5 ways how companies are licensing Oracle in VMWare environments

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by | July 11, 2019

Oracle Licensing and deploying in VMware environments?

Have there been a more controversial licensing topic in the past 10 years? I know SAP Indirect usage has been hotly discussed in recent years. But I guess without having hard facts to back it up, that more customers have struggled with Oracle Licensing and virtualization. I believe companies around the world have paid more money to Oracle for this issue than customers have paid SAP for Indirect usage.

I am not going to go into the licensing implications or rules you can search online for plenty of blogs on this topic. If you are new to Oracle SAM do a little research, then come back to this article and you can read how companies are dealing with this challenge.

I used to work at Oracle and this topic was used purely as a way of driving up the initial licensing gap price to get as much money as possible from the customers. Also, at Oracle there is no effort on educating its customers about licensing especially when it comes to this topic. Perhaps a kind reader can point us to a website where Oracle educates its customers about how to license Oracle when it comes to soft partitioning. If Oracle wanted to create stronger licensing contracts or policies, this should have been done years ago. Then customers would not have any wiggle room and would simply have to pay up. But this never happened.

I remember the days while still working at Oracle. vSphere 6.0 was released and there were wide discussions at my local Oracle office about implications for customers. It seemed so outrageous we decided not to talk about it with customers. At least the people I worked with always knew that if a customer was caught non-compliant due to the virtualisation, we never expected them to pay the full amount.

Usually we considered it a success if the customer paid 10% of the initial findings for this license gap. We would of course always try to play the game: “you need to pay for all processors” and send some nice e-mails to clients who were caught out.

Then I switched sides in 2015 and joined the good side “service providers” where I was tasked to help and explain Oracle Licensing and Contracts to both small and large customers. I realized that everyone struggled with this topic from the Fortune 500 companies with 100,000+ employees and large software asset management teams to the small companies with only a few servers.

I would get asked at almost every call or event “what is really the solution to Oracle Licensing when it comes to deploying with virtualization technologies, specifically VMware?”

The answer to that is that:

There is no magic solution to it, if you approach an Oracle licensing experts they often have different answers.

You will not find a contractual clause that tells you if Oracle is right or wrong.

There is no blog or article published that has the solution either.

What you need to do is read your contract and policies and make up your own mind about what you think is fair. You either pay money to Oracle or you don’t. If you approach Oracle the solution is #2 below or sign a ULA. Here is why it is good to work with an independent expert who can advise you on this topic, as there are more solutions than simply what Oracle wants you to select.

Companies are dealing with this issue differently, so I thought I would share some of the most common solutions in the market.

5 Most common solutions to Oracle Licensing and VMWare

1.   There are companies that simply pay whatever Oracle says they should pay. If Oracle sends them an email saying “you owe us €50m” – then they sign a ULA or similar deals for €2-20m. The customer and usually the CIO/CFO, think that they have done a great deal. Usually those companies remain in an unlimited agreement or exit such agreement with a large quantity of licenses. When you are in an unlimited style of agreement you don’t need to worry about this challenge.

2.   Other customers do as this THIS ARTICLE says, which is Oracle preferred solution outside of you signing a ULA. Oracle often approaches customers with this solution and obviously you must pay money in order to get this contractual right/limitation. If you then change your IT infrastructure Oracle can audit you or ask you for more money even if you don’t have any additional need for Oracle Software.

3.   Then there are customers who simply refuse to agree with Oracle’s view, even if they are audited by Oracle and are being issued audit reports showing large gaps. The big secret is that I haven’t seen a single case that ended in court. Usually these reports just stay in limbo if the customer refuses to pay.

4.   Some customers are creating their own bare metal or isolated virtualized environments to follow Oracle rules on virtualization. Whenever there is a new Oracle deployment it is moved to that specific environment.

5.   Some companies take external help from one of the leading services providers. (see this link) They can help you deal with Oracle and usually the results are much better. They end up in some sort of deal and the customer usually reconfigures its infrastructure by moving to (group 4) or moving Oracle to Azure or AWS where you don’t have the same licensing risk.

If you currently working at a company responsible for Oracle Licensing. A Here is a 5 step plan for how to proceed.

1.   Read up on the topic, review Oracle contracts, soft partitioning policy documents. blogs, articles, tips: VMware a excellent white papers about the topic.

2.   Get help from an Oracle licensing expert. Having someone advise you on this topic, it will not cost you a fortune. Even if you believe you know the topic, it can help to have someone neutral confirm or test your theory.

3.   Decide on a strategy that you want to adopt for your company.

4.   Have your CIO/CFO understand the strategy and commit to it.

5.   Execute.

 A call for action!

Why don’t software asset managers create a working group on how to tackle this issue. Meet, discuss and agree on how you shall license Oracle software deployed on virtual servers. Create a licensing statement for how companies should deal with this issue. Then publish the results and approach Oracle and demand a change. If there would be unity amongst Oracle customers, it could make a difference – there is strength in numbers!

I don’t have any hopes that Oracle will change its policies. But at least if there is a “recommended” solution to deal with this issue it will help Oracle customers in their discussions with Oracle. If Oracle would change its ways it would bring back some much needed goodwill and could help turn their cloud effort around.


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