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Oracle HCM Cloud Pricing and Licensing

Oracle HCM Cloud Pricing and Licensing

  • Subscription model: $15 per user/month
  • Minimum 1,000 users, 3-year contract
  • License all employees interacting with the system
  • Additional environments required for large user counts

1. Introduction to Oracle HCM Cloud Pricing and Licensing

Introduction to Oracle HCM Cloud Pricing and Licensing

Oracle Human Capital Management (HCM) Cloud is a suite of applications designed to help organizations manage various aspects of their workforce, such as recruitment, payroll, talent management, and employee engagement. As part of the larger Oracle Fusion Cloud Applications portfolio, Oracle HCM Cloud provides a powerful, integrated platform for handling all human resources facets.

Understanding Oracle HCM Cloud’s pricing and licensing is crucial for ensuring that organizations can fully utilize the platform’s capabilities without overcommitting or incurring unnecessary costs.

Oracle HCM Cloud pricing is based on a subscription model, where licenses are purchased based on user metrics. Pricing varies depending on the required features and the number of users, so it is essential to understand the different modules and licensing metrics available to maximize value.

A well-informed approach to Oracle HCM licensing can help businesses avoid pitfalls such as over-licensing or compliance risks. This guide covers key aspects of the pricing model and licensing requirements to help you make strategic decisions for your organization’s HR management.

2. Oracle HCM Cloud Base and Service Options

Oracle HCM Cloud Base and Service Options

Oracle HCM Cloud is structured around a base cloud service and several optional add-ons. Each organization must begin with the base service, which provides fundamental HR functionalities, and then can expand with various service options to tailor the solution to its specific needs.

Breakdown of the Oracle Fusion Human Capital Management Base Cloud Service

The Oracle Fusion Human Capital Management (HCM) Base Cloud Service is the foundation for all HCM functionalities. This base service includes a set of core modules that provide essential HR capabilities for managing employee records, payroll, and benefits. Specifically, the base cloud service includes the following features:

  • Oracle Fusion Global Human Resources: The backbone of the HCM suite, managing employee information and HR processes.
  • Oracle Fusion Global Absence Management: Tools to efficiently manage employee leave and absence requests.
  • Oracle Fusion Benefits: Solutions for managing employee benefit programs, including enrollment and eligibility tracking.
  • Oracle Fusion Payroll Interface: Integration capabilities to connect payroll providers with Oracle HCM.
  • Oracle Fusion Workforce Directory Management: A centralized directory for managing organizational hierarchy and employee roles.
  • Oracle Fusion HCM Journeys: Guidance for employees through HR processes like onboarding and skill development.
  • Oracle Fusion Onboarding: Supports a structured and efficient onboarding experience for new employees.
  • Oracle Fusion Workforce Predictions: Analytical tools that predict workforce trends and assist in planning.
  • Oracle Fusion Work Life Solutions: Solutions for improving work-life balance, supporting employee engagement.
  • Oracle Fusion Transactional Business Intelligence for HCM Cloud: Provides robust reporting and analytics for all HCM activities.

The base service is mandatory for all customers using Oracle HCM Cloud. The base package costs $15 per employee per month, and organizations must commit to a minimum of 1,000 employee users and a contract term of at least three years.

Overview of Service Options and Add-Ons

Overview of Service Options and Add-Ons

In addition to the base cloud service, Oracle HCM Cloud offers various service options that can be added to expand the functionality of the HCM platform.

These add-ons provide specialized tools to meet different organizational needs. Some of the available service options include:

  • Fusion Advanced Human Capital Management Controls: Enhances compliance and control within HR processes.
  • Fusion Dynamic Skills Cloud Service: Helps dynamically manage and develop employee skills tailored to business needs.
  • Fusion Recruiting Cloud Service: Provides an end-to-end recruiting solution, including sourcing, application tracking, and candidate management.
  • Fusion Workforce Compensation Cloud Service: Allows management compensation plans, including salary adjustments and bonus payments.
  • Fusion Talent Management Cloud Service: Supports performance evaluations, career growth planning, and succession management.
  • Fusion Learning Cloud Service: Offers tools for managing employee learning and development programs.
  • Fusion Time and Labor Cloud Service: Helps organizations track and manage employee work hours, overtime, and attendance.

These add-ons can be purchased to expand the functionality of the base HCM service. Importantly, the number of licenses for add-ons does not need to match the base service’s licenses, allowing organizations to tailor functionality to specific employee groups.

Mandatory Base Cloud Service and Add-Ons for Additional Functionality

The base cloud service is mandatory, meaning all Oracle HCM Cloud implementations must include at least the core HR modules. Add-ons are optional but provide critical functionality for organizations that need capabilities beyond the essentials. Add-ons allow organizations to pick and choose the features that align with their unique business requirements without having to overpay for unnecessary modules.

For example, a company looking to automate recruitment processes would need to license the Fusion Recruiting Cloud Service add-on, while another that prioritizes workforce safety could opt for Fusion Workforce Health and Safety Incidents Cloud Service. The flexibility to purchase only the add-ons required makes Oracle HCM Cloud highly customizable.

Minimum Requirements for Purchase

Oracle HCM Cloud has some minimum purchase requirements that apply to all users:

  • Minimum Employee Purchase: To use Oracle HCM Cloud, organizations must license 1,000 employee users.
  • Minimum Contract Duration: Contracts are locked in for a minimum term of three years. This contract term provides stability for the organization and helps Oracle forecast customer needs.
  • Non-Production Environment Requirements: Depending on the number of hosted employees, organizations may also be required to purchase additional non-production (testing) environments. For example:
    • Organizations with less than 10,000 hosted employees must purchase at least one additional test environment.
    • Organizations with 10,000 to 50,000 hosted employees must license three additional test environments.
    • Organizations with more than 50,000 hosted employees are required to purchase at least four additional test environments.

These non-production environments are crucial for testing new updates, customizing workflows, and ensuring smooth transitions between versions without risking the production data.

3. Oracle HCM Cloud Licensing Metrics

Oracle HCM Cloud Licensing Metrics

Licensing for Oracle HCM Cloud is based on specific metrics that determine the required licenses. Each module or add-on has a unique licensing metric, and understanding these is key to calculating the correct number of licenses and avoiding unexpected costs.

Explanation of Different Licensing Metrics per Module

Oracle HCM Cloud uses different licensing metrics depending on the specific module or service. Here’s an overview:

  • Per Employee Licensing: Most base functionalities and modules in Oracle HCM Cloud use a per-employee licensing metric. Each employee managed within the Oracle HCM system must be licensed, regardless of the specific services used.
  • Hosted Employee Metric for Add-Ons: Some add-ons, like Fusion Dynamic Skills or Fusion Workforce Compensation, also use a Hosted Employee metric. This metric includes all employees tracked by the system or having access to any functionality within the module.

These metrics calculate the licenses needed and determine the overall cost of implementing Oracle HCM Cloud. It is important to distinguish between users needing full system access and those only tracked within the system, as both must be licensed.

Hosted Employee License Metric: What it Includes and How It Applies

The Hosted Employee License Metric is the primary licensing metric used for Oracle HCM Cloud. It encompasses all employees who interact with the Oracle HCM system in any capacity. This metric includes:

  1. Full-Time Employees: All standard employees must be licensed.
  2. Part-Time and Temporary Employees: Even those working fewer hours must be included in the license count.
  3. Agents, Contractors, and Consultants: Any contractors or consultants who use or are tracked by the HCM system are counted as hosted employees.
  4. Outsourced Employees: If any business functions are outsourced, all employees of the outsourced service provider who access or are tracked by the HCM system must also be licensed.

This means that even if an individual is not directly using Oracle HCM, they must be counted towards the licensing metric if they are included in the data for tracking purposes. For example, if you have 500 employees, 200 contractors, and 300 outsourced staff tracked within Oracle HCM, you must license 1,000 Hosted Employees.

The cost implications of the hosted employee metric can be significant, especially for organizations with a mix of direct employees, contractors, and outsourced staff. Careful calculation of these employees is necessary to avoid under-licensing, which could result in compliance issues during an audit.

Minimum Licensing Requirements for Non-Production Environments

In addition to production licenses, Oracle HCM Cloud requires non-production (test) environments for certain customer sizes. Non-production environments are important for testing patches, new features, and any customizations before moving to production, which minimizes disruption.

  • Non-Production Licensing Requirements:
    • For environments with less than 10,000 hosted employees, at least one additional test environment must be purchased.
    • At least three additional test environments are mandatory for organizations with 10,000-50,000 hosted employees.
    • Four additional test environments must be purchased for organizations with over 50,000 hosted employees.

These non-production environments allow for testing without affecting the live database, ensuring that any new implementation, update, or customization will not cause unexpected issues. Oracle’s requirement for additional non-production licenses ensures that organizations can conduct thorough testing before changing the production environment.

4. Oracle HCM Base Cloud Costs

Oracle HCM Base Cloud Costs

Understanding the costs associated with Oracle HCM Base Cloud is essential for effectively planning your HR budget. Oracle uses a subscription-based pricing structure with specific requirements for employee numbers and contract terms.

Pricing Structure for Base Cloud Service ($15 per Month per User)

The Oracle Fusion Human Capital Management Base Cloud Service costs $15 per user per month. This price covers all core HR functionalities, providing businesses with essential tools for managing employee data, payroll, benefits, etc.

  • The $15 per user pricing gives organizations access to the base functionalities, including the foundational Oracle HCM features like Global Human Resources, Payroll Interface, and Workforce Directory Management.
  • It’s important to note that this is a list price, and there may be room for negotiation, particularly for larger contracts or organizations committing to extended terms.
Minimum Employee Purchase Requirements and Implications

One of the key conditions of Oracle HCM Cloud is the minimum employee purchase requirement. This minimum requirement can significantly impact smaller organizations:

  • Minimum Employee Requirement: Organizations must license at least 1,000 user licenses to use Oracle HCM Cloud. You will still need to pay for 1,000 user licenses even with fewer employees.
  • Financial Impact: At $15 per employee per month, the minimum annual cost for Oracle HCM Cloud is $180,000 ($15 * 1,000 employees * 12 months).

This minimum requirement makes Oracle HCM Cloud more suitable for medium to large enterprises. Smaller organizations may find the minimum cost challenging if they do not have enough employees to justify the licensing requirements.

Understanding the Three-Year Contract Minimum and Its Impact

Another crucial aspect of Oracle HCM licensing is the three-year minimum contract term:

  • Three-Year Commitment: Oracle requires that organizations sign up for a minimum contract term of three years. This commitment helps Oracle maintain predictable revenue and stabilizes organizations’ HR infrastructure over time.
  • Impact on Planning: Committing to a three-year term means that organizations must ensure that Oracle HCM Cloud will meet their long-term HR needs. Companies must also factor in the possibility of changes in their workforce size, HR strategy, or even budget.
  • Negotiation Opportunity: Given the long-term commitment, organizations often have leverage to negotiate discounts or additional services as part of the agreement. However, it’s essential to understand that any reduction in the employee count during the contract term will not reduce the costs, making accurate initial scoping crucial.

5. Oracle HCM Licensing Models Explained

Oracle HCM Licensing Models

Oracle HCM Cloud uses a hosted employee licensing model to determine licensing needs. The definition of a hosted employee is broad, and understanding it is essential for accurately calculating costs.

Hosted Employee Definition and Details

The Hosted Employee metric includes more than just the full-time employees on an organization’s payroll. Oracle defines Hosted Employees as follows:

  • Full-Time Employees: All standard full-time employees must be licensed under the Hosted Employee metric.
  • Part-Time and Contract Employees: Part-time or contract employees must also be licensed if they interact with Oracle HCM in any capacity.
  • Consultants and Agents: Any consultants or agents that use, access, or are tracked by the HCM system must also be included.
  • Outsourced Employees: If a company outsources part of its HR processes, any employees of the outsourced provider who use or are tracked by Oracle HCM must be licensed. This also includes agents and temporary workers provided by external companies.
Licensing Requirements for Full-Time, Part-Time, and Contract Employees

Under Oracle HCM’s licensing model, all individuals interacting with the system must be counted toward the licensing total. This includes:

  • Full-Time Employees: Licensed as standard.
  • Part-Time and Temporary Workers: Must be licensed regardless of the hours worked, provided they are tracked in the system.
  • Contract Workers: Must be counted even if their use of the system is limited.

This means that even if an individual is only partially using the system, they must still be licensed, which can significantly impact the overall cost.

Outsourced Employee Requirements and Their Effect on Licensing

When outsourcing HR functions, a company must license employees who interact with Oracle HCM. This includes employees of the outsourcing firm who use or access Oracle HCM systems for data input, management, or HR-related tasks.

  • Impact on Licensing Costs: Including outsourced workers can significantly increase licensing requirements, especially for organizations using large external teams to manage HR tasks.
  • Example: If a company has 500 in-house employees and an outsourced team 50 managing payroll, all 550 individuals must be counted toward licensing, regardless of employment status.
Additional Environment Requirements Based on the Number of Hosted Employees

Oracle HCM Cloud also mandates the use of additional non-production environments based on the size of the organization:

  • < 10,000 Hosted Employees: Requires at least one additional test environment.
  • 10,000 – 50,000 Hosted Employees: Requires three additional test environments.
  • 50,000+ Hosted Employees: Requires four additional test environments.

These non-production environments are critical for testing updates, patches, and customizations before deploying them in the production environment, which ensures minimal disruption to daily HR operations.

6. Oracle HCM Cloud Modules and Their Licensing

Oracle HCM Cloud is modular, meaning organizations can choose which additional functionalities they need based on their requirements. Here is an overview of the products included and their licensing implications.

Overview of Products Included in the Oracle Fusion Human Capital Management Base Cloud Service

The Oracle Fusion HCM Base Cloud Service includes several essential HR modules:

  • Oracle Fusion Global Human Resources: The central hub for employee information and HR processes.
  • Oracle Fusion Payroll Interface: Integration tools for payroll providers.
  • Oracle Fusion Benefits: Helps manage employee benefits, including enrollment and eligibility.
  • Oracle Fusion Workforce Directory Management: A comprehensive employee directory and hierarchy management is provided.
  • Oracle Fusion HCM Journeys: Helps guide employees through onboarding, learning, and growth opportunities.
Licensing Details for Fusion Service Options

Service options are available to expand on the base functionalities, each with its licensing metrics. These include:

  • Advanced Human Capital Management Controls: This system provides additional compliance and monitoring tools to enhance the security and integrity of HR operations.
  • Workforce Compensation Cloud Service: Used for managing compensation, merit adjustments, and bonus allocations. This module is licensed separately from the base and must be added if specific compensation tools are required.
  • Talent Management Cloud Service provides tools for career development, performance reviews, and succession planning. This module is ideal for organizations that focus on talent development.

The number of users for these additional modules does not need to match the base service, providing flexibility in targeting features to specific employee groups.

7. Oracle HCM Cloud Pricing Calculator

Oracle HCM Cloud Pricing Calculator

Organizations can use the Oracle HCM Pricing Calculator to determine the total licensing cost for Oracle HCM Cloud. This tool helps estimate costs by considering the number of employees, add-on modules, and required environments.

How to Calculate Total Licensing Costs Using the Oracle HCM Pricing Calculator

To use the Oracle HCM Pricing Calculator, you need to input the following information:

  • Number of Hosted Employees: Full-time, part-time, contractors, and consultants.
  • Modules and Add-Ons: Select the additional modules you want to include, such as Dynamic Skills Cloud Service or Workforce Compensation.
  • Non-Production Environments: Specify how many non-production environments are needed for your deployment.

The calculator provides a detailed breakdown of the total cost, including the base cloud service and any selected add-ons.

Example Calculation for Dynamic Skills Cloud Service

Suppose a company wants to implement the Dynamic Skills Cloud Service and estimates needing 3,000 hosted employees covered by the HCM system. The calculation might look like this:

  • Base Cloud Service:
    • 3,000 employees at $15 per employee per month = $45,000 per month.
    • Annual Cost: $45,000 * 12 months = $540,000 annually.
  • Dynamic Skills Cloud Service:
    • 3,000 hosted employees at $3 per employee per month = $9,000.
    • Annual Cost: $9,000 * 12 months = $108,000 annually.
  • Total Cost Before Negotiation:
    • Base Cloud Service: $540,000
    • Dynamic Skills Cloud Service: $108,000
    • Total: $648,000 annually.
Total Costs and Factors to Consider Before Negotiation

Before finalizing, it is important to consider potential discounts, multi-year commitments, and bundled pricing opportunities. Negotiating with Oracle can lead to significant cost savings, especially if committing to a larger user base or a longer contract period.

For companies planning for future growth, it is also advisable to negotiate a price hold for additional licenses, which can help keep costs predictable as the workforce expands.

8. Key Factors to Consider in Oracle HCM Cloud Negotiations

Key Factors to Consider in Oracle HCM Cloud Negotiations

Negotiating an Oracle HCM Cloud contract is a complex process that requires a clear understanding of your organization’s needs and how Oracle’s terms can impact your costs and flexibility. Here are the key factors you must consider during negotiations to ensure you get the best deal possible.

Transitioning from On-Premises to Cloud: Challenges and Negotiation Tips

Transitioning from on-premises software to Oracle HCM Cloud can be challenging, particularly when managing existing licenses and adjusting to new cloud requirements.

  • Shelving Existing Licenses: When migrating to Oracle Cloud, you might still pay maintenance fees for your on-premises software. During negotiations, requesting the temporary shelving of these existing licenses is important. Oracle may allow you to pause or reduce these maintenance costs during the transition period.
  • Migration Cost Negotiation: During negotiations, consider the costs associated with data migration, integration with existing systems, and employee training. Including these in the conversation may lead to Oracle providing additional support or discounts to smooth the transition.
Service Delays: Avoiding Wasted Contract Value by Matching Cloud Services with Go-Live Dates

Service delays can lead to significant losses if cloud services are activated before the organization is ready to fully utilize them.

  • Aligning Service Start Dates: One common issue in Oracle HCM Cloud contracts is starting cloud services too early. Companies often end up paying for services that are not fully implemented or utilized. Negotiating a service start date that aligns with your actual go-live date is crucial.
  • Mitigating Risks of Early Activation: Ensure that your contract specifies a delay or grace period for activating services, especially if you expect a longer implementation timeline. This can help avoid wasting up to 33-50% of the contract value during the initial phase.
Renewal Cap: Importance of Negotiating a Cap on Renewal Price Increases

Oracle typically includes a renewal cap in its HCM Cloud contracts, but the specifics of this term are critical to controlling future costs.

  • Renewal Cap on Price Increases: This cap limits how much Oracle can increase the price of your subscription upon renewal. It is essential to negotiate this cap as low as possible to ensure predictability in future costs.
  • Risks Associated with User Reduction: It is important to note that renewal caps are often only valid if you maintain the same number of cloud users and services. Reducing the number of cloud users may invalidate the cap, allowing Oracle to increase renewal costs significantly. Avoid over-buying users upfront to maintain flexibility in user numbers over the contract term.
Successor Cloud Products and Rebalancing

Cloud product offerings constantly evolve, and Oracle may bundle or discontinue services during your contract period. Understanding how to manage these changes is crucial for controlling costs.

  • Avoiding Price Hikes Due to Product Changes: Oracle has previously bundled multiple services into new, more expensive offerings. To prevent this from happening during your contract, negotiate a clause that ensures you will not face price increases if Oracle re-bundles or discontinues specific services.
  • Rebalancing Options: A rebalancing clause can provide significant flexibility during the contract period. This clause allows you to shift funds from services no longer needed to other Oracle Cloud services, ensuring that you can make the most of your investment without paying for unused products.

9. Price Protection and Flexibility Clauses

Incorporating price protection and flexibility clauses into your Oracle HCM Cloud contract can help you manage costs more effectively and avoid surprises during the contract term.

Price Hold Agreements: Securing Pre-Negotiated Discount Levels for Future Purchases

A price hold agreement ensures that Oracle provides a pre-negotiated discount level for additional purchases during the contract period.

  • Securing Discounts: Oracle may offer discounts on additional purchases, especially for longer-term contracts or large user bases. Ensure that your contract clearly defines these discount levels.
  • Length and Minimum Purchase Requirements: When negotiating a price hold, be aware that Oracle may specify minimum purchase requirements or limit the time frame for which the price hold is valid. It is important to understand these limitations to avoid unexpected costs if your needs change.
Cloud User Definitions: Clarifying User Categories to Avoid Compliance Issues

Accurate user definitions are crucial in Oracle HCM Cloud contracts to avoid compliance pitfalls and ensure you only pay for what you need.

  • Clarify User Categories: Oracle’s standard user definitions may not always align with your workforce’s unique structure. Ensure the contract defines all relevant user categories, such as full-time, part-time, and contract employees.
  • Negotiating Definitions: If users do not fit Oracle’s standard definitions, negotiate custom definitions that accurately reflect their usage. This will help prevent compliance issues and ensure you are not over-licensed for users who do not fully utilize Oracle HCM.

Oracle HCM Cloud Pricing and Licensing FAQ

What is Oracle HCM Cloud? Oracle HCM Cloud is a cloud-based suite of Human Capital Management applications that help organizations manage HR tasks, such as payroll, recruitment, talent management, and employee engagement.

How is Oracle HCM Cloud priced? The base service is priced on a subscription basis at $15 per user per month. Additional service options are available at separate costs.

What is the minimum commitment for Oracle HCM Cloud? The minimum commitment is 1,000 employee licenses, with a contract term of at least three years. This ensures access to core HR functionalities for a set number of users.

Do I need to license part-time and contract employees? Yes, Oracle requires licensing for all full-time, part-time, and contract employees interacting with Oracle HCM Cloud, regardless of their roles or hours worked.

Can I include outsourced employees in my Oracle HCM Cloud license? Yes, outsourced employees who use, access, or are tracked by the HCM system must be licensed. This includes employees working through third-party providers.

What is the Hosted Employee license metric? This metric includes all employees who interact with or are tracked by the Oracle HCM system, including full-time, part-time, contract, and outsourced employees.

Do I need additional licenses for non-production environments? Yes, depending on the number of hosted employees, Oracle requires additional non-production environments. For example, organizations with over 50,000 hosted employees need at least four additional test environments.

What are Oracle HCM service options? Oracle HCM service options are add-ons that enhance the base HR functionalities. These include modules like Fusion Recruiting, Talent Management, and Workforce Compensation, each licensed separately.

Can I purchase add-on modules for a subset of users? Yes, add-on modules do not need to match the user count of the base service. You can license specific add-ons for particular groups of employees depending on their needs.

What is the cost of Oracle HCM-based cloud service per year? The cost is $15 per user per month, with a minimum of 1,000 users, totaling $180,000 per year for the base cloud service before additional modules are added.

Is Oracle HCM Cloud available on-premises? No, it is available only as a software-as-a-service (SaaS) solution hosted in Oracle’s cloud infrastructure or other approved data centers.

Can I negotiate a price hold for future purchases? Yes, you can secure a price hold during negotiations. This allows you to lock in discount levels for additional licenses you may need during the contract term.

What happens if I reduce the number of users? Reducing the number of users during the contract term may invalidate the renewal cap, allowing Oracle to raise renewal prices. It’s essential to plan your user count carefully to maintain cost stability.

What is a renewal cap, and why is it important? A renewal cap limits how much Oracle can increase the subscription price upon contract renewal. Negotiating a low renewal cap is important to prevent substantial price hikes in the future.

What is rebalancing, and how can it help during my contract? Rebalancing allows you to shift unused licenses or funds from one service to another during your contract term. This can help avoid wasting resources if one of the services is underutilized and allows you to allocate funds to more valuable areas.

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Author
  • Fredrik Filipsson has 20 years of experience in Oracle license management, including nine years working at Oracle and 11 years as a consultant, assisting major global clients with complex Oracle licensing issues. Before his work in Oracle licensing, he gained valuable expertise in IBM, SAP, and Salesforce licensing through his time at IBM. In addition, Fredrik has played a leading role in AI initiatives and is a successful entrepreneur, co-founding Redress Compliance and several other companies.

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