Oracle Unlimited license agreement

Oracle ULA Renewal Strategies

Oracle ULA Renewal Strategies

Oracle ULA Renewal Strategies

As your ULA term nears its end, a critical decision emerges: should you renew the ULA or exit (certify) out of it? Renewal can extend your unlimited usage period but comes at a significant cost and commitment. It’s essential to evaluate this choice carefully based on your organization’s current and future needs.

Assessing the Need to Renew

Start by analyzing how much Oracle software your business uses and plans to use in the future. If your Oracle deployments are expected to grow substantially beyond the licenses you would certify today, a renewal might provide value by covering that growth.

Conversely, renewing could waste money if your usage has stabilized (or if you’ve deployed far more than you need and can operate comfortably with the licenses obtained at certification).

In other words, project your future Oracle consumption: organizations anticipating major expansions, new projects, or acquisitions that rely on Oracle may benefit from another ULA, whereas those moving away from Oracle or not expecting growth should lean toward certifying and ending the ULA.

Cost Implications

Budget impact is a key consideration. Renewing a ULA involves negotiating a new license fee (often based on Oracle’s assessment of value or your company size) and paying annual support (typically 22% of that license fee) on the new higher amount.

Over time, the costs only increase since Oracle’s support fees rise, and there’s no way to lower your costs and stay in an Oracle ULA. For example, one analysis showed that continuing a ULA could cost three times more over a few years than certifying and stopping new license payments.

Weigh the renewed ULA’s price tag against the alternative: exiting the ULA means no new license fees (you keep using what you’ve deployed under perpetual licenses), and you only pay support on those final quantities. If those quantities suffice for your operations, exiting can save millions in the long run.

Read how to manage Oracle ULAs.

Business and Technical Considerations

Consider your broader IT strategy. Are you planning to move to cloud services or adopt alternative technologies that could replace Oracle usage? If so, locking into another multi-year ULA may be counter-productive.

On the other hand, if Oracle software remains mission-critical and you want the freedom to deploy it as needed without constant procurement, renewal offers that flexibility. Also, review whether all the Oracle products in the current ULA are still relevant—perhaps some software is being phased out.

If certain products are no longer needed, this supports the case for not renewing them (or, if you do renew, negotiating to drop those products to reduce cost).

Additionally, think about organizational changes: for instance, if a merger or divestiture is on the horizon, how would a renewal handle that? (Many ULAs allow only wholly-owned entities; a change in ownership structure might complicate the agreement).

Avoiding the “Renewal Trap”

Oracle sales teams often strongly encourage customers to renew their ULA, sometimes using scare tactics around compliance. It’s reported that Oracle prefers ULAs because they are wildly profitable for Oracle.

Be aware of this bias – the easiest path for Oracle is to sign another ULA, but the easiest path for you may be different. If you are compliant and have prepared well, certifying out is a viable and often cost-effective option despite Oracle’s pressure.

Many licensing advisors warn that after enjoying one ULA term, renewals favor Oracle much more than the customer, adding restrictive clauses (“gotchas”) that make it harder to leave later. So, don’t renew out of fear alone; renew because it makes sense for your business.

Key Renewal Strategies and Considerations

Key Renewal Strategies and Considerations

Start Planning Early

If you might renew, begin the evaluation 12-18 months before the ULA expiration. Early planning gives you time to conduct a thorough internal usage audit, assess future needs, and avoid last-minute decisions under duress. It also gives you leverage to negotiate (Oracle knows you can walk away if you start preparations early).

Conduct a Usage Audit

Perform a comprehensive assessment of how many licenses you would need if the ULA ended. Identify any shortfall or surplus. This helps in two ways: (1) if you exit, you know where you stand; (2) if you renew, you know which products are truly used and can potentially remove any unused products from the new ULA to save costs.

Also, forecast upcoming projects that might require Oracle licenses – if those numbers are high, that strengthens the case for renewal (and negotiating those into the ULA).

Align with Business Objectives

Ensure your decision aligns with your company’s strategy. For example, if the business aims to cut costs or move to SaaS solutions, a renewal might contradict those goals.

If the business strategy is aggressive growth or global expansion that relies on Oracle technology, a renewal could support that by eliminating licensing hurdles during the growth phase. In short, the ULA should fit into the bigger picture of what the company is trying to achieve in the next few years.

Negotiate Scope and Cost (if Renewing)

A renewal is not an all-or-nothing proposition – you can and should negotiate terms. Use the renewal as an opportunity to right-size the agreement for your current needs.

This can include:

  • Removing unnecessary products: If certain Oracle programs in your original ULA were unused or underused, negotiate to drop them from the renewal to avoid paying support for them. Each product you drop can reduce the cost.
  • Adding new products: Conversely, if you plan to adopt additional Oracle products heavily, try to include them in the ULA renewal so they’re covered unlimited. Including a product from the start is more cost-effective than licensing it separately later.
  • Negotiating the price: Do not accept Oracle’s first renewal quote. Oracle often pitches a high number initially (perhaps even higher than your first ULA cost). Treat that as a starting point for negotiation. Justify a lower price by demonstrating your actual usage and the value you expect to get. If possible, engage a third-party licensing expert to help benchmark a fair price or leverage industry knowledge of discounts.
  • Limiting Support Increases: Oracle’s default support fee increases can be hefty each year. Try to cap the annual support increase or secure a fixed support fee for the term of the renewal. For example, negotiate for a 0% or 3% cap on support escalation instead of the typical 4%+.
  • Duration and Flexibility: A standard ULA might be 3 years; you could negotiate a shorter term if uncertain about long-term needs or include a clause for an earlier certification (“accelerated certification”) if a certain event occurs. Ensure any renewal contract has clear language about your right to certify (exit) at the end – sometimes Oracle may push clauses that auto-renew or restrict certification if certain conditions aren’t met. Push back on any such terms.

Leverage Timing and Alternatives

When renewal is on the table, remember when and how you negotiate can influence the deal. Oracle’s fiscal year ends in May, and end-of-quarter or end-of-year pressures can make Oracle more flexible on pricing.

If your ULA expiration and negotiation period aligns with these times, use that to your advantage – Oracle reps have sales targets and may offer better discounts as deadlines loom. Additionally, research alternatives: you create competitive pressure if you can credibly present that you might migrate some systems to another vendor (or even Oracle’s cloud services on different terms).

Oracle may concede more in price or terms if they know you have other options. Even considering a “license and support only” scenario (exiting the ULA) can be an alternative – compare what it would cost to license your current usage without a ULA versus the renewal fee, and share those figures in negotiations to make your case.

Plan for the Future (Exit Strategy)

If you renew, enter with an exit strategy for the next round. Ideally, treat this renewal as a one-time extension unless there’s clear value in continuous ULAs.

Many companies get a second ULA, but few find a third or fourth worth it. So, negotiate this renewal to facilitate an easy certification later.

For instance, ensure language that the licenses at certification will be fully usable perpetually, remove any restrictions that could trap you (like requirements to purchase a certain amount of cloud services or any “stall clauses”), and keep good records during the renewed term. By considering the end of renewal, you protect your organization’s interests.

Deciding on a ULA renewal involves careful cost-benefit analysis and strategic planning. If the benefits of another unlimited period outweigh the costs and risks, negotiate hard for a renewal on favorable terms. If not, prepare to gracefully exit the ULA.

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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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