EBS module pricing. Pay for what you run.

Oracle E-Business Suite is licensed module by module, and the way the modules are bundled, priced, and metered determines whether you are paying for the functionality you use or for a suite you partly run. The buyer side strategy starts with the module map.

Oracle E-Business Suite is not a single license. It is a collection of modules, each licensed separately, each with its own metric, and each priced on a list that ranges widely across the suite. The financials modules, the supply chain modules, the manufacturing modules, the human resources modules, and the customer relationship modules are licensed and priced independently, and the way an organisation's EBS estate maps against this module structure determines whether the licensing is efficient or wasteful. The buyer that understands the module pricing structure licenses what it runs. The buyer that accepts the bundle pays for what it does not.

This article walks through the EBS module pricing strategy. The module structure and the metrics. The bundle and the hidden cost. The shelfware problem. The user counting question. The renewal and the optimisation opportunity. The framework helps an organisation align its EBS licensing with its actual use and negotiate from an accurate position.

The module structure and the metrics.

E-Business Suite modules are licensed on a range of metrics, and the metric determines how the cost scales with the deployment. The application user metric counts the named individuals authorised to use the module, the employee metric counts the total employee population for the human resources modules, and other modules use metrics tied to the relevant business volume. The metric is the foundation of the EBS licensing position, because the cost is the product of the metric quantity and the per unit price, and a misunderstanding of the metric leads directly to a misunderstanding of the cost.

The application user metric is the most common and the most frequently misunderstood. The metric counts authorised users rather than concurrent users, and the count includes individuals who have access regardless of whether they actively use the module. An organisation that has provisioned access broadly, or that has not deprovisioned departed users, carries an application user count that exceeds its actual use, and the excess flows directly into the licensing cost and the support fee.

The structural response is to map the EBS estate against the module structure and the metrics, to establish the actual metric quantity for each module, and to align the licensing with the actual use. The buyer that understands the metrics negotiates from an accurate position. See the EBS negotiation pillar and the Oracle EBS product page.

The bundle and the hidden cost.

Oracle frequently presents EBS as a bundle, a suite of modules offered together at a headline price that appears favourable against the sum of the individual module prices. The bundle is an attractive proposition in presentation, because the apparent discount against the module list prices is substantial, but the bundle frequently includes modules the organisation does not use and will not use, and the cost of these modules flows into the support fee for the life of the licence.

The hidden cost of the bundle is the support fee on the unused modules. The support fee is calculated as a percentage of the net licence fee, and the bundle that includes unused modules carries a support fee on those modules that recurs annually and escalates over time. The headline discount on the bundle purchase is a one time benefit, while the support fee on the unused modules is a recurring cost, and the recurring cost frequently exceeds the one time benefit over the life of the licence.

The structural response is to evaluate the bundle against the actual requirement, to identify the modules that are genuinely needed, and to resist the bundle where it includes substantial unused functionality. The buyer that licenses the needed modules, rather than accepting the bundle, avoids the recurring support cost on the shelfware. See the list price versus street price article and our contract review service.

The shelfware problem.

Shelfware, the licensed but unused functionality in the EBS estate, is the most common source of waste in the E-Business Suite licensing. Shelfware accumulates through the bundle purchases, through the over provisioning of users, through the project that licensed modules that were never deployed, and through the organisational change that left modules licensed but no longer used. The shelfware carries a support fee, and the support fee on the shelfware is a recurring cost that delivers no value.

The shelfware problem is compounded by the support fee structure, which makes it difficult to reduce the support cost on the unused functionality. Oracle's support policies discourage the partial termination of support, and the matching service level and pricing policies can make it costly to drop the support on a subset of the estate. The shelfware therefore persists, carrying its recurring support cost, unless it is addressed through a deliberate optimisation that navigates the support policy constraints.

The structural response is to identify the shelfware in the EBS estate, to quantify the recurring support cost it carries, and to develop an optimisation strategy that navigates the support policy constraints. The buyer that addresses the shelfware reduces the recurring cost, and the optimisation is frequently most effective when aligned with a renewal or a broader negotiation. See the Apps Unlimited deal type page.

The user counting question.

The application user count is the central question in the EBS financials, supply chain, and manufacturing modules, and the accuracy of the count determines the accuracy of the licensing cost. The count should reflect the authorised users actually required for the business process, rather than the historical provisioning that may have granted access broadly. The over provisioned count carries a licensing cost and a support cost that exceed the actual requirement.

The user counting question is also central to the compliance position, because Oracle's audit of an EBS estate examines the authorised user counts against the licensed quantities. An organisation that has provisioned users beyond its licensed quantity carries a compliance exposure, while an organisation that has licensed users beyond its actual provisioning carries waste. The accurate user count, aligned with the actual business requirement and the licensed quantity, is the foundation of both the cost position and the compliance position.

The structural response is to establish the accurate application user count for each module, to align the count with the actual business requirement, and to manage the count to the licensed quantity. The buyer that manages the user count controls both the cost and the compliance position. See the EBS HRMS module pricing article.

The renewal and the optimisation opportunity.

The EBS support renewal is the natural point at which the module licensing should be reviewed and optimised, because the renewal brings the support fee into focus and provides the commercial context for the negotiation. The renewal is the opportunity to address the shelfware, to align the licensing with the actual use, and to negotiate the support fee from an accurate position. The buyer that approaches the renewal with the module map and the use analysis negotiates from strength.

The optimisation opportunity at the renewal is constrained by Oracle's support policies, which make it costly to reduce the support on a subset of the estate, but the constraints can frequently be navigated through the renewal negotiation, the contract restructuring, or the broader commercial conversation. The renewal is also the point at which the future flexibility, the future pricing protection, and the contract terms should be negotiated alongside the support fee. The buyer that combines the optimisation with the renewal negotiation captures the full value.

The structural response is to treat the EBS renewal as an optimisation opportunity, to approach it with the module map and the use analysis, and to negotiate the support fee and the contract terms from an accurate position. The buyer that prepares for the renewal as an optimisation captures the value that the unprepared renewal forfeits. See the Oracle Negotiation Playbook white paper and our renewal negotiation service.

Aligning the licence with the use.

The EBS module pricing strategy comes down to aligning the licence with the use. The module structure and the metrics determine the cost, the bundle and the shelfware create the waste, the user count drives both the cost and the compliance position, and the renewal provides the opportunity to optimise. The buyer that maps the estate against the module structure, that identifies the shelfware, that manages the user count, and that uses the renewal as an optimisation opportunity, aligns the licence with the use and avoids the recurring cost on the functionality it does not run.

For the broader framework see the EBS negotiation pillar and the EBS migration versus stay decision article.