E-Business Suite (EBS) is regarded as one of Oracle’s most important business software solutions. However, learning how licensing is done in the industry may be challenging, even for IT experts.. This guide discusses the basics of EBS licensing, how to follow the rules, and what to do if Oracle conducts an audit.

What is Oracle E-Business Suite?

Oracle E-Business Suite is a comprehensive collection of integrated enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (SCM) applications. It allows companies to use the needed software to improve and automate their important business activities.

Do E-Business Suite Users Require an Oracle Java License?

A Brief History

In the 1980s, the Oracle E-Business Suite started its journey as Oracle Financials. Through development and acquisitions, it became a comprehensive range of business applications. 

Major releases include:

• 1988: Oracle Financials (Oracle’s first application product)
• 2000: Oracle E-Business Suite 11i (the first integrated suite)
• 2007: Oracle E-Business Suite R12
• 2013: Oracle E-Business Suite 12.2
• 2019: Oracle E-Business Suite 12.2.9

While Oracle has shifted its emphasis to the cloud, EBS is still widely used by businesses and runs their important business operations.

The Oracle EBS Stack: Understanding the Three-Tier Architecture

Oracle EBS follows a three-tier architecture, with each tier having distinct licensing implications:

1. Application Tier

This is where the core EBS modules reside (Financials, Logistics, Manufacturing, etc.). These applications are licensed separately based on metrics like Application User or Enterprise metrics.

2. Middleware Tier

EBS uses Oracle Internet Application Server Enterprise Edition (iAS EE) as its middleware component. EBS comes with a basic license for iAS EE, but if you make certain changes or customizations, you might need to buy a full license.

3. Database Tier

At the foundation, Oracle Database powers EBS. A runtime license for the database comes with EBS, but in some cases, using Enterprise Edition features calls for full database licensing.

Oracle E-Business Suite Licensing Fundamentals

The Applications Licensing Table: Your Contract Baseline

The Oracle Applications Licensing Table serves as the authoritative contract that lays out the rules for licensing Oracle EBS. 

It defines several critical aspects, including:

• Key licensing rules, allowances, and limitations
• Required and optional prerequisite products

The Oracle E-Business Price List lists all available EBS modules, their license metrics, unit prices, and license metrics.

Key Licensing Metrics for EBS

Oracle EBS offers several licensing metrics, with the most common being:

1. Application User

This metric licenses named individuals who are authorized to use the licensed application. Each user requires a license regardless of current or past usage. In other words, if the user merely has access, the user must be licensed.

Example: If 500 people in your organization will be using Oracle Financials, 500 Application User licenses are required.

2. Enterprise

The Enterprise metric licenses all users within an organization based on the company’s revenue or employee count. This can be cost-effective for large-scale deployments.

3. Other Specialized Metrics

Some EBS modules have specialized metrics such as:

• Electronic Order Line (for Order Management)
• $M Cost of Goods Sold (for certain manufacturing modules)
• Employee (for several Human Resources related modules)
• Processor (for iSupport, among others)
• Record (for MDM related modules)

Common EBS Modules and Their Licensing

A full review of all modules is beyond the scope of this article. We strongly recommend reviewing the full price list on Oracle’s website. Here’s a summary of the most commonly used modules:

Oracle Financials

Financials is arguably one of the most commonly used and licensed EBS applications. Practically, Financials is a suite that includes:

• General Ledger: Core accounting system
• Accounts Payable: Managing vendor payments
• Accounts Receivable: Managing customer invoicing and receipts
• Fixed Assets: Tracking and depreciating assets
• Cash Management: Managing cash positions and forecasts
• Treasury: Managing financial risk and cash investments

Financials is typically licensed by Application User, with a list price of $4,595 per user plus annual support at 22% of license cost. With typical discounting, based on the overall deal size, you might pay around $2,500 – $3,500 per user with first-year support included.

Logistics

Key modules include:

• Inventory Management: Tracking inventory levels and movements
• Order Management: Processing customer orders
• Purchasing: Managing procurement activities
• Warehouse Management: Optimizing warehouse operations

The list price for Inventory Management Application User licenses is $4,595.

Order Management

Key modules include:

• Order Management: Commonly licensed along with its optional add-on, Advanced Pricing
• iStore
• Others

Procurement

Key modules include:

• Purchasing: Commonly licensed along with its optional add-ons like Advanced Pricing, Sourcing, iSupplier Portal, and others
• iProcurement
• Others

Manufacturing

Manufacturing modules include:

• Discrete Manufacturing: For assembly operations
• Process Manufacturing: For recipe-based manufacturing
• In-Memory Cost Management: For tracking production costs

Manufacturing modules typically start at $5,000-$7,000 per Application User (list price).

Internet Application Server Enterprise Edition Licensing

One often-overlooked aspect of EBS licensing is the middleware component. While EBS includes a limited use license for Oracle Internet Application Server Enterprise Edition (iAS EE), full licensing becomes necessary when:

1. Deploying custom applications that are not part of EBS
2. Implementing third-party applications on the same iAS instance
3. Using advanced features beyond what’s needed for basic EBS operations

For detailed guidance, refer to the Applications Licensing Table.

iAS EE may be licensed either on the Processor or Named User Plus (NUP) metric. When fully licensed, iAS EE can significantly increase costs if not properly managed and accounted for in the overall EBS TCO assessment and planning. This is further complicated by infrastructure considerations like virtualization, cloud, other forms of partitioning, DR, etc.

Database Licensing Considerations

Similarly, EBS includes a runtime license for Oracle Database, but full licensing becomes necessary when:

1. Using Enterprise Edition features beyond what’s strictly required for EBS
2. Running other applications on the same database instance
3. Creating custom schemas outside the predefined EBS schemas
4. Using Database Options and Packs like Partitioning, RAC, or Diagnostics Pack

Note: Default EBS Partitions are created and do not themselves trigger a licensing requirement. However, any custom or modified Oracle Database Partitions will trigger an additional licensing requirement for Partitioning Option.

For detailed guidance, refer to the Applications Licensing Table.

Like iAS EE, Oracle Database Enterprise Edition may be licensed on the Processor or Named User Plus (NUP) metric. Database licensing can substantially increase overall costs, especially in virtualized or cloud environments where all potential cores might need to be licensed.

Compliance Challenges and Risks

Oracle EBS presents significant compliance risks, making it a frequent audit target for Oracle License Management Services (LMS). Common compliance issues include:

Application Level Risks

Typically, a full stack audit of EBS assesses the application level separately from the middleware (iAS EE) and Database layers. At the application level, deployment details are typically gathered using SQL statements to map users to their respective responsibilities and their corresponding modules.

Common causes of compliance issues include:

• User Provisioning Issues: Excessive user accounts or users assigned too many responsibilities.
• Inactive User Management: Failure to properly decommission users who have left the organization.
• Module Usage Exceeding Entitlements: Using modules that weren’t purchased.
• Custom Development: Creating custom applications that leverage EBS functionality without proper licensing.

Middleware Risks

The critical risk factors for the middleware layer include:

1. Not licensing iAS EE at all: This may seem surprising, but it’s actually not unusual for customers to begin their EBS journey without realizing that they will likely need (in 90%+ of the cases) to license and budget for iAS EE separately, even when it’s clear that they will be making modifications that exceed the restricted license allowance.
2. Insufficient licensing: Even when licensed at all, exceeding cores and/or NUPs is common.

Database Risks

The main risks include:

1. Not licensing Oracle Database at all: Again, much like iAS EE, it is not unusual for customers to begin their EBS journey without realizing that they will likely need (in 90%+ of the cases) to license and budget for Oracle Database Enterprise Edition separately.
2. Insufficient licensing: Even when licensed at all, exceeding cores and/or NUPs is common.
3. Database Options and Packs: Enabling features like Partitioning, Advanced Compression, or Diagnostics Pack

Proactive License Management: An Internal Audit Approach

To avoid compliance issues, you should implement a proactive approach to EBS license management:

Step 1: Inventory Your EBS Environment

• Document all EBS instances, modules, and database configurations.
• Identify all customizations and custom applications.
• Map out your deployment architecture in detail.

Step 2: Review Your Entitlements

• Gather all Oracle order documents and contracts.
• Document all licensed products, metrics, and quantities.
• Verify support status and renewal dates.

Step 3: Analyze Your Deployment

• Review user accounts and responsibilities, including analyzing every single user’s responsibilities and corresponding licensable modules.
• Perform a comprehensive license assessment of the middleware and Database layers, including mapping the infrastructure details, applying the relevant Processor counting procedures, NUP minimum and actual calculations (including frontend multiplexing, if applicable), including DR instances, and more.
• Audit database feature usage using scripts like the Oracle Database Feature Usage Statistics report.

Step 4: Identify and Address Gaps

• Remove unnecessary user accounts
• Disable unused features and options
• Reconfigure middleware and/or Database deployments to align with licensing

Step 5: Establish Ongoing Governance

• Implement user provisioning controls.
• Create a database feature for usage monitoring.
• Develop change management procedures for EBS modifications.

Handling an Oracle License Audit

When faced with an Oracle audit targeting EBS, a methodical approach is essential:

Preparation Phase

1. Assemble Your Team: Include IT, legal, procurement, and potentially external advisors
2. Review Your Contracts: Gather all Oracle agreements, order documents, and support renewals
3. Inventory Your Environment: Document all EBS instances, modules, and customizations

Script Management

1. Review Scripts Before Running: Analyze what Oracle’s audit scripts collect
2. Limit Script Execution: Run scripts in controlled environments
3. Review Output Before Sharing: Examine data for accuracy and relevance

Data Sharing Strategy

1. Establish a Single Point of Contact: Control communication with Oracle
2. Implement a Formal Review Process: Review all data before submission
3. Share Only What’s Required: Provide only what’s contractually obligated

Findings Assessment

1. Challenge Assumptions: Review Oracle’s baseline assumptions
2. Verify Calculations: Independently verify compliance calculations
3. Address Stale Users: Contest inclusions of inactive accounts
4. Negotiate Remediation Options: Explore alternatives to immediate purchasing

Cost Management Strategies

Managing EBS licensing costs requires strategic planning:

Short-term Strategies

1. User Cleanup: Regularly review and remove unnecessary accounts.
2. Module Rationalization: Identify and remove unused modules.
3. Environment Consolidation: Reduce the number of instances where possible.

Long-term Strategies

1. Metric Optimization: Evaluate if changing license metrics could reduce costs.
2. Architectural Adjustments: Separate custom applications from EBS environments.
3. Contract Negotiation: Use renewal periods for favorable terms.
4. Cloud Migration Planning: Evaluate cloud options with licensing implications in mind.

Frequently Asked Questions

Does Oracle E-Business Suite include Oracle Database licenses?

EBS allows for the use of the Oracle Database, though only for running EBS and nothing more. You’re not allowed to change the built-in database structure or use it for other purposes.

If you alter the database, use advanced features, install other apps on it, or build new schemas, you will need to purchase the full database license for EBS.

How are Custom Developments in EBS Licensed?

Licenses for the EBS modules will usually support custom developments made with those modules. However, if extra modules are added, your whole EBS system is integrated or major EBS features are changed, you may be required to get new licenses.

How Does Virtualization Affect Oracle EBS Licensing?

When using Oracle in a virtual setup, you usually have to pay for licenses based on all the physical computer cores that the virtual machine could use, not just the ones you assigned to it.

For the application tier, using virtualization usually doesn’t affect how you count users for licensing. But if you’re licensing based on processors (like for some middleware tools), virtualization can affect how many licenses you need.

What Happens to EBS Licenses When Migrating to Oracle Cloud?

When migrating to Oracle Cloud, your EBS licenses can be considered for the “Bring Your Own License” (BYOL) program, allowing you to save money on cloud subscriptions. 

However, specific terms and conversion ratios vary by contract and program. If moving to similarly deployed VMs in the cloud, the licenses may be simply applied to the cloud deployments. This applies to the application, middleware, and database layers.

What Are the Most Common Audit Findings for Oracle EBS?

The majority of the time, we notice that customers have more users than what they purchased, unauthorized module usage, use unlicensed database options, and custom apps that depend on unrestricted EBS modules.

How Do I Properly License EBS for Disaster Recovery?

The application layer does not require additional licensing for the DR environment(s). However, the middleware and database programs, iAS EE and Database EE, are still subject to standard DR rules of failover, backup, and standby/replication.

How Redwood Compliance Can Help

Managing Oracle EBS licensing requires specialized expertise. Redwood Compliance offers comprehensive services tailored to EBS customers:

• License Optimization: We identify cost-saving opportunities while ensuring compliance.
• Audit Defense: Our expert team provides end-to-end support during Oracle audits.
• Contract Negotiation: We leverage our deep knowledge to secure favorable terms.
• Compliance Programs: We establish ongoing governance to prevent future issues.
• Architecture Review: Our technical specialists evaluate deployment designs for licensing implications.

As always, feel free to reach out for a complimentary 1-hour consultation at to discuss your specific Oracle EBS licensing challenges.