Blake says Oracle is very transparent in terms of making all of its licensing practices, agreements and pricing available for public viewing online. But, like most hardware and software vendors, Oracle also exerts pressure on its sales force to increase licensing revenue growth for each account, which leads to "opportunistic behavior where they tend to interpret Oracle policies to their advantage," Blake adds.
Unfortunately, even though all of the documents are online, many customers remain unaware of their existence. "They fail to take the time to review them and take a stand," he says.
According to a VMware spokesperson, the overwhelming majority of vSphere customers choose to build separate clusters dedicated to Oracle-only workloads. But Welch says while some Oracle customers may decide to follow that path for business reasons, others may be doing so for what they see as contractual reasons. However, "if the customer decides that they want hundreds of vSphere servers in the fewest number of clusters possible, then it is their privilege to do so," he argues.
If you're not dedicating the cluster, and Oracle challenges you on pricing issues, Blake says, "My recommendation would be to . . . ask them to show you where in the contract you executed with them it asks them to pay a license fee for every server in the cluster."
The confusion over licensing isn't entirely of Oracle's making, says Guarente. In a virtual environment it's fast and easy to spin up a new Oracle server, and it's difficult for Oracle to confirm how many instances are running at any given time. The current environment needs to be compared to the bad old days of customers being forced to use activation codes and hardware-based dongles.
"Customers wanted flexible licensing and Oracle provided it. With that comes complexity," Guarente adds.
But that complexity is easily handled, says Welch. VMware's DRS Host Affinity Rules can restrict a virtual machine hosting Oracle to an Oracle-license vSphere sub-cluster, and there are other auditable ways to restrict a virtual machine to an Oracle-licensed sub-cluster.
Enterprises want to consolidate Oracle in virtual environments to reap the benefits of consolidation. On traditional server hardware, where utilization rates hover around 15 percent, IT typically over-sizes and over-licenses servers for peak loads. But with virtualization and related technologies such as Live Migration and vMotion, average daily server efficiency has climbed into the 50 percent to 60 percent range.
"You can license many fewer physical servers on native hardware," Welch says. A typical consolidation can reduce the number of physical servers that need to be licensed from say, nine servers to four, or even three. "That should be a massive savings," he says. But not only do some customers end up paying for new Oracle licenses on processors that aren't running Oracle in a vSphere cluster, they also end up paying up to a 22 percent annual maintenance fee even on licenses that have been retired.
Paying maintenance on dead licenses
Even if customers avoid paying for additional processor licenses after transitioning to a virtual environment, they may not be able to reduce ongoing software maintenance costs for licenses that are no longer in use after a server consolidation has taken place. That leaves many organizations paying anywhere from 15 percent to 22 percent of the original software license fee every year for products that just sit on the shelf.
So even if virtualization efforts reduce the number of licenses needed in a large organization by 30 percent, it can still add up to millions of dollars in potential annual support savings that go unrealized. "Oracle has set up virtualization in a way where users do not benefit from the consolidation," says Constellation Research's Wang. Some of his clients, he says, have moved to Microsoft SQL Server on VMware to save on licensing costs.
Oracle organizes licenses into license sets, says Welch. For example, all Oracle Database licensing tiers -- Standard One, Standard Edition and Enterprise Edition -- form a single license set. According to Oracle's matching service levels policy, you cant cancel maintenance and support on a subset of licenses within a license set without also cancelling those licenses. "Should the licensee desire later to use those licenses, they would have to purchase them from scratch, not just renew maintenance and support on them," Welch says.
Whats more, says Guarente, "If you terminate, then there's a re-pricing," and that doesn't always work in the customer's favor. For example, Oracle may remove previous discounts and raise prices, with the result that "the new price might be exactly what you paid [before]," he says.
Bill, the Fortune 500 company CIO, says no one should be surprised that they can't selectively cancel maintenance on individual processor licenses without canceling the entire contract and renegotiating. Package deals have offered substantial volume discounts, and when you go that route, "it's all or nothing," he says.
But contact prices have gone up, Bill acknowledges. His maintenance amounts have risen to 22 percent of the original license purchase price -- his contracts originally started at 15 percent -- and his discounts are much smaller than what was offered in the past, he says, though he declined to say by how much. So he's shifted away from big software contract packages in favor of making smaller buys and keeping those contracts separate.
"The more segregated your paper is, the better," Welch agrees. But many organizations have taken Oracle up on an offer to do a "migration" of their existing paper to pull everything together into one neat, tidy contract. "It's rarely in the customer's interest to do so," he claims.
Tom, the other CIO, has been down that road before. "It ended up being a zero-sum game," he says. "You're not going to get tremendous value out of it."
Many organizations don't want to make waves against the vendor of software on which their core business runs, especially one that has a reputation for being litigious. But Welch doesn't think customers should worry about pushing back, at least when it comes to vSphere clusters. "There's no case law anywhere where Oracle has gone after a customer for subcluster licensing," he says.
Guarente offers more measured advice. "I haven't heard of anybody being sued, but people are very afraid. Talk to your attorney," he says. Ultimately, he says, "My experience is that most customers buckle." His advice: "Don't go wobbly." There's simply too much money at stake.
For his part, Tom is cautious about pushing back too hard. "The next time you do any negotiation with them they're going to remember you pushed back on this, and it will come back to hurt you." Here's his strategy: "Try to figure out where you can extract concessions. Know when they're under pressure and when they're not. It's like a chess game. Individual moves don't win the game. It's your overall strategy that counts."
Customers want to be in compliance, and often the contract makes it clear when the customer should pay -- and for what. When it's unclear, however, there's room for negotiation, Guarente says. "None of this is in the contract. It's all in the policy documents out there. So you need to be an expert with Oracle and know when to push -- and when not to push."
Negotiating with Oracle: Experts' tips
- When executing an Oracle software license agreement, visit the Oracle contracts page and print out or store copies of all online policy documents to which the contract refers as a class.
- Be sure to include the Oracle Partitioning Policy document (PDF), Oracle Processor Core Factor Table (PDF), Software Investment Guide, Licensing Data Recovery Environments (PDF) and Oracle Software Technical Support Policies (PDF). These have information not otherwise specified in the customer's Oracle Software Licensing Agreement (OSLA).
- The documents can change over time, so it is important to have copies of the policies that are in force at the time the OLSA is executed.
- For more information on Oracle licensing in a VMware environment read the VMware white paper, "Understanding Oracle Certification, Support and Licensing for VMware Environments" (PDF).
- Avoid overspending on new Oracle licenses when moving servers to a virtual environment, especially when it comes to vSphere clusters. Oracle may ask users to pay a licensing fee for every server in a cluster -- not just the servers where the Oracle products are installed and/or running -- "but that condition is not spelled out in the software license or associated policy documents," says Guarente.
- Inventory your Oracle licensing paperwork before starting a server consolidation project to see if you can allow maintenance contracts to lapse selectively for Oracle licenses associated with retired physical servers. Note that Oracle's contracts group individual licenses within so-called license sets. Oracle's matching support levels policy states that you can't cancel maintenance and support on a subset of licenses within a license set without also cancelling those licenses. That may trigger a re-pricing for the rest of the agreement. So renegotiating the contract may not save you any money.
- Carefully consider the implications of any invitation to migrate all of your Oracle licenses into a single agreement. Such initiatives rarely work in the customer's favor, professional negotiators say. Keep Oracle software licensing contracts separate whenever possible for maximum flexibility. Also keep in mind that Oracle's License Sets policy works against allowing maintenance and support to lapse on all product licenses within a given Customer Service Identifier (CSI).
- According to what's commonly known as Oracle's 10-day rule, you're entitled to leave one node unlicensed in a vSphere cluster -- even if you dedicate every other physical server in the cluster to Oracle -- for up to 10 cumulative days, so long as that node is named as a designated failover node. The failover node must also share a storage array with the source node. See Oracle's Software Investment Guide and Licensing Data Recovery Environments documents for details.
Sources: House of Brick, Palisade Compliance
-- Robert L. Mitchell
This article, Virtualizing Oracle software: Don't pay for what you don't need, was originally published at Computerworld.com.
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This story, "Virtualizing Oracle software: Don't pay for what you don't need" was originally published by Computerworld.