Welcome to ULA 101
What is an Oracle ULA?
To quote the Oracle data sheet located at http://www.oracle.com/us/corporate/license-management-services/lms-ula-1945174.pdf. ” An Unlimited License Agreement (ULA) is a time-based contract for unlimited use for a subset of Oracle products. At the end of the term, the customer may choose to renew the ULA or declare and certify usage to Oracle. If the customer chooses not to renew, licenses will be assigned based on the customer’s current usage and certification at the end date of the ULA”.
Oracle’s ULAs are a big moneymaker for the company. Oracle ULAs generate new license revenue and increases the stream of support and maintenance fees collected.
ULAs can be very beneficial for customers when properly negotiated and managed. Think of the Oracle ULA as the “All you can eat option.” You pay Oracle a fixed fee, a typical ULA is three years, and you can use as much of the products identified in the agreement as you want. It’s important to note “as much of the products identified in the agreement.” Organizations often forget to communicate to the technical teams what products are listed in the Oracle ULA and assume it’s all Oracle products. If the organization is not careful, the ULA can be expensive to purchase Oracle software.
Like most legal contracts, the ULA contract is drafted in the draftee’s favor. It’s important to pay attention to the terms of the ULA very carefully. Not understanding the ULA terms can put you at risk of non-compliance and can lead to a costly ULA renewal or extension. We have worked with companies that certified out of a ULA, were audited less than a year later, only to learn they were out of compliance because they did not understand the terms of their ULA. Be prepared for an Oracle audit. It’s not a matter of IF you’ll be audited, it’s WHEN. Oracle has included their license audit team (LMS) into the ULA process as a regular standard of practice.
Common Oracle ULA Mistake
A common mistake we see people make, they sign a 3-year Oracle ULA, and don’t worry about managing software use until the last six months. At this point time, most organizations don’t know where all the Oracle software is deployed and don’t have time to make changes to bring the pending bill down.
To certify out of a ULA, you must have an accurate inventory of your current usage. This requires a software asset management solution like LicenseFortress discovery. To negotiation a renewal of a ULA, it’s essential to understand your effective license position. This also requires a software asset management solution. If you don’t have one in place, then you are putting your organization at risk.
Whenever you are purchasing from Oracle, it’s important to know if any of the products you are purchasing are considered “Strategic Products.” These are products that the company currently regarded as strategic to the Oracle business. Oracle executives and sales teams are highly incentivized to sell these products. When purchasing these products, you have additional leverage resulting from more favorable terms and conditions and other price discounts for your ULA negotiation.
Like all public companies, Oracle is continually being scrutinized by the markets on its performance. Customers negotiating Oracle ULAs at the end of the fiscal year or end of quarter have additional leverage resulting in better pricing or terms and conditions. Changing terms and conditions needs to get past Oracle Legal, Oracle License Management Services (LMS), and requires more time. So take into consideration all these factors into your Oracle ULA negotiation.
The Right Team with the Right Facts
Oracle is negotiating ULA’s week in and week out. They have a standard playbook they use, fine-tuned over a year of negotiating Oracle ULAs. You must have the right team, armed with the correct facts. We strongly encourage you to have a member of the team that has negotiated a ULA before.
Many times Oracle ULA’s are a result of an Oracle LMS Audit. A well-documented strategy of Oracle is Audit, Bargain, Close.
Oracle audits you and throws out a really big number. Then offers you a deal. Then quickly close. We have seen customers in an LMS audit, being told they owe 25-50 Million or more. With an implied message, it could be far worse 50 Million if we don’t settle this. Then a smaller number is thrown out for a quick close. Many times an Oracle ULA is put on the table to make these problems go away. A customer must understand their Effective License Position (ELP), based on the contract obligation, not Oracle Policy. For example, Oracle will reference the partitioning policy. http://www.oracle.com/us/corporate/pricing/partitioning-070609.pdf
Yet in the fine print of the policy, it states, “it may not be incorporated into any contract and does not constitute a contract.” Yet it is cited as one of many reasons you are out of compliance.
Suppose you’re negotiating a ULA, a good sense of what you will use for licenses the next 3-5 years out—heavily weighted on next year’s needs since it’s really difficult to forecast out past 12 months with any level of accuracy.
The walkaway point, know your effective license position. Know what Oracle software you are using, have a sense of what you will need in the future. Armed with the right knowledge, you can negotiate an Oracle ULA, that provides a cost-effective solution to your licensing needs. The average Oracle ULA can easily be in the millions of dollars. Put a team together that helps the organization negotiate the best possible deal for your organization.
The hidden time bomb is maintenance fees. Oracle is happy to extend significant discounts on the initial purchase, recognizing that every 4-5 years, the product will have been bought over and over through the maintenance fees.
Merger, Acquisition, Divestiture
What happens to your Oracle ULA, if your company is merged with another? What happens if you acquire another company or in the event you divest a portion of your company? Oracle ULA’s are very negotiable Oracle ULAs come in many shapes and sizes. We have seen Oracle ULAs as low as 500K, and well into the tens of millions of dollars. We have seen Oracle ULA’s with limits on some products and unlimited on other products during the effective dates. Many other terms can be negotiated from price protection, rebundding protection to global usage right. There is a famous scene in an Indiana Jones movie where someone brings a knife to a gunfight. Don’t be that guy or gal and make sure you are adequately equipped to fight Oracle.
We help organizations determine if an Oracle ULA is the right way to obtain and maintain their Oracle software licenses. We also help organizations decide whether it’s in their best interest to renew their existing Oracle ULA or Certify Out of their current Oracle ULA. Contact us today to get help on your ULA.