APP-BCA1751 Virtualizing Oracle: Caging the Licensing Dragon

At VMworld Europe 2012 I went to session APP-BCA1751  because I am interested in stories about Oracle licensing on VMware. The bottom line : Oracle wants  to maximize revenue and let their customers pay as much as possible by confusing them and put them on pressure by threating with a court case.

I have written many blogposting about this subject in the recent past. My goal is to give Oracle customers as much as information so they can license Oracle in the most cost effective way. And I also give ammunition so they can fight Oracle during an audit or when  a claim is presented.

An overview of postings can be found in a posting titled: It was on tape, removed but recovered: Oracle supports VMware DRS Host Affinity

A good overview of the current issues on Oracle licensing can be found in this article titled Complex and non-transparent Oracle licensing costing firms millions

Larry Ellison (CEO Oracle) has a nice boat.

The VMworld session was presented by Daniel Hesselink of License Consulting, Judica Krikke of Stibbe (a law firm) and Donnie Hamlet of iQuate. The VMworld presentation is available online for both  VMworld US and Europe attendees via The presentation can also be requested at License Consulting.

If you need help, contact Daniel Hesselink of License Consulting. For the USA, contact Dave Welch of House of Brick.

After the session I went to a groupdiscussion about the same subject.

I was told that before about one year ago most Oracle customers wanted to settle a claim. They did not want to spent energy and money in lawyers and a potential court case. Since about a year there is a trend that customers are sick and tired of the money grabbing policy of Oracle and are turning away from Oracle. They migrate to other database solutions. Sybase and Microsoft SQL have clear contracts and have well documented how their software should be licensed.  They also offer volume licensing.

Daniel explained about the various documents Oracle has available. The conclusion is those documents have no more value than toiletpaper.

Oracle has a document which is titled Oracle Partitioning Policy. The footnote reads:

 This document is for educational purposes only and provides guidelines regarding Oracle’s policies in effect as of September 05, 2012. It may not be incorporated into any contract and does not constitute a contract or a commitment to any specific terms. Policies and this document are subject to change without notice. This document may not be reproduced in any manner without the express written permission of Oracle Corporation.

Judica Krikke (lawyer) explains that the policies do not apply to the contract. And they do not overrule the contract. Oracle LMS position is based on the policies. So the position of LMS (their statements/opinion) does not hold.

Only what is written in the contract has legal value.

So lets look in the contact. Many customers do not have a contract with Oracle. There are various contract documents and not a complete set. Oracle license and Services Agreement (OLSA) is the standard contract. None of the 100s of OLSA’s Stibbe lawyers have seen contain any word about virtualization and/or Software partitioning.

None of the OLSA’s contain any reference to the Oracle Software Investment Guide.

None of the OLSA’s contain any reference to Oracle Hard/soft partitioning whitepaper.

The contract does say:

  • Turnover related
  • User based
  • Hardware based

The term processor is described in the contract as:

Processor: shall be defined as all processors where the Oracle programs are installed and/or running. Programs licensed on a processor basis may be accessed by your internal users (including agents and contractors) and by your third party users. The number of required licenses shall be determined by multiplying the total number of cores of the processor by a core processor licensing factor specified on the Oracle Processor Core Factor Table which can be accessed at All cores on all multicore chips for each licensed program are to be aggregated before multiplying by the appropriate core processor licensing factor and all fractions of a number are to be rounded up to the next whole number. When licensing Oracle programs with Standard Edition One or Standard Edition in the product name, a processor is counted equivalent to an occupied socket; however, in the case of multi-chip modules, each chip in the multi-chip module is counted as one occupied socket.

Judica has spent a whole day with several technical people to understand what this text means but could not get a clear understanding. The contract text is incomprehensible.
An incomprehensible text requires interpretation. Not just Oracle’s interpretation.

1. Policies do not apply
2. Contract language is unclear.
3. Interpretation required.
4. Oracle’s interpretation is not decisive

In vSphere 5.1 VMware introduced shared nothing migration. Virtual machines running on SAN1 can be live migrated to SAN2. So even when a customer created a separate VMware HA cluster just for Oracle VMs, those VMs could potentially be running on VMware hosts not part of this dedicated cluster. If Oracle continues its view it would mean that ALL VMware hosts of a customer in one or more datacenters (metrocluster) must be licensed for Oracle.

Oracle gets more and more in a yawning gap  as long as they are not clear in their licensing. Inside Oracle are voices who believe the situation needs to change. Sales people are likely not fully aware they are fooling their customers. They are wrongly educated by Oracle. On the other hand their salary is based on the revenue they make. An Oracle salesman has a relative low base salary on which bonusses are added when targets are made. Oracle LMS auditors get a bonus when they find not correct licensing of customers. Read more here

Will Oracle change?

“No, they won’t, because if they backtracked, thousands of customers from the past who have paid licensing penalties will start demanding cash back,” said Hesselink, adding that the only way forward is for the database provider to introduce volume licensing policies.

Daniel compares the view of Oracle with the following: suppose your car is able to drive 200 km/hour. The speeding limit is 120 km/hour. A police officer gives you a fine because you could potentialy have driven faster than allowed.

This is proven guilty until proven otherwise. No judge will ever give you a penalty. The same applies for Oracle. Oracle will need to prove in court that the customer used their software on more sockets/users than have been licensed.

Oracle is allowed to visit a customer and perform an audit. They will need to inform the customer days in advance about their intention to visit the customer for an audit. Oracle will let the customer believe the audit is a kind of service to the customer. But their intention is not to help but get your money. A large part of the revenue of Oracle is based on claims which are always initially much to high.

If the audit takes place, make sure you only give  relevant information for the audit. A screendump of vCenter Server is not relevant. The more information is given to Oracle, the more info they have to create a higher claim. Make sure someone of your own organization is sitting next to the Oracle LMS auditor to see what he or she is doing. This should be a technical person. Do not let Oracle gather not relevant information.

A legal document which describes what kind of documents Oracle LMS is allowed to see and ask for is non existing. Make sure you agree with Oracle before the beginning of the audit about what Oracle can see and cannot see.

If you as a Oracle customer knows the details and your legal position you can put Oracle in the corner instead of the reverse.

Oracle does not want their customers to know if a claim thrown of the table of heavily reduced. Customers will need to sign a NDA which states nobody is allow to talk and write about the settlement. This is why information on claims are hard to find.

At setup of Oracle software some options (which costs a lot of money) are installed by default. Make sure the person who installs the software knows exactly which options are needed and which are not. Sometimes options are installed after the installation of the software. The database can automatically install options the customer is not aware of.

It is a good practise to monitor the number or Oracle database instances, the number of options, which options are installed etc. iQuate has software to monitor all this.

When a customer wants to adjust a contract , for example reduce the number of servers, Oracle will quote them a lot higher price. When for example the discount for 100 licenses was 60%, the discount for 99 licenses is reduced to 10 %.

Another trick of Oracle is that initially, when the customer is building a new application based on Oracle software, all licensing seems to be correct. Later, when the application is running production (and the customer has no way back) Oracle will start to complain the customer is not compliant and need to buy more licenses.
Always make sure Oracle is involved in the initial architecture and confirms on paper with signatures the architecture is compliant.

Oracle will not go to court. They know they will lose the case. If that happens, lots of customers will start to complain they want their money back. Oracle’s goal is not to go to court. Their goal is to make you spend more money with Oracle. As soon Oracle understands the customers is well prepared, knows his stuff they will try to settle. Results is that the initial claim is much reduced. Claims can be reduced to 90 %.

One of Oracle’s customers was using Standard Edition. They needed to install an official Oracle patch. After that patch was installed, all of a sudden the install was not a Standard Edition but Enterprise Edition. The auditors came for a check, found out the customer was using Enterprise edition but was licensed for Standard Edition. Result was a big claim. License Consulting was able to reproduce the unwanted upgrade and the claim went off the table.

The biggest known claim by Oracle was 4 billion US Dollar. It was for an organization using named user licensing. Oracle view was that each citizen of a county (I assume the US) could access the Oracle application using internet so this is how they calculated their claim. In the end the claim went down to 27 million US Dollar.


About Marcel van den Berg
I am a technical consultant with a strong focus on server virtualization, desktop virtualization, cloud computing and business continuity/disaster recovery.

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