Three Actions Oracle Customers Should Take at the End of a ULA
Of the many complex licensing arrangements Oracle offers to its customers, none seem to generate as much confusion and consternation as the Unlimited License Agreement (“ULA”). For companies that have already determined that they are not going to renew their ULAs with Oracle, the following are a few guidelines to follow to minimize the risks of future problems related to the ULA.
Certifying usage at the end of the Oracle unlimited license term is not merely a good idea, it is a requirement under the ULA. At the end of the Oracle ULA term, there are two primary choices – enter into a new ULA, or allow the ULA to lapse. If your organization allows the ULA to lapse, the organization must then provide a signed certification to Oracle that includes the number of ULA products that have been installed, along with details about each installation.
Many organizations are not prepared to certify their usage of Oracle ULA products at the end of the license term. For three years (or more, if there have been multiple ULAs), there has been no need to count usage of the ULA products. Suddenly, the team must locate each installation of ULA products and certify to Oracle the number of products in use in the environment.
Regularly Evaluate Usage
Once the organization has certified the ULA product usage, everyone can breathe a sigh of relief and forget about Oracle licensing for a while, right? Not necessarily. After the ULA term expires, Oracle has to review and accept the license certification, which can often take many months.
Even after Oracle has accepted the certification, the company is stuck paying maintenance and support payments perpetually based on the terms of the ULA. Many Oracle customers choose not to renew ULAs because their Oracle footprints did not expand at the expected rate. This could mean that a company could be stuck paying maintenance on licenses that it has not used and will never use.
A company in this situation may consider reducing the maintenance but will likely hear from Oracle that it is not possible to reduce maintenance for ULA products. Others that try to reduce the number of licenses acquired via a former ULA hear that the maintenance can be reduced, but that any previously granted concessions associated with those products will have to be repaid. Not surprisingly, customers in this scenario often learn that it allegedly costs more to cancel maintenance and support after the Oracle ULA term expires than it does to continue the ULA support in perpetuity.
Prepare for an Audit
If Oracle does not have a comfort level that your organization has the ability to accurately identify and certify the ULA products in use at the end of the ULA term, Oracle may consider initiating a license review with its license management or LMS team to validate the assertions in the certification. When asked during presentations, Oracle often claims that cancellation of a ULA does not increase a company’s likelihood of being audited. While that may be true generally, Oracle’s team is regularly evaluating a customer’s usage and each business’ compliance with the existing Oracle agreements, especially when the relationship is changing and Oracle’s revenue is potentially declining.
To make sure that your organization is ready for an Oracle audit or license review, be sure that your team can identify all installations and validate that all deployments are licensed. It is important to ensure that the validation would be acceptable to Oracle, particularly in light of the fact that there is a limited subset of tools for certain environments that Oracle accepts during a software audit. Once the Oracle customer is confident that it has accurate installation data, it then will need to be able to accurately review its license entitlements.
When evaluating the entitlement information, carefully examine the initial Oracle ULA to see if any previously issued perpetual licenses were converted and subsumed into the ULA. Customers are often surprised to learn that they surrendered perpetual licenses when they signed the first unlimited license agreement with Oracle.
Be prepared to defend the company’s position, and get help if the company needs it. All Oracle license inquiries are potential licensing disputes, even if you believe the organization has done everything correctly and with the best of intentions. Oracle’s interests are not necessarily aligned with its customers’ business objectives. Oracle likes to say that it is a partner trying to help customers increase efficiency (e.g. http://www.oracle.com/partners/en/partner-with-oracle/develop-solutions/why/increase-value-reduce-cost-3907933.pdf), when in reality, it is a vendor that is trying to maximize the revenue it derives from companies like you. It is a best practice to treat all inquiries, especially those after the ULA term, with suspicion.
Although there are many benefits to an Oracle ULA, there can also be quite a few pitfalls. At the conclusion of the ULA, it is useful to carefully evaluate and certify usage, continually monitor post-ULA utilization of the Oracle licenses, and always be prepared for an audit.