Oracle stops selling on-premise term licenses

licensing term cloud

Oracle typically sells software licenses on a perpetual basis. Apart from this “everlasting” term, Oracle also offered the option to buy term licenses for all of their programs. The list price for a term license was based on a specific percentage of the perpetual license price. Annual term licenses were available from 1 to 5 years:

  • 1 year – 20% of list
  • 2 year – 35% of list
  • 3 year – 50% of list
  • 4 year 60% of list
  • 5 year 70% of list

The technical support for all term licenses was 22% of the net perpetual fee.

Whats new? 

As of September 1st, 2020, Oracle stops selling on-premise term licenses (1-5 year terms) for the majority of their on-premise programs. Only for a limited number of “Technology programs” Oracle will continue to sell a 1-year term license; end users will no longer have the option to buy a 2-5 year term license for these programs.

The only Oracle Technology programs for which a 1-year term license can be bought are:

Oracle Database programs:

  • Oracle Database Standard Edition 2
  • Oracle Database Enterprise Edition

Oracle Database Enterprise Edition Options:

  • Oracle Active Data Guard
  • Oracle Advanced Compression
  • Oracle Advanced Security
  • Oracle Database In-Memory
  • Oracle Database Vault
  • Oracle Multitenant
  • Oracle OLAP
  • Oracle Partitioning
  • Oracle Real Application Clusters
  • Oracle Real Application Clusters One Node
  • Oracle Real Application Testing

Oracle Database Enterprise Management Packs:

  • Oracle Diagnostics Pack
  • Oracle Tuning Pack

Oracle Middleware:

  • Oracle Forms & Reports
  • Oracle Internet Application Server Enterprise Edition
  • Oracle WebLogic Server Enterprise Edition
  • Oracle WebLogic Server Standard Edition
  • Oracle WebLogic Suite

Oracle WebLogic Suite Options:

  • Oracle SOA Suite for Oracle Middleware

Oracle Data Integration Programs:

  • Oracle Golden Gate

Oracle Exadata Programs:

  • Exadata Storage Server Software

Organizations that have existing term licenses and continue to pay support for these licenses will remain supported through the end of their term.

Why is Oracle making this change? 

Oracle representatives informed us that the number of term licenses sold over the last years has declined. Because of this reason and Oracle’s focus to move their customers to the Oracle Cloud, a strategic decision has been made to eliminate the term licenses.

What does this mean for you as an end-user? 

Term licenses are relevant for end users in two specific situations. 

Infrastructure Change

In case an end user is changing their infrastructure (e.g. from older hardware to newer hardware, from on-premise deployments to public cloud like Amazon or Azure), the Oracle software will be “installed and/or running” on both the existing as well as the new infrastructure for a limited period of time.

This period of double use is typically licensed through term licenses.

  • Migrations which involve Oracle programs for which no term licenses are available will require both the current and new infrastructure to have (more expensive) perpetual licenses.
  • Migrations which involve Oracle programs for which only a 1-year term license is available will require end users to complete the infrastructure change within the period of 1 year.

Non-Compliance Resolutions

Many end users will recognize the following situation: “You were found to be “non-compliant” during the course of an audit due to “unintended use” of specific Oracle software programs.” This can include, for example, specific database options and/or database management packs which have been used just a limited amount of times. In such situations, end users usually do not intend to continue using the specific program and are therefore not willing to buy a (expensive) perpetual license.

Historically, the commercial settlement discussions would result in the purchase of a (retroactive) term license for the period of unlicensed use. Your Oracle account manager and LMS representative would look at the FIRST USAGE DATE included in the output of the audit scripts you run on your systems and use that as the start date of the unlicensed use. Usually, this would be a period of 2-3 years. In case you are found to be non-compliant for a specific program which is used longer than 1 year, as of now you will have to buy (more expensive) perpetual licenses (or move to an Unlimited License Agreement).

Need help?  

Are you negotiating a new agreement with Oracle and need to include non-standard terms that will allow you (among others) to migrate between your old and new infrastructure without having to buy additional (expensive) licenses for the period of double use? Are you going through an audit and need to know what the “do’s” and “don’ts” are? Reach out to us and one of our specialists will get in contact with you to discuss how we can support you best.

This article was published on 02-09-2020