Licensing, Oracle,

What are Oracle’s Enterprise $M Revenue and Employee metrics?

Short Answer

Oracle’s Enterprise metrics are an evergreen license and contract model based on a company’s size rather than countable items such as users or cores.

In-Depth Answer

For those who would rather not track individual users for business applications, Oracle offers a license model based on your company’s total revenue or employee count. This is often referred to as Enterprise licensing, not to be confused with a ULA.

For example, Oracle Financials under the standard model lists for $4,595 per user. Under the Enterprise $M in Revenue metric, Oracle Financials is $2,290 per $1,000,000 in company income. Consider a $3B company. Oracle Financials would be $6,870,000, or $3B divided by $1M times $2,290. As mentioned, Oracle discounts deeply against high list pricing especially under this model. Annual support follows the same 22% of net license per year.

Enterprise metrics are evergreen in that you’re required to license the revenue gap as your company grows. Therein lies some pain. A license verification form (LVF) is required annually, not to mention Oracle can use publicly-available information to send you a bill.

Under a revenue or employee metric, it does not matter whether you’re using more or less of the software as you grow (including by acquisition) or shrink. These agreements have an expansion clause and exhibit that defines the trigger for additional licensing, e.g., 10% of original net license for each 10% of growth above the original revenue figure or employee count. From the example above, if net license for Oracle Financials was originally $50,000 (at $3B in revenue), then growing to $3.3B would trigger incremental net licensing of $5,000 and add $1,100 to annual support.

Many people come to us wanting out of their long-standing Enterprise license model. One approach is to assess actual usage under the standard user-based model to reverse-engineer commercial effectiveness. Other options include pricing competitive solutions or opting for third-party support to balance incremental license fees. The Enterprise metrics aren’t necessarily bad deals, it’s just painful to unravel them.

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