Hosted Named User vs. Hosted Employee User Licensing

Hosted Named User vs. Hosted Employee User Licensing

• Recurring Payments: Customers pay on a monthly or annual basis.
• Flexible Models: Hosted Named User and Hosted Employee User options.
• Scalable: Licenses can be adjusted as user needs change.
• Cloud Services: Covers ERP, HCM, and CRM solutions.
• Compliance Management: Regular monitoring is required to avoid penalties

Hosted Named User vs. Hosted Employee User Licensing

Oracle Cloud Subscription Licensing is a fundamental aspect of how organizations interact with Oracle’s suite of cloud services, such as Oracle Fusion, ERP Cloud, and HCM Cloud. Understanding Oracle’s subscription models is critical for ensuring cost efficiency and compliance as more businesses transition to the cloud.

In this article, we’ll explore the key aspects of Oracle Cloud Subscription Licensing, focusing on the Hosted Named User and Hosted Employee User models, their use cases, and their implications for businesses using Oracle’s cloud services.

Overview of Oracle Cloud Subscription Licensing

Oracle offers various subscription licensing models that allow organizations to access Oracle’s cloud-based solutions. These solutions cover an array of business needs, including Enterprise Resource Planning (ERP), Human Capital Management (HCM), and Customer Relationship Management (CRM), all part of the Oracle Fusion suite.

The licensing model selected will directly impact the cost structure and scalability of the services. Oracle’s subscription-based approach means that customers pay regularly rather than making a one-time software purchase, providing greater flexibility and requiring ongoing management of licensing needs.

For Oracle ERP Cloud and Oracle HCM Cloud, there are two primary licensing models:

• Hosted Named User
• Hosted Employee User

These models offer different approaches to licensing users of Oracle’s cloud services, and understanding the differences between them is crucial for organizations to select the most suitable and cost-effective option.

Hosted Named User Licensing

Hosted Named User licensing is one of the primary options for accessing Oracle Cloud services. This licensing model is based on the number of individual users authorized to access the cloud service. Each authorized user is assigned a specific license, and only those named individuals can access the services.

Key Features of Hosted Named User Licensing

• Individual-Based: Hosted Named User licenses are based on named individuals within the organization with access to the Oracle Cloud services.
• Direct and Indirect Users: This model also includes individuals who may access Oracle’s services indirectly, such as through third-party applications or integrations that connect to Oracle Fusion ERP or HCM.
• Scalable: Organizations can add or remove licenses as their user base changes, providing flexibility as employee numbers fluctuate.

Benefits of Hosted Named User Licensing

• Cost-Effective for Smaller User Bases: This model is particularly cost-effective for organizations with relatively few employees requiring access to Oracle services. Since only the named users need to be licensed, costs are directly tied to the number of users.
• Predictable Costs: Licensing only those individuals who actively need access makes budgeting more predictable. The organization knows exactly how many users need licenses and can avoid over-licensing.
• Examples: Consider a mid-sized enterprise that uses Oracle ERP Cloud for financial management. Only the finance team of 15 employees needs access to the software. Hosted Named User licensing allows the organization to license just those 15 users, minimizing costs while ensuring compliance.

Challenges of Hosted Named User Licensing

• User Growth Management: While the model allows adding users as needed, it can become costly if the organization’s cloud user base grows significantly. As more employees need access, the licensing costs will scale linearly with the number of users.
• Managing Named Users: Organizations must be diligent about managing named users to ensure licenses are not assigned to users who no longer need them. Failing to do so can result in unnecessary licensing expenses.

Hosted Employee User Licensing

Hosted Employee User licensing is a more comprehensive licensing model, particularly suited for organizations that need extensive access to Oracle services across a large employee base. This model requires organizations to license the entire employee population, regardless of how many employees need to access the Oracle Cloud service.

Key Features of Hosted Employee User Licensing

• Full Employee Population Licensing: Under this model, organizations must license all of their employees—even if only a portion need access to Oracle services.
• Ideal for Large Organizations: This type of licensing is better suited for large enterprises where it is challenging to determine precisely who will need access to Oracle ERP or HCM Cloud services over time.
• Access Flexibility: Unlike the Hosted Named User model, Hosted Employee User licensing ensures that any employee can potentially access Oracle Cloud services without requiring separate named licenses.

Benefits of Hosted Employee User Licensing

• Simplified Licensing Management: The main advantage of Hosted Employee User licensing is simplicity. By licensing the entire employee population, organizations do not need to manage individual user licenses, simplifying compliance and reducing administrative overhead.
• Flexibility for Dynamic Organizations: This model provides more flexibility for dynamic organizations where employees frequently change roles or where there is significant movement in the workforce. Since the entire employee population is licensed, there is no need to reassign licenses when job roles or access requirements change.
• Examples: A large retail chain with thousands of employees might find it impractical to assign individual licenses for Oracle HCM Cloud to each employee needing access. The Hosted Employee User model covers all employees, which is easier to manage as they shift roles and access needs.

Challenges of Hosted Employee User Licensing

• High Costs for Low Access Needs: The biggest drawback of this model is the cost. Organizations must license their entire employee population, even if only a small percentage of employees can access the Oracle ERP or HCM Cloud. This model can result in substantial over-licensing for organizations where only 25% of employees need access.
• Limited Cost Control: Since licensing is based on the full employee count, costs can be higher and less flexible than the Hosted Named User model, especially in organizations with large but fluctuating employee numbers.

Use Cases for Oracle Cloud Subscription Licensing

Oracle ERP Cloud

Oracle ERP Cloud is a suite that includes financial management, procurement, project management, and more. Licensing the ERP Cloud can vary greatly depending on how many employees need to interact with these applications.

• Hosted Named User is suitable for licensing specific employees, such as those in the finance or procurement departments who need continuous access to Oracle ERP functions.
• Hosted Employee User licensing might benefit organizations where many employees need occasional access to the ERP system, such as managers needing to approve procurement requests or review project budgets.

Oracle HCM Cloud

Oracle HCM Cloud provides tools for workforce management, talent acquisition, and payroll. Effectively licensing the HCM Cloud is essential for organizations looking to digitize their human resources functions.

• Hosted Named User works well for companies where only HR staff and managers require regular access to HCM functionalities.
• Hosted Employee User is suitable when all employees must access certain HCM modules, such as self-service for payroll information, benefits enrollment, or training resources. This model ensures that everyone is covered without managing individual user licenses.

Compliance Considerations for Oracle Cloud Licensing

Ensuring compliance with Oracle’s cloud licensing requirements is crucial for avoiding unexpected costs and penalties.

Here are some key compliance considerations:

User Management

• For Hosted Named User licenses, organizations must maintain accurate records of who is authorized to access Oracle services. This includes monitoring indirect access to ensure that all users are properly licensed.
• For Hosted Employee User licenses, organizations must be clear about the number of employees they have, as this will directly determine the cost of the licensing agreement.

Audits and Monitoring

Oracle often conducts licensing audits to ensure compliance. Organizations using Oracle Cloud must be prepared for such audits by maintaining detailed documentation of their licensing agreements and user access records.

• Regular Internal Audits: Conducting regular internal audits can help ensure that user access aligns with the purchased licenses and that any changes in employee numbers are accounted for in the licensing agreement.
• Cloud Access Controls: Implementing role-based access controls (RBAC) can help organizations manage access to Oracle services more effectively and ensure that only authorized users can interact with sensitive cloud-based resources.

Best Practices for Optimizing Oracle Cloud Subscription Licensing

Managing Oracle Cloud licensing effectively requires careful planning and continuous monitoring.

Here are some best practices for optimizing cloud subscription licensing:

1. Evaluate Employee Needs Regularly

Assess which employees regularly need access to Oracle Cloud services. This can help avoid unnecessary costs associated with over-licensing and ensure that the right users have access to the tools they need.

• Example: Conduct quarterly reviews of Oracle Cloud users to identify any changes in access needs. If certain employees no longer require access, adjust the licensing accordingly.

2. Optimize the Use of Hosted Named User Licenses

If using Hosted Named User licenses, make sure they are assigned effectively. Avoid assigning licenses to users who may not need frequent access, and consider creating tiers of users based on access frequency.

• High-Access Users: Assign licenses to users who need continuous access.
• Low-Access Users: Consider whether these users could be covered under a shared access model or whether they require individual licenses.

3. Consider Hosted Employee Users for Large Populations

For large organizations where user needs are difficult to track, Hosted Employee User licensing might be a better fit. While it is more costly, it simplifies user management and ensures compliance, particularly in environments where employees frequently change roles.

4. Leverage Oracle’s Licensing Tools

Oracle provides licensing tools that help monitor usage and compliance. Utilizing these tools allows organizations to keep track of their licenses in real time and avoid any surprises during Oracle’s periodic audits.

• Oracle Licensing Management Tools: These tools help identify compliance risks and provide insights into user access, making it easier to manage licenses proactively.

FAQ: Oracle Cloud Subscription Licensing

What is Oracle Cloud Subscription Licensing?
It is a recurring licensing model that grants access to Oracle’s cloud services through regular payments.

What services are covered by Oracle Cloud Subscription Licensing?
It covers ERP, HCM, and CRM solutions, among other Oracle cloud services.

How does Hosted Named User licensing work?
This model assigns licenses to specific individuals who can access the service.

What is Hosted Employee User Licensing?
It licenses the entire workforce, even if only a portion needs to access the cloud services.

Which model is more cost-effective for small teams?
Hosted Named User licensing is usually more affordable for smaller groups.

How can licensing be adjusted over time?
Organizations can add or remove licenses as their needs change.

What are the compliance risks with subscription licensing?
Non-compliance occurs if more users access services than the number of purchased licenses.

How does Oracle ensure compliance?
Oracle conducts audits to verify that licenses match usage.

What happens if a subscription license expires?
Service access may be restricted until the subscription is renewed.

Can organizations mix Hosted Named User and Hosted Employee licenses?
Yes, Oracle allows a combination of these models to meet different needs.

What are the challenges with Hosted Employee User licensing?
It can be costly if only a few employees use the services.

How can companies manage their subscription licenses efficiently?
Regular internal audits and using Oracle’s licensing tools can help track licenses.

Is support included with Oracle Cloud Subscription Licensing?
Support is usually bundled into the subscription, covering maintenance and updates.

Can Oracle Cloud Subscription Licensing be used in hybrid environments?
Yes, many organizations use it in combination with on-premise solutions.

What tools does Oracle provide for managing cloud licenses?
Oracle offers licensing management tools that track usage and compliance in real time.