For large companies that utilize Oracle products, one of the main goals often remains sustaining both manageability and cost. In order to do so, Oracle provides a number of different ways in which to license their products. A range of factors influences which particular licensing model makes the most sense for a given product.
What type of environment will this product be used in, such as production, pre-production, or development? Is the user base expanding, contracting or remaining the same? Is this product something expected to become integral to the company’s day to day business needs or is this simply a requirement for this moment, or this project, but the future use remains unclear? All of these considerations can make deciding on the right type of license a struggle for even the most Oracle savvy team.
Enterprise Metrics, offered by Oracle, are measured differently from User based or Hardware based metrics. They revolve around counts outside the actual number of people granted access to the application, or the underlying hardware upon which an application is run. These counts can be in measurements based on Revenue, Employee Count, or Cost of Goods Sold. These types of licenses are meant to simplify the managerial aspects of monitoring access to a particular application, however they do have their own set of pros and cons that should be taken into consideration before a purchase decision is made.
Oracle Enterprise Metric Advantages:
- Non-User Based Measurement
Enterprise Metrics do not focus on the actual number of users, but on figures related to the overall company structure and performance. These include number of Employees, amount of Revenue in Millions of Dollars, or amount of Cost of Goods Sold in Millions of Dollars, as well as others. Because the measurement of these metrics is not based on users, the user pool can be as large or as small as a company requires and there is no need to actively monitor and control access rights.
- Lower Initial Cost
For clients with a very large user base, Enterprise Metrics typically provide a lower initial cost for obtaining licenses, due to the lower overall cost of an individual license, as well as an aggressive discount schedule.
- Predictable Future Costs
When a company purchases an Enterprise Metric based application, Oracle typically establishes an Expansion Exhibit, which lays out the cost and quantity for future purchases. These terms are negotiable and may involve specific triggers in terms of overages, at which point a company would need to make a purchase. These exhibits also establish a set price, locking in discounts and giving a company a clear understanding of future costs, while avoiding the need to renegotiate for every future purchase.
Oracle Enterprise Metric Disadvantages:
- Ongoing True Up
While the fact that the licenses are not tied to the actual user count is often a major benefit for many organizations, one must consider the potential downside. In situations where the growth of an application stalls, or even decreases, but the overall figure under which the application is licensed continues to grow, say Millions of Dollars in Revenue, a client will be required to continue purchasing licenses, reducing the overall value seen from the application.
- Reduced Contractual Flexibility
As mentioned in the Advantages section, an Expansion Exhibit is established during the initial purchase of licenses. While this helps to create predictability in terms of future costs, it also ties all future purchases of licenses together, effectively creating an ever growing single CSI under which all the licenses of a particular product are owned. If the metric under which the product is owned suddenly decreases due to economic downturn, it is much more difficult to reduce the quantity of licenses for the product in question, due to Oracle’s repricing rules.
- Limited Migration Paths:
Many of Oracle’s license structures provide paths for converting licenses. The most common being from Named User Plus to Processor, or from Limited Use to Full Use. Enterprise metrics on the other hand do not typically have straightforward migration paths should a client desire to move to a more traditional user based metric. While it can be done, it generally involves a much more involved level of negotiation with Oracle.
Enterprise Metrics provide a great additional option for those licensing applications on premise, but what about in the Cloud?
The Enterprise Metric applications discussed earlier can generally be utilized in the public cloud without concern for the underlying provider, or hardware on which the application is deployed. The only exception would be if one’s contract with Oracle specifically forbids it, which can sometimes be the case in ULA and ELA situations.
Oracle also offers Enterprise Metrics in the Cloud. Oracle’s Fusion Cloud Subscriptions include a number of products sold both under traditional Hosted User metrics and under Cloud Enterprise metrics such as Hosted Millions of Dollars in Revenue, Hosted Millions of Dollars in Freight under Management, and Hosted Employee.
Due to the fact that Cloud Services are subscription based, a customer may have more flexibility should it be deemed that the service is no longer needed, or the figure upon which the metric is based decreases. A company can potentially have more opportunity to adjust during economic downturns than otherwise would exist with on premise solution.
However, it is important to note that any potential decrease in pricing would still need to be negotiated and even though there is a drop in the enterprise figure, new pricing for the reduced quantity may not lead to a linear change in price and could end up being the same.
One important consideration for any company is the fact that Fusion Cloud Services are not the same as the on premise applications that they aim to replace. They have their own specific functionality, and often do not have the same level of customizability. It is important to consider carefully the specific requirements for a given solution and whether the Cloud Service provides all the functionality needed for the on premise solution it will replace.
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Miro is a leading global provider of software asset management and subscription services for Oracle, Microsoft, IBM, Adobe, and Salesforce. We specialize in License & Portfolio Optimization Reviews, Audit Advisory Services, Contract Negotiation Advisory, and Entitlement Management Services. Contact us for more information.