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Best Pract ices for Oracle
License Management:
Opt imize Usage and Minimize Audit Liability
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Best Pract ices for Oracle
License Management
Every Oracle

customer shares a common challenge: how

to avoid over- or under-licensing. In a recent survey, 53
percent of enterprises indicated t hat a port ion of software
license spend is associated wit h applicat ions t hat are
overused and t herefore out of compliance.
1
At t he same
t ime, a large percentage of organizat ions also overspend
owning Oracle licenses t hat are not used or not deployed
for maximum beneft.
For example, an internat ional energy company conducted an
internal assessment of Oracle license usage and ident ifed 25
percent more database CPUs t han t hey t hought had been
deployed which was a cost ly liability. In anot her case, a
large global consumer packaged goods manufacturer saved
over $30 million USD in licensing costs, including $7 million
on Oracle software, by analyzing t he actual installat ion and
usage of databases and database opt ions.
These companies reduced audit liability and achieved cost
savings by proact ively managing t heir Oracle licensing
processes. They integrated asset management pract ices
and deployed tracking software to deliver value t hroughout
t he software lifecycle management process from
negot iat ing favorable pricing to opt imizing usage, saving
on unnecessary expenditures and avoiding unforeseen costs
from Oracle audits.
Wit h Oracle audits on t he rise, organizat ions t hat can best
align license agreements wit h actual database and opt ion
usage can reduce t heir fnancial risk and maximize t he
value of t heir Oracle investments. The goal is to right-size
Oracle across t he enterprise and gain control over t he
ent ire license management process from accurate needs
project ions and licensing negot iat ions, to deployments and
audit preparat ion.
Oracle Licensing and Compliance Rules Create License
Management Complexity
Any Oracle licensing strategy is a complex calculat ion
based on current and projected usage. Its not enough to
count database server CPUs, t he number of users, or even
installat ions. While t hese metrics are important, especially
for processor-core based agreements, Oracle requires
detailed accounts of what is being used which includes
edit ions, versions, and any opt ions and management packs.
The burden is on t he organizat ion to keep licenses aligned
wit h actual usage.
Actual usage can often vary dramat ically from t he
projections used when entering into an Oracle contract
part icularly for growing companies. Oracle provides
assistance in making usage calculat ions, including
scripts for tracking software usage. However, t he onus
is on t he company to maintain license compliance, and
many organizat ions simply do not have t he processes or
infrastructure in place to meet t he report ing requirements
of Oracle contracts so t hey are at high-risk of expensive
over-ut ilizat ion adjustments in t he event of an Oracle license
assessment or audit.
While usage tracking is central to managing audit risk,
tracking can also address under-ut ilizat ion fnding Oracle
licenses t hat could be redeployed for maximum usage. This
frequent ly happens when organizat ions buy and install
large quant it ies of Oracle database Opt ions, but never
actually deploy t hese Opt ions. The process to determine
Opt ion ut ilizat ion is much more complex t han simply
confrming installat ions. The process requires detailed
analysis of each individual database Opt ion t hrough SQL
queries and applying t he appropriate business rules.
1. 2010 Key Trends in Software Pricing and Licensing Survey
Best Pract ices for Oracle License Management
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System Inventory
Oracle DB Instances
Oracle DB Opt ions
and Features
Management Tools
E-Business Suite
Applicat ion
Components
Product ion
6 Processors
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ITE
Test
8 Processors
E
_BUSINESS SU
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Disaster
Recovery
4 Processors
Five Reasons Your Oracle Licensing Requirements
May Evolve
Even in well-managed and predictable environments, Oracle
software licensing can quickly become out of balance.
Somet hing as simple as changing t he server confgurat ion
can increase license costs because Oracle licenses are, in
many cases, based on t he number of processor cores in t he
physical servers.
During t he term of an Oracle licensing agreement, many
factors can lead to over- or under-licensing:
1. Emerging Technologies. The complex task of usage
tracking has become increasingly complicated wit h
virtualizat ion, mult iplexing, and cloud comput ing,
which can expand access for a larger number of
users internal and external and drive up
installat ions and use of Oracle databases and
opt ions. Changes in t he hardware environment can
also t hrow organizat ions into non-compliance, such
as adding addit ional servers and/or processors. For
example, if a license has a minimum requirement
of users per CPU (processor-core), and a hardware
refresh adds to t he number of CPUs, t hen minimum
requirements may no longer be met.
2. Business Requirements. Many business improvement
processes impact usage of Oracle databases. For
example, t he expanded use of a front-end applicat ion
t hat requires an Oracle database under t he hood may
increase license requirements. Also, where decision-
making is being empowered at lower levels wit hin
an organizat ion, t he need to expand or build
report ing capability can mean more processing
power, and more processor-cores, driving up Oracle
licensing requirements.
3. Vendor Consolidat ion. Architectural simplifcat ion
or consolidat ion of vendors, including relat ional
database vendors, can change licensing requirements.
Oracle may even offer replacement incent ives to
move Sybase, Informix, or SQL Server customers to
t heir plat form. These incent ives can save money, bot h
operat ionally and wit h Oracle, but t hey also change
t he license need.
4. Technical Needs. As companies become more
proact ive in managing t heir Oracle estate, t hey may
expand t heir use of Management Packs. For example,
t hey may implement Tuning and Diagnost ics Packs to
pinpoint technical problems or improve effciencies.
These Packs are addit ions to t he Oracle infrastructure,
and t he licensing requirement is not only for t he
machines where t hese Opt ions are installed, but also
on any database t hey are used to manage remotely
somet hing a simple inventory scan cannot detect.
5. Organizat ional Changes. Software and licensing
needs can evolve in response to acquisit ions, mergers
and divest itures, reorganizat ions, and changing
chargeback issues. Whet her t hese organizat ional
changes require system integrat ion, consolidat ion,
or expansion, t hey often lead to changes in t he
Oracle infrastructure.
Best Pract ices for Oracle License Management
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Five Best Pract ices for Oracle License Management
Best pract ices for Oracle license management encompass administrat ive,
report ing, and operat ional pract ices t hat allow for proact ively
managing t he ent ire Oracle software estate. The goal is developing
and maintaining a right-size solut ion across t he ent ire estate while
empowering departments or business units to proact ively manage t heir
Oracle licenses.

1. Defne Oracle software needs and negot iate
better terms Best pract ices begin by shift ing t he central quest ion
from what software do we own? or what are we using? to what
do we need?

Companies t hat can defne t heir software needs over a two or t hree
year period and ant icipate changes to hardware and deployment
models will be in a strong posit ion to negot iate pricing and terms,
opt imize investment over t he life of t he contract, and increase
product ivity by fully ut ilizing each license.

For example, if t he organizat ion expects signifcant growt h in
Oracle usage, an Unlimited License Agreement (ULA) may provide
t he greatest cost-beneft over a two or t hree year period.

Tracking current installat ions and usage is a valuable start ing point
in determining need. Most Oracle customers have a mixture of
single server, mult i-server, concurrent user, CPU, Universal Power
Unit (UPU), and Named User licensing some of which are no
longer offered. This mix of agreements can often be simplifed or
restructured to better match licensing opt ions in current Oracle
pricing structures.

Its also helpful to keep in mind t hat Oracle may change its
agreement structures. If t he past is any indicat ion, organizat ions can
expect Oracle to change t heir licensing metrics every t hree years or
so, which can present opportunit ies for benefcial licensing changes,
if you have t he facts regarding usage in
hand before making changes.
2. Empower proact ive management wit h
centralized controls The most effect ive license compliance
strategies are based on a centralized IT management structure
act ively managing assets to know t he locat ion, confgurat ion,
and usage history of every software applicat ion. This can provide
procurement t he detailed and accurate informat ion it needs to
negot iate fexible, cost-effect ive contracts, and form t he basis for
cost-reduct ion projects such as plat form standardizat ion, volume
bundling, securing longer-term agreements, and vendor or hardware
consolidat ion.
ORACLE LICENSE COMPLEXITY
Types of Oracle Licenses:
Oracle database license metrics have
changed many t imes over t he past 10
years, but current ly are licensed on a
named user or per processor basis.
Each has its advantages, and requires
compliance to be verifed based on
different metrics.
Processor based license (CPU) Processor
licensing is based on server processor-
core counts where Oracle programs are
installed. Even if t he programs arent
running, t he processors need to be
counted. Processor licenses are easier to
track and maintain t han user licenses,
and are more cost effect ive when t he
user count is high. The processor based
license metric must also be used when
t he user count is not available, such as
externally facing Internet applicat ions
where t he user populat ion is unknown.
Oracle defnes t he processor-core
count based on a core factor table.
The number of physical cores is
mult iplied by t he core factor for t he
given processor vendor and model in
t he server to determine t he number of
licenses required. In some cases, even
t he speed of t he processor (or processor
model number) is required to determine
t he correct core factor value.
Named User Plus license (NUP) Named
users are not just human users, but
include devices accessing an Oracle
program, such as a stock market tracker
t hat is updat ing a database. Each user
must have t heir own NUP license, but
t hat user may t hen access mult iple
Oracle database systems. The NUP
model is based on users or devices t hat
connect eit her direct ly or indirect ly to
t he database. This type of license
does not accommodate sharing or
concurrent usage.
To complicate matters, for t he Enterprise
Edit ion of t he database, t here is a NUP
minimum per processor-core of 25. This
means t hat you must have at least 25
user licenses for each processor-core
on t he server where t he database is
installed. And different User Minimums
apply to ot her edit ions of t he database.
Cont inued
Best Pract ices for Oracle License Management
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Companies wit h a decentralized IT Asset Management (ITAM) structure
task various departments or business units wit h defning software
needs, negot iat ing agreements, and maintaining compliance. But a
decentralized system can create a disconnect between procurement, IT,
and end users, making it is easy to violate contract terms and/or over
spend on licenses and maintenance. For example, it is commonplace
for systems to be installed wit hout understanding t he licensing
implicat ions, which can trigger addit ional license requirements and
re-pricing of support fees for a specifed license set calculated at 22
percent of net license fees. Conversely, decommissioned licenses can
signifcant ly reduce support costs if contracts are negot iated wit h t his
in mind up-front, or t hey can be used to offset addit ional demand for
t hat license in t he future.

In addit ion, decentralizat ion reduces t he incent ives to negot iate best
pricing for usage across t he enterprise and discourages redeployment
or reallocat ion of underut ilized licenses. Gartner est imates t hat as
much as 20 percent of software licensing and hardware maintenance
charges are incurred for assets t hat are no longer in use.
2
Having t he
informat ion available to ret ire, redeploy, or reallocate assets across
an organizat ion can result in signifcant cost savings. Companies can
enable sharing of licenses between groups and better allocate software
costs t hrough charge-back account ing.
3. Use automat ion for real-t ime tracking and act ionable intelligence
To meet compliance requirements, Oracle customers need to
track and verify usage and compare t his to ent it lements in t he
Oracle license agreement. This is best accomplished by automated
processes for discovery, usage analysis, compliance, and cost
reduct ion t hroughout t he licensing period not just in response to
an audit. Software-based discovery, inventory and usage tracking
solut ions verifed by Oracle can accurately map software usage to
company specifc contracts and ent it lements. Some of t hese software
solut ions integrate Oracle internal audit scripts and can manage
t he complexity of any licensing agreement, including number of
users, CPUs, mixed support, software edit ions, and installed opt ions
and management packs, such as t he Tuning and Diagnost ics Pack.
Because database opt ions can easily double or triple t he cost of a
single database, being able to track and manage database opt ion
usage provides t he opportunity to great ly reduce t he cost of t he
database/opt ion package.

Automat ion also enables companies to ident ify and correct non-
compliance issues. Even ULAs can be subject to non-compliance
based on geographic parameters, opt ions installed, and
ot her factors.

2. Gartner, Dont Overlook Opportunit ies to Save Costs on ITAM, March 2008
Unlimited License Agreement (ULA) A
t ime-based (usually 2 to 3 year) license
for unlimited use of a subset of Oracle
technology or applicat ions. Price is
based on known and expected growt h.
At t he end of t he term, t here are no
license or support adjustment costs, but
customers must count and declare usage
to Oracle.
Terms of Oracle Licenses:
Under a licensing agreement, t he term
of each license can be specifed. A
specifc period of t ime can be defned,
such as 2 years or 3 years, or t he term
can be perpetual. Perpetual is less
cost ly over t he long-term, but if t he
organizat ion has a short-term need
for a license, t hen a limited term may
be more benefcial. For example, if
an organizat ion requires licenses for
contract employees for a two-year
period term licensing is t he better
choice. However, if t hose licenses may
have use beyond t he two-year term,
a perpetual license could be more
effect ive to cut down on t he overall
licensing costs.
License Management Processes Often
Exclude Oracle
Oracle customers use a variety of
systems to manage software licenses
from resource-intensive, manual,
spreadsheet-based processes to
using advanced software to monitor
installat ions and ot her key metrics.
Manual audits often lack t he level of
detail required by Oracle, and manual
processes can vary wit hin an enterprise
different met hodologies for different
departments. Also, spreadsheet-based
systems cant maintain accuracy in
dynamic IT environments, part icularly
in a virtualized environment, and often
dont account for under-ut ilized assets.
Unless an enterprise has tools t hat can
collect usage data across all network
topologies including highly secured
areas and accurately track usage
against Oracles licensing metrics, t he
system will be insuffcient to mit igate
audit risk and minimize costs.
Best Pract ices for Oracle License Management
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Monitoring Oracle software installat ions and usage
across t he enterprise provides act ionable intelligence t hat
can inform a range of management decisions, including
IT budget ing and resource allocat ion. For example, wit h
real-t ime centralized report ing of databases, database
opt ions, and e-business suite installat ion and usage
across t he enterprise, organizat ions can quickly ident ify
effciencies t hat may defer addit ional expenditures.

This was t he case for a large telephone and mobile
telecommunicat ions company, which deployed a software
solut ion to determine t heir current Oracle Database
and Opt ion compliance posit ion and discovered t hey
had over-licensed t heir core Oracle Database Enterprise
Edit ion software by approximately $1.4 million USD.
4. Manage Oracle licensing in complex environments:
virtualizat ion, mult iplexing, and cloud comput ing
The increasing use of virtualizat ion technologies,
front-end user mult iplexing, and cloud comput ing
have changed t he license management landscape
creat ing addit ional challenges for organizat ions
tracking users, CPUs, or ot her metrics for Oracle
compliance. For example, in a virtualized environment,
a single physical machine can host 5, 10, or 20 virtual
machines and mult iple virtual machines can potent ially
handle 1,000s of users.

At t he end of 2009, Gartner reported t hat 18 percent
of all server workloads were running on virtualized
servers,
3
and t he research indicates t hat by 2012 half
of all workloads will be virtualized.

In t hese environments, bot h CPU and NUP licenses have
merits. Generally, CPU licenses are easier to track and
manage, and are more cost effect ive when t he user
count is high. The processor based license metric must
also be used when t he user count is not available, such
as externally facing Internet applicat ions where t he user
populat ion is unknown. Enterprise NUP licenses are
more cost effect ive when organizat ions want to cover
a large percentage of t heir user populat ion (usually
approaching 100 percent), and t hese users use mult iple
databases for mult iple applicat ions on mult iple servers.
Or NUP may be preferred when user counts are low,
which is often t he case in test ing, development, Q&A,
and staging deployments.

When using Oracle in a virtualized environment,
companies must be able to collect inventory of virtual
machines and correlate t hese machines to a physical
host. In addit ion, its crit ical to ascertain t he type
and number of processor-cores in t he physical host to
determine license compliance for t he virtual machines
running Oracle. Each virtual machine has t he same
number of cores as t he full physical server, from an
Oracle licensing perspect ive.
An accurate inventory can enable companies to
consolidate Oracle databases to a minimum number
of physical hosts and save money. For example: as
t he diagram illustrates, if t here are four ESX servers
each wit h t hree virtual machines, but only t hree (total)
virtual machines are running Oracle, by moving t he
t hree virtual machines running Oracle onto one ESX
host, Oracle processor-core based license costs would
be signifcant ly reduced (assuming Oracle processor
count on t he one physical machine is much less t han
processor count of t he t hree original physical servers).
5. Know when to use Unlimited License Agreements
For companies considering ULAs, license management
automat ion is almost essent ial. Despite t heir name,
a ULA is not unlimited. A ULA can defne a specifed
set of products, opt ions, management packs, and
geographic parameters and wit h seven different
Oracle Enterprise Management Packs and 11 Oracle
Database Opt ions, t here are many possible ULA
confgurat ions. Non-compliance costs include fnes and
backdated support revenue claims from Oracle.

By one recent report, t he majority of ULAs have not
ended up being in t he customers favor. This is in
part due to t he economy over t he past couple of
years, which reduced projected usage. But a more
systemic factor is t hat companies enter into t hese
agreements wit hout a careful analysis of t heir actual
product, opt ion, and usage needs. The ULA can
seem like a way around t he complexity of licensing
and compliance uncertainty, but t he management
requirements are as challenging as non-ULA contracts.
Any organizat ion wit h a ULA must be in compliance
wit h t he terms of t he agreement at all t imes and
After Opt imizat ion
Before Opt imizat ion
3. Gartner: Server virtualizat ion now at 18% of server workload - Ellen Messmer,
Network World, October 20, 2009
Best Pract ices for Oracle License Management
7 Flexera Software: FlexNet Manager Suite White Paper Series
automated processes are t he only way to achieving t he
level of real-t ime accuracy required.

Proact ive license management not only ensures contract
compliance, it delivers maximized benefts during
t he term of t he ULA. For example, from t he midpoint
to t he end of t he ULA, usage data can indicate
underut ilizat ion which may lead to adjustments in
deployment or enable managers to better plan for t he
next licensing period.

Despite t hese caveats, if a company can determine t he
value of a ULA based on projected needs, t his license
can provide a substant ial cost savings, part icularly
for companies t hat expect high growt h in Oracle
usage over t he term of t he agreement. An automated
software asset management solut ion can also help
companies quant ify t hese savings and provide an
accurate ROI for t he original ULA investment at t he
end of t he term.

An opt imized license management solut ion t hat meets
Oracle report ing requirements
As companies evaluate opt ions for independent
enterprise license opt imizat ion solut ions to manage
t heir Oracle estate, t hey should consider only t hose
verifed by Oracle, such as FlexNet

Manager
Plat form, part of t he FlexNet Manager Suite for
Enterprises. The Flexera Software Oracle discovery,
inventory and license management capability in
FlexNet Manager Plat form has been verifed by
Oracle License Management Services (LMS) as
being detailed and accurate. Oracle database and
opt ions deployment and usage reports provided by
t he Plat form will be accepted by Oracle LMS, and
customers no longer need to rely solely on Oracle
scripts to provide t he data for a license audit.

In addit ion to t hese industry leading Oracle
opt imizat ion capabilit ies, FlexNet Manager Plat form
supports a central governance framework and
chargeback mechanisms. The Plat form also provides
asset discovery, asset inventory, and applicat ion
recognit ion for over 100,000 applicat ions from more
t han 11,000 publishers. The plat form offers robust
contract management and an execut ive dashboard t hat
provides visibility and software license opt imizat ion
insights across t he ent ire software estate.

Reports provided by FlexNet Manager clarify
actual licensing needs, support fact-based contract
negot iat ions, avoid t he excess costs of over-licensing
and help organizat ions make informed decisions
regarding maintenance renewals.
Conclusion
The risk of an Oracle audit and t he unant icipated and
high costs t hat can result from non-compliance compel
many organizat ions to seek more effect ive software
management processes, but t he ability to also discover
under-ut ilized assets is equally compelling.
Through centralizat ion, automat ion, and proact ive
management, companies will be in an excellent posit ion
to opt imize t heir Oracle estate. They can regain control
of t he licensing processes, be in a strong posit ion to
defne licensing needs, and secure t he most cost-effect ive
agreements wit h Oracle.
About Flexera Software
Flexera Software is t he leading provider of strategic
solut ions for Applicat ion Usage Management; solut ions
delivering cont inuous compliance, opt imized usage and
maximized value to applicat ion producers and t heir
customers. Flexera Software is trusted by more t han 80,000
customers t hat depend on our comprehensive solut ions-
from installat ion and licensing, ent it lement and compliance
management to applicat ion readiness and enterprise license
opt imizat ion to strategically manage applicat ion usage
and achieve breakt hrough results realized only t hrough t he
systems-level approach we provide. Flexera Software is a
privately-held company and an investment of private equity
frm Thoma Bravo, LLC. For more informat ion, please go to:
www.fexerasoftware.com
The FlexNet Manager Plat form dashboard presents Alerts, Compliance
Summary and Compliance Details, all designed to provide act ionable
informat ion for Oracle license management, and compliance
resolut ion, including: Overused ent it lements; Ent it lements approaching
compliance t hreshold; Under-used ent it lements; and Ent it lements in
good standing.
Next Steps:
For more informat ion visit
www.fexerasoftware.com/products/fexnet-manager-
suite-enterprises.htm
Flexera Software, Inc.
1000 East Woodfeld Road,
Suite 400
Schaumburg, IL 60173 USA
Schaumburg
(Global Headquarters)
+1 800-809-5659
United Kingdom (Europe,
Middle East Headquarters):
+44 870-871-1111
+44 870-873-6300
Japan (Asia,
Pacifc Headquarters):
+81 3-4360-8291
For more offce locat ions visit:
www.fexerasoftware.com
2011 Flexera Software, Inc. and/or InstallShield Co. Inc. All ot her brand and product names ment ioned herein may be t he trademarks and registered trademarks of t heir respect ive owners.
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