What is Oracle E-Business Suite (EBS)?

Oracle EBS is an integrated suite of business applications that help organizations manage a wide range of operations, from finance and human capital to logistics and customer service. The suite is modular, meaning customers can license only the components they need.

Popular EBS modules include:

• Financial Management
• Procurement 
• Project Management 
• Human Capital Management (HCM) 
• Supply Chain Management (SCM) 
• Customer Relationship Management (CRM) 

EBS can be deployed on-premises, hosted in private clouds, or lifted-and-shifted to public cloud platforms like Oracle Cloud Infrastructure (OCI), AWS, or Azure. 

Oracle EBS Licensing Models

Oracle offers four primary licensing models for E-Business Suite in 2025, each with distinct advantages and considerations:

1. Application User Licensing (User-Based Model)

This traditional model licenses individual named users who access the EBS applications.

• Licensing basis: Per module per individual user with system access. Each different module requires its own license per user.
• Cost structure: Direct correlation between user count and licensing costs
• Advantages: Precise control, predictable scaling with user growth, straightforward compliance tracking
• Challenges: Administrative overhead for user management, potentially costly for broad deployments
• Best for: Organizations with limited, well-defined user populations and targeted EBS deployments

Each person with access rights requires a dedicated license regardless of usage frequency. Authorization counts, so even if it’s not being used actively, users still require a license. Rigorous user management practices are needed to maintain compliance and avoid unnecessary costs.

2. Revenue Metric Licensing (Enterprise Revenue-Based)

This enterprise-wide model bases licensing costs on your organization’s total annual revenue.

• Licensing basis: Total company revenue (typically per $1M in revenue)
• Cost structure: Scales with business growth rather than system usage
• Advantages: Unlimited user access, simplified administration, no user tracking required
• Challenges: Costs increase automatically with revenue growth, potential disconnect between system usage and licensing costs
• Best for: Large enterprises with high user-to-revenue ratios and predictable revenue growth

Revenue Metric licensing eliminates user counting in favor of a simpler enterprise-wide approach. The downside to this: the cost doesn’t decrease as your company revenue decreases.

3. Employee Metric Licensing (Enterprise Employee-Based)

Similar to Revenue Metric but based on workforce size.

• Licensing basis: Total employee count across the organization
• Cost structure: Scales with workforce growth rather than system usage
• Advantages: Unlimited user access, simplified administration, natural fit for HR-focused implementations
• Challenges: Requires clear definition of “employee,” costs increase with workforce expansion
• Best for: Organizations with stable employee counts and broad user access needs

This model suits HR-focused implementations and environments where employee count is more stable than revenue.

4. Custom Application Suite (CAS) Licensing

A flexible approach that allows organizations to create tailored bundles of EBS modules.

• Licensing basis: Customized combination of modules with negotiated terms
• Cost structure: Bundle pricing typically offering discounts over individual module licensing
• Advantages: Cost efficiency through bundling, simplified administration with unified terms
• Challenges: Complex initial negotiation, reduced flexibility for partial termination
• Best for: Organizations implementing multiple EBS modules with long-term requirements

CAS licensing enables tailored combinations while unlocking discounts and contractual simplicity.

There are some older metrics that you can still use but are no longer offered. These are:

1. Concurrent User: Limited simultaneous logins, now retired in favor of application user licensing. Legacy licenses may face conversion pressure. Monitoring peak usage is crucial for compliance.
2. Named User-Professional vs. Employee: Older EBS versions distinguished full-access Professional Users from limited Employee Users (e.g., HR self-service). Misinterpretations led to compliance gaps. Oracle now uses Application User metrics instead.
3. Other Unit-Based Metrics: Some modules use transaction-based licensing (e.g., expense reports processed, order lines handled). These can be cost-effective but tracking actual usage and contract amendments are necessary when switching.

It’s important to understand that licensing the EBS suite does not include the licenses for the underlying database or middleware — those must be licensed separately.

Common Licensing Challenges

1. User classification confusion: Customers often confuse Named User Plus with Application User metrics, leading to over- or under-licensing.
2. Customization pitfalls: Custom-built applications or extensions using Oracle technology may require additional licensing.
3. Third-party cloud hosting: Running EBS on AWS or Azure raises questions around license portability and compliance with Oracle’s cloud policy.
4. Virtualization restrictions: Oracle has strict rules around “soft partitioning” (e.g., VMware), which can lead to significant licensing exposure.

Oracle Support Policies

Support is a critical cost component. Oracle’s support policies influence long-term licensing costs and upgrade decisions:

• Premier vs. Sustaining Support: Older EBS versions may only be eligible for Sustaining Support, which lacks bug fixes and new updates.
• Reinstatement fees: If you drop support, re-subscribing can come with penalties.
• De-support risks: Running unsupported versions increases operational and compliance risks.

EBS on Oracle Cloud vs. Other Clouds

Oracle provides incentives for customers to run EBS on Oracle Cloud Infrastructure (OCI) through its Bring Your Own License (BYOL) model. However, deploying EBS on non-Oracle cloud platforms like AWS or Azure introduces licensing complications:

• License Mobility restrictions: Oracle’s licensing rules often do not recognize virtual cores on non-Oracle clouds, leading to over-licensing.
• Support concerns: Oracle may limit support for deployments outside of OCI.

EBS on Microsoft Azure

Running Oracle EBS on Microsoft Azure is technically feasible, but licensing compliance is a major concern. Oracle officially certifies Azure as an Authorized Cloud Environment (ACE), which means you can license Oracle software on Azure (and Amazon Web Services and Google Cloud Platform), but you need to take the following items into account:

• No license portability: Oracle does not grant license mobility for EBS, Oracle Database, or middleware components on Azure. Customers must license for the full underlying physical infrastructure, not just the virtual instances used.
• Increased cost risk: This restriction often results in inflated license requirements — especially in virtualized environments where hard partitioning is not recognized.
• Support limitations: While Oracle may provide limited assistance, customers running EBS on Azure do so at their own risk. Full support may only be guaranteed when deployed on OCI.
• Lack of clarity: Oracle’s public licensing documentation does not provide consistent or transparent rules for Azure deployments, leaving customers exposed to unexpected findings in audits.

Organizations considering Azure for EBS hosting should conduct a detailed compliance assessment, engage independent licensing experts, and document deployment architecture carefully. In some cases, it may be more practical to explore OCI for compliant BYOL benefits, or to limit EBS to on-premises environments while leveraging Azure for other workloads.

All our consultants are Microsoft licensing experts – reach out to us with any questions on Oracle EBS hosting in Azure.

Audit and Compliance Considerations

Oracle audits are rigorous, and Oracle EBS environments are frequently included in the scope. These audits are not random. They are often triggered by events or patterns Oracle deems high-risk.

• Infrastructure expansion: Adding CPUs, memory, or servers can increase your license requirements and prompt an audit.
• Virtualization xhanges: Deployments in virtualized environments, especially using VMware or other soft-partitioning tools, attract scrutiny due to Oracle’s restrictive licensing interpretation.
• Use of custom applications: Integrating or extending EBS functionality with custom-built apps that use Oracle technology may require additional, often overlooked, licensing.
• Cloud migrations: Moving EBS to public clouds like AWS or Azure raises compliance flags, particularly when Oracle’s license policies for non-Oracle clouds are not followed precisely.

During an audit, Oracle typically requests:

• Complete hardware configurations and virtualization diagrams
• Detailed user and access reports (especially for NUP or Application User metrics)
• Evidence of proper licensing for any custom or third-party integrations

Key risk: Oracle licensing is contract-based, not entitlement-based, so relying solely on deployment tools (such as OEM or LMS scripts) without aligning to contractual terms can result in unexpected findings.

To mitigate risks:

• Maintain current deployment documentation and license records
• Proactively audit your own environment using the same logic Oracle employs
• Seek independent validation before significant changes in infrastructure or architecture

Proper preparation and documentation are critical! Oracle’s findings can result in substantial license fees, back support charges, and strained vendor relationships if not managed proactively. LicenseQ offers support with Oracle audits, helping clients prepare documentation, assess risk exposure, and respond effectively. Our services include mock audits, Oracle LMS script reviews, contract and entitlement analysis, and guidance on aligning deployment data with contractual terms.

Optimization Opportunities

Despite the complexity, there are clear opportunities to reduce cost, streamline compliance, and improve visibility across your Oracle EBS licensing estate:

1. Rightsize users: Conduct a thorough user access review to eliminate inactive or duplicate accounts. Many organizations overpay due to outdated user lists or overly cautious provisioning.
2. Review module usage: Evaluate which EBS modules are actively used versus those sitting idle. Removing or reallocating unused licenses can lead to significant savings.
3. Optimize licensing models: In some cases, switching from Application User to Revenue or Employee Metric licensing, or consolidating modules through CAS agreements, may provide more predictable costs and operational simplicity.
4. Clean up customizations: Custom extensions may trigger unexpected licensing obligations. Reviewing and rationalizing these customizations can prevent compliance risks and reduce associated database or middleware costs.
5. Independent licensing review: Engage an expert partner like LicenseQ to perform a deep-dive compliance check, simulate an Oracle audit, and develop a long-term license optimization strategy tailored to your business goals.

Migrating from EBS to Fusion or Other ERP Solutions

As Oracle continues to prioritize its cloud-first strategy, many organizations are evaluating a migration from EBS to Oracle Fusion Applications: Oracle’s next-generation, cloud-based ERP solution. Fusion offers a fully SaaS-based experience, with continuous updates, modern UX, embedded analytics, and tighter integration across business functions. However, licensing and transition planning are critical to success.

Licensing Oracle Fusion Applications

Fusion is licensed as Software-as-a-Service (SaaS), meaning:

• Subscription-based model: Customers pay annual or multi-year subscription fees based on user roles, application modules, and transaction volumes.
• Role-based licensing: Each user is assigned a specific role (e.g., Financial Analyst, Procurement Manager), and each role includes access to specific functionalities.
• No perpetual licenses: Unlike EBS, Fusion does not offer perpetual licenses. Costs are recurring, and usage must be managed continuously.
• Tiered SKUs and Add-ons: Fusion licensing includes core modules (e.g., Financials, HCM, SCM) with optional add-ons (e.g., analytics, risk management). Pricing varies based on industry and deployment size.

Organizations must perform a detailed role-mapping and workload analysis to avoid over-licensing or functionality gaps.

What Happens to Your EBS Licenses?

Organizations transitioning from EBS to Fusion or another ERP platform should consider the following:

• License Trade-In Programs: Oracle may offer credits for existing EBS licenses, which can offset the cost of Fusion subscriptions. These credits are subject to Oracle approval and negotiation.
• Ongoing support costs: If the transition is phased, organizations may still be liable for EBS support until all users and modules are retired.
• No refund for unused licenses: Oracle does not offer refunds for unused on-premises licenses, and support fees are typically non-refundable.
• Shelfware risks: EBS licenses may become shelfware if not carefully managed or leveraged in the negotiation of the Fusion contract.
• Dual usage and audit risk: Operating both EBS and Fusion simultaneously can increase compliance complexity. Ensure proper licensing is maintained for both environments during the transition.

Alternative ERP Paths

Some organizations consider moving from EBS to third-party ERP systems such as SAP S/4HANA, Microsoft Dynamics 365, or Workday. In these cases:

• EBS licenses become stranded assets, unless they can be repurposed (e.g., for OCI-hosted legacy apps).
• It’s essential to align termination dates for support contracts to avoid unnecessary renewals.

Migrating to a cloud ERP like Fusion can deliver long-term benefits, but the licensing model shift from perpetual to subscription requires strategic planning, robust change management, and expert guidance.