oracle audit / Oracle licensing

Oracle licensing VMWare – Audit Strategies for 2023

Navigating Oracle Licensing VMware: A Critical Challenge

If you are dealing with Oracle licensing in VMware and facing an Oracle audit, you must know the significant implications.

Running Oracle technology on VMware has been a contentious issue in IT Asset Management.

Key points to consider:

  • The Nuclear Bomb: Oracle’s audit alarm bells should ring loudly when Oracle licensing and VMware intersect. This combination is considered a high-risk area in IT Asset Management.
  • Pre-Audit Management Options: If the Oracle audit hasn’t begun yet, you have several options to manage the license audit effectively. Understanding these options can help you proactively handle the situation. However, if you’re already in possession of the audit report, your available choices may be different. Read on for strategies to minimize audit claims and explore the possibility of fighting back.
  • The Long-Standing Controversy: Oracle has generated billions of dollars through audits by asserting that customers must license servers even if they don’t run any Oracle software. Licensing Oracle in VMware has been a contentious topic for over 15 years, with no clear resolution.
  • Oracle’s Position and Licensing Agreements: Oracle’s contractual position on VMware licensing is weak, and its stance is not explicitly outlined in its licensing agreements. Many customers have approached Oracle ULA (Unlimited License Agreement) to address this licensing challenge.
  • Isolation Requirements: Oracle may require specific types of isolation to limit the licensing implications for customers running Oracle on VMware. However, it’s important to note that a contractual agreement with Oracle is necessary to isolate VMs running Oracle.

VMware Oracle Licensing

Here’s a summary of the essential takeaways from this article on Oracle licensing for VMware:

  • Complex and Controversial: Oracle licensing for VMware is known for its complexity and controversies.
  • Undefined Position: Oracle’s stance on VMware licensing is not explicitly outlined in their licensing agreements, leading to ambiguity and challenges for organizations.
  • Contract and Policy Review: To navigate Oracle licensing for VMware effectively, organizations must thoroughly review their contracts and Oracle policy documents and develop their licensing strategy.
  • Audit Struggles: Many companies have faced difficulties during audits regarding Oracle licensing for VMware, making it a common pain point.
  • Virtualization Categories: Oracle distinguishes between “hard partitioning” and “soft partitioning” for virtualization technologies.
  • VMware as Soft Partitioning: Oracle categorizes all versions of VMware as “soft partitioning” technology, necessitating the licensing of all physical hosts/cores in all vCenters.
  • Potential Solutions: Organizations have several options to address Oracle licensing for VMware, including signing an Oracle ULA, moving Oracle out of VMware, or negotiating a network and storage isolation agreement with Oracle to isolate Oracle installations.

Inside Oracle: A Former Employee’s Perspective on VMware Licensing

oracle licensing insider vmware

From our experience as former Oracle employees, we can share some insights on Oracle’s approach to VMware licensing:

  1. Licensing Gap Price: Oracle often used the complexity of VMware licensing to increase the initial licensing gap price during audits. This was primarily a tactic to extract as much money as possible from customers.
  2. Lack of Customer Education: Oracle rarely educates its customers about licensing, especially soft partitioning. It’s hard to find resources where Oracle explicitly explains how to license Oracle in the context of soft partitioning.
  3. Contractual Ambiguity: If Oracle wanted to enforce stricter licensing contracts or policies, they could have done so years ago. However, Oracle’s licensing agreements do not reference virtualization policies or the soft partitioning document, leaving some room for interpretation.
  4. Internal Reactions to vSphere 6.0: When vSphere 6.0 was released, there were extensive discussions within Oracle about the implications for customers. The potential impact seemed so significant that we decided not to discuss the change with our customers.
  5. Negotiating Non-compliance: If a customer was found non-compliant due to virtualization, we never expected them to pay the full amount. If the customer paid 10% of the initial findings for this license gap, we consider it a success.
  6. Playing the Game: Despite the above, we would still try to enforce the “pay for all processors” rule and send some “friendly reminders” to customers under audit.

Navigating Oracle Licensing on VMware: No One-Size-Fits-All Solution

When licensing Oracle on VMware, there’s no “silver bullet” or one-size-fits-all solution. 

Here’s why:

  1. Diverse Expert Opinions: Different Oracle licensing experts often provide different answers. This diversity of opinion reflects the complexity of Oracle licensing.
  2. Lack of Clear Contractual Clauses: You won’t find a contractual clause stating whether Oracle’s stance on VMware licensing is right or wrong.
  3. No Comprehensive Guides: No single blog post or article provides a comprehensive solution to Oracle licensing on VMware.
  4. Need for Personal Judgment: It’s crucial to read your contract and Oracle’s policies and form your opinion about what’s right. Ultimately, you either pay Oracle or you don’t. If you approach Oracle, the solution often involves signing a ULA or opting for option #2 below.
  5. Value of Independent Experts: Working with an independent Oracle licensing expert can be beneficial. They can provide advice tailored to your specific situation.
  6. Multiple Strategies: There are various strategies for Oracle licensing on VMware. It’s worth exploring what other clients are choosing and what other Oracle licensing experts are discussing.

Remember, the best approach depends on your unique circumstances and needs.

Oracle VMware Licensing EXPLAINED!

Oracle Policy Documents

Oracle has published a partitioning policy document,” laying out which virtualization technologies you can limit the CPUs you need to license when deploying Oracle.

Read our blog Oracle partitioning policy – How to fight back

Understanding Hard and Soft Partitioning in Oracle Licensing

oracle hard partitioning

Oracle categorizes virtualization technologies/sub-capacity licensing into two types: hard partitioning and soft partitioning. Here’s what you need to know:

  1. Hard Partitioning: Under approved hard partitioning technologies, the number of processors that need to be licensed on a server or cluster of servers can be limited. This allows for more precise control over licensing costs.
  2. With soft partitioning technologies, Oracle requires that the full server capacity and/or all physical cores in a server or cluster be licensed. Partitioning is prohibited, meaning you must license the entire server or cluster.
  3. Oracle’s Policy Document: Oracle provides a list of technologies that fall under soft and hard partitioning in their policy document. Referring to this document to understand how different technologies are categorized is essential.
  4. VMware and Oracle Licensing: According to Oracle, VMware (all versions) falls under soft partitioning. Oracle also states that with VMware ESXi 6.0, it’s possible to move a virtual server across vCenters using vMotion. Therefore, all physical hosts/cores in all your vCenters must be licensed, not just those in clusters or vCenters where you have Oracle software running.

Oracle licensing VMware per version

oracle licensing vmware 2

The licensing requirements for Vmware Oracle Licensing vary depending on the vSphere ESXi’s version.

Here is a breakdown of the licensing requirements for each version:

  • VMware’s vSphere ESXi up to 5.0: In older versions of vSphere ESXi, shared storage is required for end-users to move virtual machines running Oracle throughout the VMware environment. The Oracle software is installed on shared storage, and all the clusters connected to the shared storage can run Oracle. Oracle requires you to license all the physical ESXi hosts’ physical cores that are part of the cluster connected to the shared storage.
  • VMware’s vSphere ESXi 5.1 – 6.0: In newer versions of vSphere ESXi, end-users no longer need shared storage to live migrate a running virtual machine. The virtual machine running Oracle can be moved anywhere within the vCenter Server Instance without relying on shared storage. As a result, Oracle requires you to license all the physical cores of all the physical ESXi hosts that are part of the same vCenter Server Instance, including across data centers within the instance.
  • VMware’s vCenter 6.0 and higher: With vCenter Server 6.0 or higher, a running virtual machine can move across vCenter Server Instances, which affects licensing across the entire environment. Oracle requires you to license all the physical cores of all the physical ESXi hosts of all the vCenter Server Instances that have hosts with ESXi 5.1 or later hypervisors.
oracle on vmware

Six Most common solutions to Oracle Licensing and VMware

  1. Some companies simply pay the amount Oracle demands, entering into Oracle Unlimited License Agreements (ULAs) and mistakenly believing they have struck a great deal. In ULAs, they don’t need to worry about Oracle licensing and VMware.
  2. Other companies negotiate with Oracle and sign contractual amendments, agreeing to perform storage and network isolation. While restrictive and often unworkable, this option is widely available.
  3. Some customers disagree with Oracle’s view, even when audited and presented with reports showing large gaps. These audits typically remain unresolved if the customer refuses to pay and rarely end in court.
  4. Some customers move to bare metal or change virtualization technology, such as Hyper-V, OVM, or IBM LPAR – to comply with Oracle’s virtualization rules, moving new Oracle deployments to these specific environments.
  5. Others follow VMware’s advice, which Oracle does not endorse. More information can be found in VMware’s blog post about Java and VMware.
  6. Many customers opt to move Oracle workloads away from VMware, with strategies ranging from using Oracle AWS or Azure (licensing per vCPU), Oracle Private Appliances with trusted partitions and VMware, or migrating to Oracle Cloud or Oracle Cloud at Customer.

For independent Oracle licensing advice on which approach is best, or if you want expert help to guide you to a solution, contact us.

Understanding the Network and Storage Isolation Amendment for Oracle on VMware

Recently, Oracle has introduced a network and storage segregation amendment for customers running Oracle on VMware.

Here’s what you need to know:

  1. Technical Restrictions: This amendment involves implementing technical measures to prevent licensed Oracle machines from migrating to different hosts. This ensures that Oracle clusters remain isolated.
  2. Negotiated Agreement: The amendment is a negotiated agreement between the customer and Oracle. The final terms are documented in an Oracle licensing amendment. Customers must actively negotiate this with Oracle.
  3. Isolation of Oracle Clusters: An example of the architecture that Oracle often requires under this amendment is the isolation of Oracle clusters. This involves segregating the network and storage for Oracle databases from other non-Oracle workloads.
oracle network and storage isolation

Understanding the Oracle Contractual Amendment for VMware Licensing

Oracle has introduced a network and storage segregation amendment to address the complexities of Oracle licensing in VMware environments.

This amendment is a negotiated agreement that sets specific conditions for running Oracle on VMware.

  1. Negotiated Agreement: The amendment is a mutually agreed upon contract between the customer and Oracle. It’s designed to clarify the terms of running Oracle in VMware environments.
  2. Technical Restrictions: The agreement involves implementing technical restrictions to prevent licensed Oracle machines from migrating to different hosts. This ensures that Oracle clusters remain isolated.
  3. Network and Storage Segregation: The amendment calls for segregating the network and storage for Oracle databases from other non-Oracle workloads. This separation helps maintain compliance with Oracle’s licensing terms.

The Value of the Oracle Contractual Amendment: Key Benefits

The Oracle contractual amendment significantly benefits customers running Oracle in VMware environments.

Here’s why it’s valuable:

  1. Clear Licensing Framework: The amendment provides a clear framework for licensing Oracle in VMware environments. By adhering to the amendment, customers can confine their Oracle licensing needs to specific settings, reducing licensing costs.
  2. Legal Certainty: The amendment provides legal assurance. Since the terms of the amendment are negotiated and mutually agreed upon with Oracle, customers can have confidence that they comply with Oracle’s licensing requirements.

Pros of the Oracle Contractual Amendment

  1. Cost Savings: Customers can save on licensing costs by limiting the Oracle licensing requirements to specific environments.
  2. Legal Certainty: The amendment provides a clear framework for licensing Oracle in VMware environments, reducing non-compliance risk.
  3. Flexibility: The amendment allows customers to run Oracle on VMware under specific conditions, providing more flexibility in deploying and using Oracle software.

Cons of the Oracle Contractual Amendment

  1. Technical Restrictions: The amendment requires customers to implement technical restrictions, which can be complex and challenging to manage.
  2. Limited Scope: The amendment only applies to specific environments, limiting its applicability.
  3. Negotiation Required: The terms of the amendment must be negotiated with Oracle, which can be a time-consuming and complex process.

Oracle Audits VMWare – What are your options?

  • Avoid sharing any data with Oracle about the underlying infrastructure. If you provide hardware specifications on your physical hosts, Oracle may use this information to make a financial claim in an audit.
  • Purchase new software licenses from Oracle to cancel the audit potentially, but keep in mind that the issue with Oracle on VMware may remain. However, this can buy you time as Oracle is unlikely to audit you again for at least three years.
  • Negotiate a network and storage isolation agreement with Oracle, which allows you to license Oracle in specific environments as long as you meet the technical requirements specified by Oracle.
  • Consider seeking the help of an Oracle licensing expert who can assist you with the license audit and communicate with Oracle on your behalf.

Oracle on VMware: Essential Actions to Take at the End of an Audit

Facing a multi-million dollar claim from Oracle can be daunting.

Here are some strategies to consider that can help you navigate this situation:

  1. Engage an Expert: Seek help from a professional with expertise in Oracle audit negotiations. Having an expert on your side can significantly improve your chances of achieving a favorable outcome.
  2. Educate Yourself: Familiarize yourself with Oracle licensing policies, contracts, and related topics. This knowledge will help you build a robust strategy. Remember, Oracle’s stance on licensing on VMware may not be contractually correct, so it’s crucial to understand the details.
  3. Prepare for Meetings with Oracle LMS: Don’t be a “sitting duck” in meetings with Oracle License Management Services (LMS). If you’re unprepared, Oracle may exploit this. Show them that you’re well-informed and have a strategic plan in place.

Does Oracle VMware licensing apply to Java as well?

  • Yes, Java licensing also follows Oracle licensing rules and policies for deploying on VMware.

Oracle Licensing on VMWare – FAQs

What is Oracle’s position on licensing for VMware?

You must license all physical hosts in all vCenters, not only where Oracle software runs. However, in our experience, Oracle is now more willing to offer its contractual customer agreements for running in Isolation (network and storage isolation agreements)

Are most companies signing such network and storage isolation agreements?

At least 50% + many believe the technical requirements do not fit into their IT infrastructure.

What is the issue with Oracle licensing for VMware?

Oracle licensing for VMware can be complex and controversial, as Oracle’s position on licensing for VMware is not clearly defined in their licensing agreements. Many companies have struggled with Oracle licensing for VMware in audits.

Is there a "magic bullet solution" for Oracle licensing and VMware?

No solution or contractual clause can resolve the Oracle licensing issue for VMware. Different strategies exist, and it is best to work with an independent Oracle licensing expert to determine the best approach.

What are the different categories of virtualization technologies that Oracle uses for licensing?

Oracle has two categories of virtualization technologies: “hard partitioning” and “soft partitioning.”

How does Oracle define VMware in terms of licensing?

Oracle defines VMware (all versions) as “soft partitioning” technology, meaning licensing all physical hosts/cores in all vCenters is required.

Does Oracle’s licensing position on VMware change depending on the version of VMware being used?

Yes, Oracle’s licensing position on VMware can change depending on the version of VMware being used. For example, with VMware 5.1 to 5.5, Oracle views that you must license all physical hosts within that specific vCenter, even if they do not use the same storage.

Are there any approved technologies for hard partitioning?

Yes, Oracle approves certain technologies for hard partitioning, where you can limit the number of processors you license on a server or a cluster of servers. Approved technologies include IBM LPAR and Oracle VM.

Can I use an Oracle Universal License Agreement (ULA) to solve the challenge of Oracle licensing for VMware?

Some companies have entered Oracle ULA to solve this challenge. However, it is best to work with an independent Oracle licensing expert to determine the best approach for your organization.

Does Oracle licensing policy apply for Weblogic licenses also?

Yes, Weblogic licensing works like database licensing when using VMware.

How does Oracle licensing policy application licensing?

Regarding Oracle EBS, you only need to pay attention to the technology licenses under EBS. They follow the same licensing rules and policies. However, other applications, such as Peoplesoft, are not licensed per processor and can run on VMware.

How Redress Compliance Can Help

This is how we can support your organization:

  1. Oracle licensing assessment: This step involves identifying all Oracle products and versions currently used or planned for use within the VMware environment. This includes determining the number of virtual processors, the number of virtual machines, and the number of instances of each Oracle product running or running within the environment.
  2. Contract assessment: Review the current Oracle licensing contracts and agreements to determine if any changes or adjustments must be made to align with the VMware environment. This includes determining if any existing licenses can be used within the VMware environment or if new licenses will be required.
  3. Designing an Oracle licensing strategy on VMware: Based on the information gathered during the assessment phase, design a licensing strategy that aligns with the VMware environment and meets the business requirements. This should include a plan for obtaining the necessary licenses, compliance with Oracle’s licensing policies, and a strategy for managing and optimizing the use of Oracle licenses within the VMware environment.
  4. Help in Oracle negotiations: Provide support and guidance during negotiations with Oracle.

Oracle Licensing on VMware? Contact Redress Compliance for Expert Assistance!

Suppose your organization seeks professional guidance in designing an effective Oracle licensing strategy on VMware, navigating negotiations with Oracle, or understanding your licensing risks. In that case, Redress Compliance is here to help.

Our team of Oracle licensing experts has extensive experience in addressing the complexities of Oracle licensing in VMware environments. We can provide tailored solutions and valuable insights to optimize your licensing, minimize risks, and achieve compliance.

Don’t leave your Oracle licensing on VMware to chance. Contact Redress Compliance today to benefit from our expertise and ensure your organization’s Oracle licensing strategy is robust, cost-effective, and aligned with industry best practices.


  • Fredrik Filipsson

    Fredrik Filipsson possesses 20 years of experience in Oracle license management. Having worked at Oracle for 9 years, he gained an additional 11 years of expertise in Oracle license consulting projects. Fredrik has provided assistance to over 150 organizations worldwide, ranging in size and tackling various Oracle licensing challenges, including Licensing Assessments, Oracle audits, Oracle ULAs, and more.