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Oracle licensing guide: understand the essentials

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Oracle’s software licensing is seen as complex and treacherous. The number of products and the acquisition of companies by Oracle over the years has resulted in numerous pricelists and a wide array of licensing possibilities and extended definitions. Keeping track of the changes that effect your organization may seem an impossible undertaking.

For Oracle and all other software vendors, today’s technological possibilities determine tomorrow’s licensing practices. At first glance (or review), Oracle’s licensing strategy may be perceived as being solely steered by commercial motives. However, by closely observing last decade’s changes we can discover the logic and an ongoing effort to make licensing ever more transparent and accessible.

This article provides a basic historical overview of Oracle’s common licensing practices to help you understand the essentials. Confirm you have an accurate overview of your software programs and licenses with our health check.

Most common Oracle licensing metrics

Oracle’s more than three thousand products can be plotted in this four-layer model:

  • Applications
  • Middleware
  • Database
  • Infrastructure

The licensing associated with each product relates to these categories and to how the software is deployed. This results in over 80 license metrics in use today, many of them corresponding to very specific products or groups of products. We will introduce you to the most common metrics for database and middleware, also called Oracle Technology products.

Database and application servers – user based

User based licensing has always been on offer, or at least since the Oracle database version 6 in the late eighties. Over the years, the user definition has significantly changed, often to adjust to new technology. The licensable element has remained the same: Oracle user based licensing relates to the individuals or devices able to access the software, regardless active usage.

Also from the beginning, a hardware related pricing has been in place. Initially specific hardware/OS combinations were distinguished; today, hardware differentiation is based on a minimum requirement per processor. Per your license agreement, Oracle holds your organization responsible for having faithfully described your situation. This should be taken very seriously in order to avoid under-licensing and the associated penalties.

The dominant metric for user based licensing is Named User, meaning any specific individual that has been authorized by your company to use the Oracle software, regardless of whether he or she is actively using the programs at any given time. Individuals can be employees, contractors, but also customers able to use the software directly or through other applications. In case of non-human operated devices, such as sensors, each needs to be counted as a named user if it can access the software.

Oracle software licenses: specific products

Oracle software licenses authorize individuals and instances to use a specific product, regardless of how often the product is used. This means that you can use multiple installations of a specific product, on one or multiple servers. If the individual is licensed once, no additional licenses are required. For example if John has a NUP license for Database Enterprise Edition, he can access a multitude of databases on various machines, all under that one NUP license. These so-called multi-server rights are a standard part of the license grant.

Named User licensing is about the employee functions and the devices allowed to use the software, not about user names or who actually uses the software. In multi-tier or other complex technical architectures this can be very hard to determine. Oracle software can be at the bottom of the digital infrastructure and some users may have access to Oracle software without knowing it. Especially when batching or multiplexing is being used it can be difficult to get a clear picture of the situation. Oracle’s named user licensing does not recognize multiplexing software, so the numbers need to be determined at the front end of the multiplexor.

A practical rule that helps you find the correct user populations is to track:

  • Where the requests come from.
  • Where the information comes from.

To be sure, document your architecture and approach a licensing specialist to assist, as mistakes can be costly.

Oracle’s Named User Plus (NUP) metric

Since 2002, Oracle uses the Named User Plus (NUP) metric. NUP is available for the majority of products on Oracle’s Technology pricelist: Database products (Oracle database, Options, Enterprise Management), Data Warehousing (Express), Application Server products (Weblogic, iAS, Options, Enterprise Management), Business Intelligence (Oracle BI, Hyperion Essbase), and many Enterprise 2.0 products (Webcenter, Content Management).

Over time, the NUP definition has been adjusted to allow for the automatic batching from computer to computer. This means that if data is stored in one relational database and then batched to a datawarehouse on Oracle technology, the individuals who can use the first database are not to be considered as named users of the datawarehouse. Prior to NUP there were slightly different other license types, such as Named User Single or Multi Server in 2000, and per Named User in the nineties.

Because of these complexities, the NUP license metric may only be used in countable populations. Often it is used to license the employees and contractors of a company or the internally used applications. It is also a popular license for development and test environments, as those are often characterized by a low number of users who can access the software, however be aware of the minimum requirements which are hardware related!

Make sure to always look at the exact definition in your Oracle License and Service Agreements (OLSA) attached to your order form or offer.

Database and application servers – box based

In December 1999, with the rise of the Internet and uncountable user populations Oracle introduced Box Based licensing. As ever more applications have become web based logically, this metric has gained popularity.

The first metric in 1999 was the Power Unit Intel and Risc, later followed by Universal Power Unit metric in 2000. In 2001 Processor licensing was introduced and this metric is still on the pricelist today. Almost all products on the Oracle technology pricelist, including the products that can be licensed by NUP, are offered by Processor licensing. This makes it a very simple all-around metric, often used in larger contracts and Enterprise Agreements. To license internal usage with NUP and all external / customer facing systems by Processor is a common combination although with larger customers it is not uncommon to license all production machines by processor.

There are a few important nuances that need to be made when dealing with the Processor license metric of Oracle:

  • Installed and/or Running - All processors should be licensed were Oracle Software is installed and/or running. This means that if the machines are put in a cluster, the entire cluster needs to be licensed that have Oracle installed. For standby or remote mirroring machines this is similar. The exception is for failover machines: you are allowed to run a failover (like Oracle Failsafe or Veritas, HP Service Guard, HACMP, Linux HA – Heartbeat) if the machine is live for less than 10 separate days per year. Legacy systems, also those powered off, require licensing if Oracle software is installed.
  • Processor Calculation - A processor license is calculated by multiplying the total number of cores by a core processor licensing factor specified on the Oracle Processor Core Factor Table which can be accessed here. All cores on all multi-core chips for each licensed program are to be aggregated before multiplying and all fractions of a number are to be rounded up to the next whole number.

There are some differences per product as well. For example, when licensing Oracle Database Standard Edition, a processor is counted equivalent to an occupied socket; however, in the case of multi-chip modules, each chip in the multi-chip module is counted as one occupied socket.

Virtualization software and partitioning

Oracle distinguishes between two types of partitioning: hard and soft. If partitioning methodologies, including virtualization software, is part of hard partitioning, only the partitions with Oracle software need to be licensed. Soft partitioned servers need to be completely licensed. All third party (like VMware) is considered soft partitioning and requires the full environment to be licensed. Oracle VM, a free open source VM, can be set up as hard partitioning. If set up correctly, this is the only virtualization software that classifies as hard partitioning.

The partitioning categorization depends on the ease of managing the data processing resources (CPU capacity). Hard partitioning is where a server is physically segmented taking a single large server and separating it into distinct smaller systems. Each separated system acts as a physically independent, self-contained server, typically with its own CPUs, operating system, separate boot area, memory, input/output subsystem and network resources.

As the minimum licensing requirements for NUP are also based on Processor licensing it is good practice to start your licensing needs by determining the requirement number of Processor licenses. To be safe, always start with licensing the widest architecture (especially in case partitioning or virtualization software is used) and restrict your licensing by carefully following Oracle guidelines (i.e. mark failover machines or ‘hard’ partitioned systems). Of course, for your existing box based metrics, always check your contract for exact definitions.

Software on desktops

Most people do not associate Oracle with desktop products, but since the early days Oracle software has been deployed on PCs. The majority are tools used by the technical staff involved in Oracle to design, develop, or maintain Oracle software (such as Internet Developer Suite and Programmer) however a few are more aimed at a wider population ( like Discoverer Desktop Edition and the Personal Edition Database) and even some server products can be found on desktops, such as the Standard Edition Database.

The licensing of these products has been very consistent over the last 15 years. There is no separate licensing model for this, it was always available under the same definitions as the user based licensing as used for their database & Application Server product range.

Since 9 years, there has been Named User Plus (NUP). Prior to that there were slightly different other license types, such as Named User Single or Multi Server, and in the nineties per Developer, however the definitions of these license types have always been an exact copy of the user based database product licensing. This means you need to license all individuals authorized by you to use the software, regardless of whether these individuals are actively using the software at any given time. In other words: if it is installed on a desktop, all people that are allowed to use that desktop need to be licensed.

What does support have to do with it?

Lifetime Licensing

Under a perpetual license, a customer purchases the license to use the software and then pays annual support. This support fee gives you the right to contact Oracle for support and the right to use the latest version of the product, including all supported previous versions. For example: you buy Internet Application Server (iAS) version 11, and install version 10, or have bought version 9, but now run version 11.

Each release could contain functionality that was previously licensed separately. The grant you have is for the latest version of the product you are entitled to under your support agreement. The new product could include all new features and functionality that you are now entitled to use or, often when it is larger bundle, you are not allowed to use. The version on the CD is often considered as the new version by technical staff when in reality the new version could be the new product, with the restricted functionality of the licensed product.

The other complexity of support for understanding your licensing is that all historically agreed licensing terms & conditions are still applicable today. Oftentimes, users will rely on their support invoices to understand their license grant. This is not complete, as the support invoice does not hold all the differences in terms and definitions. Keep a good record of your original order and OLSA. You wouldn’t be the first to add up licenses, especially buying additional licenses, which seem to be for the same product but not have the same definitions and restrictions!

Oracle has spent many efforts in simplifying their licensing. Licensing types and associated rules are on the website and in online purchasing systems like the Oracle Store. However, due to Oracle’s acquisitions, the number of products and flexibility in usage, it has become complex for end users to understand.


Oracle offers lifetime support (including updates) on almost all products. This has increased the licensing definitions, rules and interpretations, all still valid today. By and large Oracle licensing is not especially complex; there are just many flavours.

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Get a personalized approach

Do you have any questions or want to know. which Oracle license would be right for you? We offer a comprehensive range of Oracle advisory services and in-dept knowledge to help you find the best solution for your business.

Get a personalized approach

Do you have any questions or want to know. which Oracle license would be right for you? We offer a comprehensive range of Oracle advisory services and in-dept knowledge to help you find the best solution for your business.


SoftwareOne blog editorial team

Blog Editorial Team

We analyse the latest IT trends and industry-relevant innovations to keep you up-to-date with the latest technology.