A guide to Oracle’s Term ULA (TULA)

Oracle Unlimited License Agreements (ULAs) are a common sight for any ITAM, IT and procurement professionals. They have their pros and cons, and ULA renewals and exits require specialist knowledge and expertise to navigate.

In this blog, we’ll take you through the lesser-known Oracle Term ULA – what it is, how it differs from the standard ULA, its benefits, and particular areas to keep an eye on.

Standard ULA vs Term ULA

Organizations will be most familiar with the standard Oracle ULA. This contract provides organizations with unlimited deployment rights of a set amount of Oracle products for an agreed time period – typically three to five years. At the end of this period, organizations must certify their usage, and under this agreement, they retain license rights indefinitely (or in license speak, in perpetuity). Contracting for a ULA has lots of challenges, but many customers encounter the biggest test at contract end. The support stream from the ULA remains fixed, and this may be compounded by subsequent renewals, regardless of future deployment.

Recently, a new contract offer we have seen from Oracle is the Oracle Term Unlimited License Agreement (TULA). The TULA is a new and potentially cost-saving alternative to the standard unlimited license. Though Term licenses have been available from Oracle in the past (note they are now only available as one-year term), this has been limited to a standard purchase. The TULA takes a Term license contract to a different plane, by extending the license grant to unlimited deployment for a defined period. Put simply, one can, for example, purchase a database license with unlimited deployment for three years. At the end of the TULA, all license grants cease, as does the support stream attached to the license grant. If licenses under this agreement are still deployed, then it would be necessary to remove or purchase new licenses.

Why has Oracle introduced this new ULA?

We could hypothesise on many fronts why Oracle has introduced this contract type, but one main consideration is clients are wary of purchasing and/or renewing a standard ULA. Although there can be many business benefits to a ULA, there are, for good reason many down-sides. Top of the list is Oracle’s intransigence to negotiate around the annual support stream, but the TULA circumvents this issue.

The TULA contract allows Oracle to continue to sell significant amounts of its on-premise technology licenses. So this potential presents an opportunity for both parties. Given a customer’s license rights will terminate at the end of the TULA, Oracle has the opportunity to sell a new set of licenses, and of course the client has the opportunity to buy according to its short-term needs. Under a standard ULA, the client only had a good outcome if Oracle underestimated the deployment within the ULA period – and of course a bad outcome if the requirement was overestimated. The latter case ensured the client the ULA with fixed and inflated support fees.

Significant customer advantages

If organizations are unsure about their future usage requirements going into 2021, and their standard ULA is up for renewal, they might also benefit from considering a Term ULA. For example, if an organization is undergoing a large transformation or migration project. It may be unsure of the required deployment of Oracle licenses necessary during an extended period, and at the completion of the project.

It certainly would not want to be committed downstream to a whole new set of redundant licenses with a continuous support stream attached. A TULA could be a good alternative. The organization will be able to meet temporary requirements without the long-term effects and embedded recurring costs of a standard ULA. To me it seems a far better alternative than previous offers, such as a Pool of Funds.

As with any Oracle contract negotiation, ensure you make the most of the situation. If a TULA fits your medium-term planning, if correctly negotiated, it may also offer the opportunity to consider amendments to historical contracts, legacy product retirement and support stream cost reduction.

Many organizations still renew their ULA almost out of habit, or as a defensive strategy, particularly if they are unsure about their compliance standing or future usage. But if organizations can properly calculate their actual requirements – using Trustworthy Data, Optimization and Lifecycle Management – then they will be able to determine which ULA would be best for them.

The drawbacks to keep in mind

While Term ULAs have their upsides, there are also some disadvantages to keep in mind. For one, there are the potential costs if Oracle claims license fees at the end of the contractual period term if licenses are still deployed.

This is because you’ll lose the rights to use the licenses at the end of the term period, which is not the case with a standard ULA. This could mean potentially more costs further down the line if licenses need to be purchased anew, so effective SAM management throughout this period is essential.

To find the best fit for your organization, it’s crucial to be able to accurately say what your future requirements are and forecast usage before entering into these agreements. By knowing the number of licenses you’ll need and by planning ahead, you’ll be better placed to get the best deal for your organization. If you’re uncertain, Livingstone Group’s Oracle specialists are on hand to provide expert advice.

For more information on how Livingstone Group can help you navigate your Oracle ULA, check out our ULA Purchase and ULA Exit Primer resources below!