Oracle PAH License – Prop Hosting Licensing – FAQ

What is Oracle Proprietary Hosting?

• Definition: Oracle Proprietary Hosting (PAH) licenses allow Oracle ISVs to use Oracle technology in hosting environments.
• Purpose: Used to build and run proprietary applications as SaaS.
• Restrictions:
  • Only for ISVs, not end customers.
  • Specific to the ISV’s intellectual property.
  • Not for third-party applications.

What is an Oracle PAH License?

Oracle PAH License, or Proprietary Application Hosting License, is a specialized licensing option for Oracle Independent Software Vendors (ISVs). This license allows ISVs to use Oracle technology software in hosting environments, including databases and middleware such as WebLogic.

This enables ISVs to build and run their intellectual property as a software-as-a-service (SaaS). This model has replaced the generic hosting licenses Oracle previously offered in the early 2000s to 2010s.

Difference Between Oracle PAH License and Full Use Licenses

• Full-Use Licenses:
  • Purchased by Oracle end customers.
  • Allow use of Oracle software for internal business operations.
  • No restrictions on the applications used.
  • Terms defined in the Oracle OMA agreement.
• Oracle PAH Licenses:
  • Available only to Oracle ISVs.
  • Enable the use of Oracle technology software in hosting environments.
  • Must be used to build and run the ISV’s intellectual property as a SaaS.
  • Subject to specific terms outlined in the Oracle licensing agreement and APRF document.

Oracle PAH Licensing Limitations

• The Oracle ISV owns the license; end customers do not sign licensing agreements.
• PAH licenses can only be used if the ISV owns the intellectual property utilizing Oracle software.
• It cannot be used for third-party applications.
• It must be used for environments with multiple end customers, not 1:1 hosting.
• Restricted to a specific solution/application, as defined in the Oracle licensing agreement.
• The solution must be commercially available to multiple end customers.

Risks of Incorrectly Purchasing Oracle PAH Licenses

Oracle sales teams may aggressively promote PAH licenses to customers, potentially leading to unsuitable licensing models for their needs. This misalignment can expose companies to financial risks. Oracle customers need to review the PAH license metric independently and ensure it aligns with their usage.

Oracle License Agreements Regarding Hosting

1. Internet Hosting:
   • Included in the Oracle Ordering Document.
   • Allows full-use licenses for both internal operations and external entities.
2. Proprietary Hosting:
   • Requires signing Oracle partner agreements, including the APRF form.
   • Permits the use of Oracle technology software in hosting environments to build and run SaaS solutions.

Frequently Asked Questions About Oracle Hosting Licenses

Is the pricing for Oracle hosting licenses the same as for Oracle full-use licenses?

• Hosting licenses may be slightly more expensive than internal use licenses. Pricing is negotiable with Oracle.

What should I do if an Oracle account team asks me to buy Oracle hosting licenses and replace my old licenses in exchange for lower support fees?

• Be cautious and review the PAH license terms before deciding. Understand the potential legal and financial risks if audited.

Do I need to license my test and development environments if I am developing an application that will eventually go into production?

• No, you can prototype and test without licensing as an Oracle Partner Network (OPN) member. However, production and associated test and development environments must be licensed.

If our proprietary hosting application is in production, must I license my test and development environments?

• Yes, all environments must be licensed once the application is in production.

How does Oracle define what I can use my Oracle hosting license for?

• The APRF defines the application’s name, architecture, and end customers. This form is part of the PAH license agreement.

What is your advice on how to complete the Oracle APRF?

• Keep details vague to avoid renegotiating for future updates. This flexibility benefits the ISV.

What if I already purchased Oracle hosting licenses but have the incorrect Oracle licensing model?

• Understand and comply with the terms signed. Misuse of PAH licenses can lead to financial risks if audited.

How do the licensing metrics work with Oracle hosting licenses?

• The metrics are the same as those used in standard Oracle licensing: named user plus and processor-based. The difference lies in contract terms and usage conditions.

Can I sign a proprietary hosting Unlimited License Agreement (ULA)?

• Yes, but Oracle typically imposes more restrictions than normal ULAs. The exit process can be challenging.

Can I use PAH licenses in AWS or Azure?

• Yes, but Oracle insists on an amendment. Some argue this is unnecessary.

Comprehensive Guide to Oracle PAH Licensing

Oracle PAH licenses provide a tailored solution for ISVs to leverage Oracle’s technology in creating and delivering SaaS applications. However, navigating the complexities of these licenses requires a thorough understanding of their limitations and risks.

Practical Examples and First-Hand Experience

Example 1: Transition from Full-Use to PAH Licenses

An ISV initially used full-use licenses for internal operations. As the company transitioned to a SaaS model, it faced increased costs and compliance risks. By switching to PAH licenses, it aligned its licensing with its business model, reducing costs and ensuring compliance. However, this transition required careful planning and renegotiation with Oracle to avoid potential pitfalls.

Example 2: Misalignment of PAH Licenses

Oracle sales persuaded a company to switch to PAH licenses with the promise of lower support fees. However, the company later discovered these licenses were not suitable for their internal business operations, leading to a costly audit. The lesson is thoroughly understanding the PAH license terms and ensuring they align with your usage.

Tips for Effective Oracle PAH License Management

1. Review Licensing Agreements: Understand all terms in the PAH agreement and APRF.
2. Engage Experts: Work with Oracle licensing consultants to navigate complexities.
3. Monitor Usage: Regularly review your license usage to ensure compliance.
4. Negotiate Terms: Seek flexible terms in your PAH agreement to accommodate future changes.

Conclusion

Oracle PAH licenses offer a strategic advantage for ISVs leveraging Oracle’s robust technology for SaaS solutions. However, these licenses’ complexity and potential risks necessitate a thorough understanding and careful management. By engaging with experienced Oracle licensing consultants, ISVs can navigate these challenges effectively, ensuring compliance and optimizing their licensing investments.