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AWS Optimize CPU Program Can Reduce Oracle Licensing Costs

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There is a battle raging in the war for your cloud dollars. While there are many fronts in this conflict, the particular skirmish we’ll talk about today revolves around pricing for the Oracle database when running in a non Oracle cloud.

On one side is Oracle who is trying to make their software more expensive when using non-Oracle clouds like AWS and Azure. On the other side of this battle is just about everyone else. This includes Oracle customers and Oracle competitors. It’s certainly a strange situation to see Oracle customers aligning with Oracle competitors, but with most things Oracle, it’s complicated.

Amazon’s AWS recently announced a new Optimized CPU program for EC2. The program is designed to give clients the freedom to deploy their Oracle software in the AWS cloud while using fewer Oracle licenses, thus saving customers money on unnecessary Oracle fees. It’s a brand new approach by the vendor and something worth exploring.

The Optimize CPU program for EC2 allows AWS customers to configure their AWS EC2 environments and choose the number of vCPUs assigned to their instances. Before Optimize CPU, AWS customers were allocated a specific number of vCPUs for their EC2 deployments based on AWS rules. Under Optimize CPU, the clients decide upfront for themselves. For example, under the old program an AWS customer would be allocated 16 vCPUs for an AWS EC2 environment. This environment would require either 16 or 8 Oracle database licenses depending on when the client purchased their Oracle licenses. (Pre January 2017 had different Oracle licensing policies than post January 2017). However, under the Optimize CPU program, that same client can now configure an AWS EC2 environment with 2 vCPUs (or even 1!). This would require either 1 or 2 Oracle licenses depending on when the client acquired their Oracle software. Given that Oracle database costs $47,500 per license, this savings on Oracle is significant and can easily reach millions of dollars.

The way Amazon has set up this Optimize CPU Program requires their customers choose upfront how many vCPUs are utilized for their deployment. According to AWS, there is no way for a client to increase or reduce the number of vCPUs after the initial creation unless they fully delete the instance and recreate it. This restriction will eliminate any chance for Oracle to use the argument that the customer’s deployment “could possibly” move to other vCPUs and therefore require more Oracle licenses. That’s how Oracle tries to get you on VMWare usage and Oracle may try to do the same thing here. Our initial assessment of this program, and how customers manage their deployments, is that it does offer Oracle users running on AWS EC2 an opportunity to significantly reduce the number of Oracle licenses required and can therefore lower the associated Oracle licensing costs.

Given Oracle’s history, we can expect them to respond in some way. They may try to change their licensing rules AFTER you sign your contract (not allowed!) Their sales teams may make licensing claims they are not qualified to make. They may just stay silent on this issue and try to spread uncertainty in the market by not “endorsing” the Optimize CPU program. One thing is certain, Oracle customers should not wait for Oracle to make it easier to deploy on AWS or any other non-Oracle cloud. Ultimately, it is up to each Oracle licensee to take control of their Oracle licensing and determine their own path forward.