Oracle Licensing

Oracle Term License: Benefits and Key Information

What is an Oracle TERM License?

An Oracle term license is:

  • A license for Oracle software.
  • Only available for certain Oracle technology products.
  • Valid for one year.
  • Both license and support expire after this period.
  • It cannot be renewed; it requires a new purchase afterward.

What is an Oracle Perpetual License?

An Oracle perpetual license gives users the indefinite right to use a specific version of Oracle software. Unlike other licensing models, a perpetual license has no expiration date, allowing organizations to continue using the licensed software for as long as they choose.

However, while the license is perpetual, ongoing support and updates are optional and typically cost additional money.

Oracle TERM License: Key Details

Oracle term license

Oracle’s TERM license is a time-limited licensing option that allows organizations to use Oracle software for a fixed duration, typically one year. After the license term ends, the license and its associated support expire, requiring users to purchase new licenses and support to continue using the software.

Key Characteristics of the Oracle TERM License

  • Fixed Duration: TERM licenses are valid for one year and cannot be renewed. Once expired, organizations must acquire a new license and support.
  • Limited Availability: On September 1, 2020, Oracle stopped offering term licenses for most on-premises software. Only certain Oracle Technology products remain available under this model, which is exclusively for one year.
  • Cost-Effective Pricing: TERM licenses are priced at a fraction of the perpetual license cost—typically 20% of the perpetual license price for products like Oracle Advanced Security.
  • Support Fees: The support fee for a TERM license is calculated as 22% of the perpetual license’s list price, not 22% of the TERM license fee.

Comparing Perpetual and TERM Licenses

FeaturePerpetual LicenseTERM License
License DurationIndefinite; no expiration.Fixed at one year.
CostHigher upfront cost.Fraction of the perpetual license price.
Support ContinuityOptional; can be renewed annually.Expires with the license term.
AvailabilityWidely available for on-premises and cloud.Limited to certain Oracle Technology products.

Scenarios Where TERM Licenses Are Beneficial

Oracle TERM licenses are particularly useful in specific scenarios, providing flexibility and cost-effectiveness for temporary needs.

1. Short-Term Compliance

Organizations facing immediate licensing gaps can use TERM licenses as a cost-effective alternative to perpetual licenses, especially to address temporary non-compliance issues.

Example: A company undergoing an Oracle audit discovers unlicensed software usage. Procuring a TERM license resolves compliance without committing to a long-term solution.

2. Temporary Software Requirements

TERM licenses offer a practical and affordable option for projects requiring Oracle software for a limited time, such as migrations or testing phases.

Example: A business uses Oracle TERM licenses to manage short-term database needs during a cloud migration project without overcommitting financially.

3. Post-Audit Resolutions

TERM licenses are frequently recommended after an Oracle audit to address license discrepancies highlighted during the process.

Example: An audit reveals a shortfall in Oracle Advanced Security licenses. The organization opts for TERM licenses to meet compliance quickly while strategizing a long-term solution.


Understanding Changes in Oracle TERM Licensing

Since September 2020, Oracle has limited its TERM license offerings to specific Oracle Technology products. This shift aligns with Oracle’s broader focus on cloud adoption and reduces the availability of short-term licensing options for on-premises software.

Implications for Organizations

  • Fewer TERM License Options: Businesses relying on term licenses for on-premises software must adjust to the reduced availability.
  • Increased Cloud Adoption: The limited TERM licensing options encourage organizations to transition to Oracle’s cloud-based solutions, such as Oracle Cloud Infrastructure (OCI).

Pricing Insights for TERM Licenses

A TERM license costs significantly lower than a perpetual license, typically 20% of the latter’s list price. However, support fees for TERM licenses are calculated at 22% of the perpetual license price, which may influence total costs.

Example:

  • Oracle Advanced Security Perpetual License: $100,000.
  • TERM License (One Year): $20,000 (20% of perpetual price).
  • Support Fee for TERM License: $22,000 (22% of perpetual price).

FAQs on Oracle TERM Licenses

What is an Oracle Perpetual License?
An Oracle perpetual license allows users to use a specific version of Oracle software indefinitely without expiration. However, ongoing support and updates are optional and cost additional.

What is an Oracle TERM License?
A TERM license allows users to use Oracle software for a fixed duration, typically one year. After the term expires, the license and associated support end, requiring the purchase of a new license.

Can a TERM License be renewed?
No, Oracle TERM licenses cannot be renewed. Once expired, a new license and support agreement must be purchased to continue using the software.

What changes did Oracle make to TERM licenses in 2020?
As of September 1, 2020, Oracle discontinued TERM licenses for most on-premises software, except for certain Oracle Technology products, available only for one year.

How does the cost of a TERM license compare to a perpetual license?
TERM licenses typically cost 20% of the perpetual license’s list price. For example, a one-year TERM license for Oracle Advanced Security would be priced at 20% of the perpetual license cost.

How are support fees calculated for TERM licenses?
Support fees for TERM licenses are calculated as 22% of the perpetual license’s list price, not 22% of the TERM license fee, which can affect total costs.

When is a TERM license beneficial?
TERM licenses are ideal for short-term compliance needs, temporary software requirements like migrations or testing, and addressing license discrepancies after an Oracle audit.

What is the main advantage of a perpetual license?
A perpetual license offers ongoing rights to use the software without any time limitations, making it suitable for long-term software usage.

How do TERM and perpetual licenses differ?
TERM licenses are time-bound and cost less upfront, but they expire after a year. Perpetual licenses allow indefinite use but have a higher initial cost.

What happens after a TERM license expires?
After expiration, organizations must purchase a new license and support agreement to continue using the software. TERM licenses do not have a renewal option.

Can TERM licenses address Oracle audit findings?
Yes, TERM licenses often address license shortfalls identified during an Oracle audit. They offer a cost-effective short-term compliance solution.

Why is Oracle focusing more on cloud solutions?
Oracle has shifted its focus to cloud offerings, reducing TERM license availability for on-premises software to encourage adoption of Oracle Cloud Infrastructure (OCI).

How can organizations use TERM licenses for migrations?
TERM licenses can support temporary needs during migration projects, such as ensuring compliance or maintaining access to Oracle products during the transition.

What are the support limitations of TERM licenses?
Support ends when the TERM license expires, requiring a new license and support purchase for continued use.

How can organizations decide between TERM and perpetual licenses?
Organizations should consider their budget, long-term software needs, and the duration of their software requirements. TERM licenses are better for short-term needs, while perpetual licenses suit long-term use cases.

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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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