Oracle EBS Licensing Models: A Comprehensive Guide
With over a decade and a half of experience in Oracle EBS licensing, I’ve had the privilege of assisting more than 300 organizations in navigating the intricacies of EBS licensing. As a former Oracle employee and now a consultant, I’ve become a recognized authority in this field. I’m thrilled to share my expertise and insights with you.
- Understanding Oracle EBS Licensing
- Enterprise-Wide Licensing
- The Evolution of Oracle EBS Licensing Models
- Understanding Oracle EBS Licensing Metrics
- Concurrent Usage
- Professional User
- Component Application User
- Component Usage-Based License Metrics
- Custom Suite User
- Enterprise License Metrics
- Common License Compliance Risks with Oracle EBS
- FAQ on Oracle EBS Licensing
- Need Help Review Oracle EBS Licensing?
Understanding Oracle EBS Licensing
Oracle EBS Licensing is a complex process that requires organizations to identify all individuals with authority to use the E-Business Suite programs, regardless of their active users. Many organizations overlook the need to actively manage their user population, including identifying new users who require access and removing users who no longer need it, such as those who have changed roles or left the organization.
Even if an individual no longer uses the software, they must be licensed if they are authorized to do so. To comply with Oracle’s licensing requirements, organizations should perform data cleanups on EBS instances and end-date individuals who no longer need to use the software. It’s crucial to remember that every individual who is authorized to use the software on single or multiple servers must be licensed.
Oracle Enterprise software’s licensing model is based on “Enterprise metrics” determined by an organization’s size regarding factors such as the number of employees, revenue, or revenue under management. These metrics do not depend on the number of users or systems where the Oracle software is installed. While this may seem straightforward, many companies encounter difficulties when fulfilling their annual reporting obligations.
To minimize the risk of non-compliance with Oracle policies and contractual rules, it is essential to clearly understand the Enterprise licensing model and address any related details or issues. This will enable end-users to properly manage their software licenses and reduce noncompliance risk. Products licensed under the Oracle Enterprise model may include PeopleSoft, JD Edwards, Siebel, Hyperion, Agile, Demantra, and Oracle eBusiness Suite (EBS).
Multiple legacy licensing metrics, including Concurrent Licenses and Professional users, are no longer sold.
The Evolution of Oracle EBS Licensing Models
Oracle EBS licensing models have seen significant changes over the years. Here’s a brief overview of these changes:
- Concurrent User License: This model was based on the peak concurrent usage of all users accessing the system at a particular time. It benefited global companies with different shifts, as they only had to license based on peak concurrency.
- Professional User License: Introduced as Oracle released new product capabilities, this model was designed to grow Oracle’s install base with small and medium-sized companies. It required companies to maintain professional user licenses for at least 10% of the employee population and a combination of professional users and employee user licenses for at least 20%.
- Component License: This model broke apart the suite, requiring a separate license for each module a user accessed. It was a per-use license consumption model with distinct license metrics for each product.
- Custom Application Suite License: This model allowed customers to create their own custom application suites, acting as a single license model. If users had access to any of the modules in the suite, they were counted as one usage.
- Enterprise License: This all-you-can-eat model was based on a company’s revenues and other factors, not on actual usage. It had five licensing metrics for usage-based metrics and an enterprise employee metric.
Understanding Oracle EBS Licensing Metrics
Oracle’s licensing metrics play a crucial role in determining your entitlements. This article will delve into the various licensing metrics, their definitions, and their implications for your Oracle usage.
The concurrent user is defined as the maximum number of users accessing at any time. This metric focuses on the peak usage to measure license requirements rather than tracking individual access to the respective modules. It’s essential to actively manage this metric to avoid Oracle requiring migration to current license metrics that may be less favorable.
Introduced around 2000, the e-business suite professional user licensing model was maintained until March 2003. This model was designed for individuals authorized to use application programs installed on a single server or multiple servers, regardless of whether they actively use the programs. As the employee population grows, the minimums need to be maintained.
Component Application User
The component application user is authorized to use the applicable licensed programs installed on a single server or multiple servers, regardless of whether the individual is actively using the programs at any given time. This metric is component-based, meaning it is licensed based on specific modules.
Component Usage-Based License Metrics
This metric applies to Oracle order management, where the license is based on the number of application users and the number of electronic order lines entered from any source other than those entered by Oracle management order management users. It’s crucial to measure both the access from an application perspective and the usage of order management functionality in terms of APIs, interfaces, etc.
Custom Suite User
Oracle introduced the custom suite user licensing model to allow customers to create a custom bundle of modules to meet their needs. This model is for companies standardizing on Oracle and having specific users requiring access to various modules within the Oracle e-business suite.
Enterprise License Metrics
The enterprise model has five licensing metrics: enterprise revenue, enterprise operating budget, cost of goods sold, freight under management, and enterprise employee metric. These metrics allow for internal and external usage. Still, as the business grows, you will be obligated to uplift your license fees, even if your user population hasn’t grown.
Common License Compliance Risks with Oracle EBS
- Not end dating users after they leave your organization or no longer need access to EBS.
- Assigning users to roles and responsibilities that you don’t have a license for or assigning them by mistake.
- Some EBS modules have prerequisites, meaning if you license one product, you must purchase another regardless of use or requirements.
- Not fully aware that some EBS application modules have minimum requirements and that you can not have five users when you need a minimum of 100.
- Not licensing database and middleware products with full-use licenses because you have made customizations that trigger full-use licenses.
- You may have old EBS legacy metrics with definitions in the contract specifying how many users you need based on employee population or legal entities using EBS.
- You may not follow the restrictions about EBS read-only licenses.
FAQ on Oracle EBS Licensing
How Redress Compliance Can Help With Oracle E-business suite licensing
Our EBS license review includes the following:
- A comprehensive review of your EBS licenses to ensure compliance with Oracle’s licensing policies and agreements.
- Use Oracle license compliance scripts to analyze and validate your EBSlicense usage data, ensuring you accurately report the number of licenses required.
- Contract analysis of your entitlement to identify discrepancies between your license agreements and your actual use, ensuring that you only pay for what you need and avoid unnecessary expenses.
- License optimization recommendations to help you reduce your licensing costs while maintaining compliance with Oracle’s policies and agreements.
- A detailed report summarizing the findings of the license review, including any areas of noncompliance or potential cost savings opportunities.
- Consultation with our licensing experts to discuss the information and provide guidance on addressing any identified issues.
- About the Author
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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.