Moving Named User Plus (NUP) licensing model to Processor without penalty

Software Licensing Oracle Licensing
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Anonymised question:

I need help with a query regarding a conversion of a number of our licences across various Oracle product lines from Named User Plus (NUP) licensing model to a Processor based metric.

We have a large number of physical servers running database workloads under NUP licensing and want to consolidate these workloads onto a virtualised platform as part of a planned hardware refresh project (the Contracts we have with Oracle allow us to virtualise).

We will transition each workload from running on physical to running on virtual. As we do not have sufficient processor licenses for the planned infrastructure, and Oracle do not allow a mix of Processor and NUP licensing to co-exist on a platform, we need to perform the conversion to processor highlighted below.

All the licenses we are requesting to are from a single contract (CSI) with Oracle. The conversion rates are well publicised by Oracle and we have sufficient quantities of NUP’s to perform the required conversion - should Oracle permit the conversion.

The question is how easy a request should this be for us to make? We have successfully done it before for another contract with little challenge from Oracle and without asking, Oracle gave a 24-month transition period, so we know it can be done.

The concern we have is that having made an initial approach to our Account Manager to see if this is possible in principle, it is starting to feel that he is pushing for us to make a commercial commitment at the same time for Oracle to consider the request.

The line the Account Manager appears to be taking is that we will be dual running both Physical and Virtual platforms at the same time and therefore we may need to purchase some Term licenses to facilitate the transition (he hasn’t actually stated this fact - it is more of a gut feeling that this is the direction of travel he wants to try and take)

For clarity - there will be no situation where we will run a specific workload on both platforms in order to do any sort of comparison (which we acknowledge this IS dual running). The project will on a workload by workload basis transition from physical to virtual (the key word here being transition)

We are currently in the position where we are ready to start ordering hardware - but are unable to do so without Oracle confirming that conversion is absolutely possible and something they are willing to allow. Oracle on the other hand want to know how long the project will take - which we are unable to plan until they give agreement on the previous point.

Any help, guidance or insight you can offer with regard to any experience in this area would be gratefully received.

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Few points:

  1. It’s absolutely possible and should face NO challenge to ask for a license conversion from NUPP to PROC at a 50:1 ratio.
  2. I would be “EXTREMELY” sceptical on Oracle’s stance of Virtualization, please tread carefully as these are the situations that turn non-compliance to >10M of liabilities.
  3. You will likely be audited after the fact when you do the conversion and virtualization so please be prepared for that.
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Hi Martin,

A couple of things should be taken into account:

The conversion from Named User Plus to Processor is NOT a contractual right, but a common best practice Oracle normally allows an end-user to do.

Oracle has however the right to refuse a customer to do such a conversion, since contractually the customer most likely has not agreed upon such a conversion (Oracle rarely approves to have such conversion rate listed inn the agreement). The customer is therefore depending on the relationship with its Sales rep unfortunately.

If Oracle allows such a conversion, Oracle would normally apply a ratio of 50 Named User Plus = 1 Processor. The rational behind this is that the list license and list support fees of 50 NUP licenses equals 1 Processor license.

Customer should however keep in mind that this conversion is actually a so called “license upgrade” through which the use rights are expanded. This since the customer with the 50 Named User Plus licenses initially only had the right to deploy the Oracle software and have a limited amount of people making use of the software (in this example 50), where the Processor licenses do allow the customer to have an unlimited amount of individuals making use of the software.

If the customer would (in theory) for example buy the NUP licenses against 70 or 80% discount (e.g. with the argument that only a very small number of people are using the software and the fact that the minimums are therefore not showing the actual value the customer receives from the software) and then later on wants to convert these licenses into Processor licenses since these licenses are being used for an external facing application, then Oracle would want to get additional fees for such “expansion” of use rights.

Oracle will as such most likely ask for an additional license and associated support fee to allow the upgrade to to happen (expansion of use rights is more value from the software = additional payments)

Customer should in addition be aware that the licensing policies do state that the software is required to be licensed once the software is “installed and/or running”; in other words the moment that the software is installed on the target (virtualised) architecture, a license requirement for such installation is already applicable (regardless of whether the software is already “running” or “in use”. Typically during such a migration the software is installed both on the old and the new environment and as such there is period of “double license” requirements.

Oracle facilitates these kind of situations through a so called 1-year term license, which the customer can buy at 20% of the list license perpetual fee (without any further discounts). Keep in mind that the annual list support fee remains the same as perpetual (since its charged for the period of 1 year). The minimum term Oracle offers is a 1 year term license.

Customer should also assess carefully what the license requirements are for its deployment on the virtualized environment; different counting rules are applicable depending on the virtualization technology chosen (e.g. Vmware, Sun Solaris Zones, Oracle VM, IBM LPAR, others)

Regards

Richard