Oracle Hosted Named User
- Definition: Any individual authorized to access Oracle ERP services.
- Licensing Requirement: This applies to employees, admins, and consultants.
- Inactive Users: Licenses are required if they retain credentials.
- Cost Implication: Inactive licenses inflate overall costs.
- Access Control: Review access regularly to minimize costs.
Oracle Hosted Named User
Oracle ERP Cloud is one of the leading enterprise solutions for managing business processes. Understanding the associated licensing model is crucial for cost management and compliance. One key licensing model is the Hosted Named User (HNU).
This guide will explore the meaning of Hosted Named User Licensing, the associated rules, and how to optimize your licensing strategy effectively.
Oracle’s HNU model requires careful attention, as it impacts costs, legal compliance, and system accessibility. By understanding the principles behind Hosted Named User Licensing, organizations can avoid common pitfalls, manage expenses efficiently, and fully leverage their Oracle ERP investments.
Definition of Hosted Named User Licensing
A Hosted Named User (HNU) is anyone authorized to access Oracle ERP Cloud services. This licensing metric extends to a broad group of individuals, including:
- Employees: All full-time, part-time, and temporary employees who need access to Oracle ERP for their roles.
- System Administrators: Anyone with administrative privileges who needs access to manage the system.
- External Consultants are contractors, vendors, or any third parties needing access to specific projects or services.
The key point is that licensing is not about usage but access. Whether the user actively logs into the system or not, as long as they can access Oracle ERP, they count as a licensed user.
Key Rules for Licensing
Understanding the licensing rules for different user categories is critical for compliance and cost-efficiency. Here are the key rules that govern the Hosted Named User model:
1. Active Users
All active users who log in to Oracle ERP services must be licensed. This includes employees, managers, and anyone using the platform’s features. Regular access audits can help determine whether all active users are essential and ensure the number of licenses matches your requirements.
2. Inactive Users
Inactive users who might no longer use the system but still have login credentials must also be licensed. These users could be former employees or individuals who have shifted to roles that no longer require Oracle ERP. Maintaining these users leads to inflated licensing costs, as you’re essentially paying for accounts that provide no return on investment. Regular reviews and cleanups of user accounts can mitigate these unnecessary expenses.
3. System Administrators
System administrators, database admins, and IT support staff with administrative privileges are also considered hosted named users. These roles are crucial for maintaining the system’s integrity, and as such, they must be accounted for when calculating your licensing needs. This includes internal administrators and third-party IT service providers needing access.
Read our Oracle ERP Cloud Pricing Works.
Avoiding License Mismanagement
One of the most common pitfalls with Oracle HNU licensing is license mismanagement, often resulting from over-allocation or under-utilization of user accounts. Here are some key strategies to avoid mismanaging licenses:
1. Granting Access without Real Need
Granting access privileges too freely contributes significantly to unnecessary costs. Often, users are granted access “just in case” they need it, but in practice, they never use the system. It’s essential to evaluate who genuinely needs Oracle ERP access and avoid excessively distributing licenses.
2. Regular License Review Process
Conduct regular audits of user lists to identify inactive or unnecessary accounts. Set a schedule—perhaps quarterly or semi-annually—to conduct a complete audit of your Oracle ERP users. During these reviews, you can identify employees who have left the company, users who have shifted roles, and even administrators who no longer need the same level of access.
A best practice for license reviews is to partner with department heads to ensure you’re not missing critical users. Department heads have insight into who actively uses the system and who may no longer need access.
Consequences of Granting Access without Need
Mismanaging HNU licenses can have several negative consequences, both financial and compliance-related:
1. Increased Costs
Licensing costs add up quickly when unnecessary users are included. For example, if a company has 50 inactive users who still have credentials at $625 per user per month, that’s an unnecessary annual cost of $375,000. Over time, these costs can balloon and significantly strain the IT budget.
2. Compliance Risks
Non-compliance with Oracle’s licensing agreements can lead to hefty penalties during an audit. When an organization is found to be under-licensed, it could face both retroactive charges and fines, which could cost more than maintaining proper compliance from the outset. In addition, failing an Oracle audit could tarnish a company’s reputation, impacting both customer trust and internal morale.
3. Audit-Related Penalties
Oracle periodically conducts licensing audits to ensure companies comply with their contractual terms. During these audits, discrepancies between licensed users and actual usage can lead to penalties, which are often expensive and time-consuming. Staying ahead of license compliance through proactive management can save costs and organizational headaches.
Tips for License Optimization
Optimizing your Oracle HNU licenses can result in significant savings and streamlined operations. Here are some best practices for getting the most value out of your Oracle ERP system while controlling costs:
1. Regular User Audits
Scheduling periodic user audits is the most effective way to maintain a balanced licensing structure. Audits can help identify inactive users or users who no longer require access. After identifying these users, promptly revoke their access to reduce the licenses you need to maintain.
Example: Consider a mid-sized company with 200 licensed users. After conducting an audit, they found that 30 users no longer needed access—removing these users would save $225,000 annually.
2. Implementing Stricter Access Controls
Strict access controls should be in place to minimize unauthorized or unnecessary access. For instance, a system for requesting and approving user access can help ensure that only those needing it receive it. This can include requiring department head approval or having IT validate the business need for each user request.
3. Use Role-Based Access Control (RBAC)
Role-Based Access Control allows you to provide access based on an employee’s role within the company. For example, only finance team members might need access to specific financial modules, whereas project managers may only need access to project billing. By clearly defining roles and setting access permissions accordingly, you can control who uses Oracle ERP and manage license costs more effectively.
Example: If an organization assigns specific roles such as “Basic User,” “Administrator,” or “Finance Manager,” they can limit which users have access to which parts of the Oracle system. This helps prevent over-licensing while ensuring that employees have the tools they need.
4. Monitor Employee Lifecycle Events
Integrate HR processes with IT access management. When employees leave the company or change roles, their access to Oracle ERP must be updated immediately. Often, companies overlook revoking access when an employee transitions to a role that doesn’t require Oracle ERP usage. By aligning IT access with HR changes, companies can reduce unnecessary licenses.
5. Avoid Blanket Access to External Consultants
For external consultants and third-party providers, access should be provided only for the project or task they’re working on. Once the project ends, access should be revoked. A mistake many companies make is leaving access open indefinitely, leading to accumulating unnecessary licensing costs.
6. Leverage Oracle License Management Services
Oracle License Management Services (LMS) can be a valuable resource for reviewing and managing your licensing needs. Engaging with LMS can help you understand the full scope of your licensing situation, identify areas for cost savings, and prepare effectively for future growth or audit events.
Oracle Licensing Example: Cost Breakdown
Consider a company with the following user needs:
- Employees: 150 employees actively using Oracle ERP.
- External Consultants: 20 consultants working on temporary projects.
- System Administrators: 10 administrators managing the system.
Total HNU Licenses Needed = 150 + 20 + 10 = 180 Hosted Named User Licenses
- Monthly Cost per User: $625
- Total Monthly Cost: 180 users x $625 = $112,500
- Annual Cost: $112,500 x 12 = $1,350,000
If an audit reveals that 25 of these users are inactive, the company will pay $187,500 annually for licenses that are not being used. By conducting a regular user audit and removing these 25 licenses, the company could realize significant savings.
FAQ: Oracle Hosted Named User
What is a Hosted Named User in Oracle licensing? A Hosted Named User is anyone authorized to access Oracle ERP services, including employees, administrators, and consultants.
Do inactive users require a license? Yes, if they retain credentials, they still need a license. Reviewing and revoking unnecessary access helps manage costs.
How do I determine who needs a Hosted Named User license? Anyone with credentials to access Oracle ERP must be licensed, even if they are not actively using the system.
Are external consultants counted as Hosted Named Users? Yes, external consultants who are granted access must also be licensed.
Why should I review Hosted Named User access regularly? Regular reviews help identify inactive users and remove unnecessary licenses, saving costs and ensuring compliance.
What happens if I grant users unnecessary access? Granting unnecessary access increases subscription costs and increases compliance risks during Oracle audits.
How can I optimize Hosted Named User licensing costs? Implement strict access controls, perform regular user audits, and use role-based access to avoid over-licensing.
Do system administrators require a license? All administrators with credentials to access Oracle ERP must be licensed under the Hosted Named User model.
How can role-based access help with license management? It ensures that only users who need specific functionalities are granted access, helping to control license costs.
What is the cost of an Oracle Hosted Named User license? The cost is typically $625 per user per month, translating to $7,500 annually.
Can I remove licenses for users who leave the company? Yes, promptly removing access for departing employees is a good practice to avoid paying for unused licenses.
How does Hosted Named User licensing differ from per-user licensing? Unlike typical active-user models, hosted Named User licensing requires licensing all users authorized for access, regardless of activity.
What are the compliance risks of improper license management? Improper management can lead to non-compliance with Oracle agreements and costly penalties during an audit.
Should I license temporary or part-time employees? Yes, all employees must be licensed, including temporary or part-time staff with access to Oracle ERP.
What tools are available to manage Oracle user access? Oracle License Management Services (LMS) and internal audits can help effectively manage and optimize user licenses.
