASFU license model, end customers are not liable for Oracle audits related to license compliance.

With over ten years of experience working for Oracle, including time spent in the Oracle auditing department and in Oracle ISV organizations, we have become experts in Oracle ISV and OEM license models and contracts.

This includes a deep understanding of the Oracle ASFU license model, the Oracle ESL license model, and the Oracle PAH model.

What is an Oracle ASFU License?

The Oracle ASFU license, short for Oracle Application Specific Full Use license, is a unique model designed for Oracle ISV/OEM partners. These partners have developed solutions or applications that leverage Oracle technology.

Key points to note about the Oracle ASFU license:

• Usage: The ASFU license model can utilize all Oracle technology software, including the Oracle database and Oracle middleware products like WebLogic.
  
• Reselling: The ISV purchases the license from Oracle and then resells it to the end customer. The end customer is then listed as the owner of the ASFU licenses.
  

Oracle ASFU License Terms

Below is a screenshot from an ASFU Oracle license terms  (Oracle Distribution agreement). You can find copies of this publically available:

The Oracle ASFU license, or Oracle Application Specific Full Use license, comes with certain limitations:

• Specific Use: The ASFU license can only be used for the specific solution or application defined in the agreement. For example, one common solution is SAP. SAP customers often have Oracle ASFU licenses, which cannot be used for non-SAP applications.
  
• Limited to ISV/OEM Application/Solution: The Oracle Application Specific license is strictly limited to a specific ISV/OEM application or solution.
  
• Contractual Limitations: The limitations of the ASFU license are defined in a contract (APRF) between Oracle and the Oracle ISV that has entered into the Oracle agreement.
  
• Integration with Non-Oracle Applications: You can integrate non-Oracle Application Specific applications into the solution using Oracle ASFU licenses. However, any connection to the Oracle software must be made via an ISV-provided API. The Application Specific Full Use license model does not allow direct links between Oracle and third-party software.
  

For a fee, Oracle Application Specific Full-use end customers can migrate/upgrade the licenses to full-use licenses and re-use the licenses for other applications.

Oracle ASFU technical limitations

The Oracle ASFU (Application Specific Full Use) license comes with certain technical limitations:

• Third-Party Data: It is not allowed to store any third-party data in the Oracle database.
  
• Customized Code or Applications: Building customized code or applications and using the Oracle database license is prohibited.
  
• Third-Party Programs: Let third-party programs run their business logic or store any data in the Oracle database is not permitted.
  
• Non-ASFU Application Access: Non-ASFU applications can read data from the database using ODBC or similar access methods. However, using these methods, they cannot write data directly to the database.

Oracle ASFU vs Oracle Full Use

The Oracle Application Specific Full Use (ASFU) license has several unique characteristics and differences compared to other Oracle licenses:

• Discount: The ASFU license is 60% off the standard Oracle price list.
  
• Technical Support: ASFU end customers cannot contact Oracle technical support directly. The first line of contact is the ISV/OEM partner, who should contact Oracle if the end customer needs technical support. Oracle then charges the ISV 19% for technical support, as they expect the ISV to act as the first line of support.
  
• Licensing Rules: Oracle ASFU licenses do not always follow standard Oracle licensing rules, such as counting named users plus users or processors. Instead, they occasionally use royalty license models where the ISV can resell Oracle licenses, and Oracle receives a percentage from the ISV price list every time there is a sale. This model eliminates the need to count processors or users.
  
• Oracle Unlimited License Agreement: If you enter into an Oracle Unlimited license agreement, you must migrate and include the ASFU licenses.
  
• Oracle ASFU vs. Oracle PAH: There are differences in how Oracle positions these license models to its ISV/partners due to different sales compensation packages. The main difference is that Oracle PAH licenses are intended for use by many end customers, while the ASFU license model is for 1:1 companies. If you are an Oracle ISV, it’s crucial to understand these differences in license models to avoid costly license fees if Oracle audits your business.
  
  

Two Oracle ASFU License Models

There are two different license models that the App Specific FU license is available under. The most common 95%+ is the standard Oracle license metric, user plus, and processor licenses.

If you have that license model, you need to license the Application Specific Full Use licenses as you would for regular full-use licenses but with the application package restrictions.

The second ASFU Oracle license model is rare but exists in the royalty license model. In this model, the ISV provides Oracle with its current price list, and they agree on providing Oracle with a % of all sales. In return, the ISV can resell App Specific FU licenses without considering the number of users and processors.

Oracle ASFU and Audits

• Oracle ASFU license deployments should not be included in end-customer Oracle license audits.
• Any audit of Oracle software for Application Specific Full Use must be done via the ISV/OEM partner who resold the license. (Oracle audits the Oracle ISV and not the end customer)
• The end customer is not liable to Oracle for non-compliance with the Oracle license.

Oracle ISV Audit

• In the past few years, Oracle has been increasing the number of audits they conduct on its ISVs.
• ISVs who have resold licenses to their customers are often targeted in audits. If its customers are found to be non-compliant, the partner is liable to pay Oracle for unlicensed software.
• Oracle ISVs or end customers who (incorrectly) have purchased PAH or hosting licenses are a priority target for Oracle audit organization.

Oracle ASFU Pros and Cons

Oracle ASFU Pros

• The ISV receives a 63% discount on license purchases and can either share that margin with the end customer or make more margin on reselling Oracle.
  
• The Oracle App Specific FU license is not included in a normal software audit by Oracle. Oracle must audit the specific environment of the reselling partner/ISV.
  
• The ISV pays non-compliance for the Application Specific full-use license, not the end user. That means it’s good for the end user but can be risky for the ISV.

Oracle ASFU Cons

• It is restricted to usage for the application package. You cannot re-use the license for any other third-party application.
  
• You must pay an upgrade fee for full use to recycle the Oracle database.
  
• There is more work to ensure you are not compliant with the agreement if you perform integrations and customizations to the application page that uses the Oracle database storage.
  
• The end customer cannot contact Oracle directly for technical support or updates. Any contact with Oracle support must be done by calling the ISV that resold the license.

Expert Advice on Oracle Application-Specific Full-Use License

If you’re an Oracle Independent Software Vendor (ISV) considering an Application Specific Full Use (ASFU) Oracle agreement, here are some key points to consider:

• License Model Selection: Determine the model best fits your company and solution. Remember, different solutions may require other license models. For instance, one solution might work best with Named User Plus and Processor licenses, while another might be more suited to a royalty-based model.
  
• APRF Agreement: When dealing with the Application Package Resale Full Use (APRF) agreement, keeping the details broad is beneficial. This approach prevents your solution from being confined to specifics, which could require renegotiation if minor changes or upgrades are made.

As an end customer with an ASFU license, there are important considerations:

• Oracle Audit Liability: Understanding your liability during an Oracle audit on the ISV is crucial, as this could indirectly affect you.
  
• Penalty Fees: If the ISV environment is deployed in a way that doesn’t adhere to the ASFU license terms, there could be penalty fees. While Oracle won’t claim these fees from you, it’s essential to establish clear responsibility between you and the reselling application vendor.
  
  

FAQs on Oracle ASFU License

Oracle ISV Licensing Service

Our Oracle ISV Licensing Service helps ISVs ensure their end customers comply with Oracle licensing regulations. To achieve this, we offer the following:

• A comprehensive licensing assessment of all end customer environments to identify potential compliance risks.
  
• A review of Oracle ISV agreements to determine whether they meet licensing requirements and to provide recommendations on improving them.
  
• Designing Oracle APRF to maximize flexibility.
  
• Assistance in navigating the complex world of Oracle licensing to ensure full compliance.
  
• Support in defending ISVs if they are audited by Oracle, leveraging our team’s extensive experience in this area.

Our service aims to provide Oracle ISVs peace of mind, knowing that their end customers are compliant and protected from potential audit fees. Contact us today to learn more about our Oracle ISV Licensing Service and how it can benefit your organization.