oracle audit / Oracle licensing

Oracle licensing VMWare – Audit Strategies for 2024

Oracle licensing, when deployed on VMware, is managed as follows:

  • Oracle requires licensing all physical cores on the host and clusters/vCenters running VMware for versions before vSphere 6.0.
  • For vSphere 6.0 and later, Oracle licensing is needed for all physical cores, and all vCenters, regardless of Oracle, are deployed in that specific vCenter.
  • VMware clusters must be carefully managed to avoid licensing the entire vCenter.
  • Oracle’s hard partitioning policy does not recognize VMware, leading to higher licensing requirements.

Oracle Licensing Virtualization

VMware Oracle Licensing

As the IT landscape evolves, virtualization has become more prevalent than traditional physical servers, prompting Oracle to adapt its licensing strategies to this shift.

Oracle licensing typically hinges on a server’s physical cores, but the rise of virtual environments necessitated a clearer approach to licensing in these contexts.

Oracle outlines its stance on virtualization licensing in a policy document. While not contractual, this document is crucial for properly licensing Oracle products in virtual environments.

Oracle distinguishes between two main categories of virtualization: soft partitioning and hard partitioning, each with distinct licensing implications.

  • Soft Partitioning: Oracle does not permit customers to license based on the virtualization OS CPU in this category. Essentially, soft partitioning does not allow for the licensing of a server or cluster according to the specific resources allocated to Oracle software within the virtual environment. VMware is notably classified under this category, meaning customers using VMware for virtualization must license all physical cores accessible to the Oracle software, regardless of how many cores the software is using.
  • Hard Partitioning: This category includes technologies that Oracle recognizes for sub-capacity licensing. Hard partitioning allows customers to license a portion of the server or cluster based on the capacity (number of cores or processors) the Oracle software uses within the virtual environment. Oracle explicitly lists technologies that enable hard partitioning and allow for more granular and potentially cost-effective licensing of Oracle products in a virtualized setting.

Understanding these distinctions is vital for Oracle customers navigating virtualization strategies. Properly aligning with Oracle’s soft and hard partitioning policies can significantly impact licensing costs and compliance.

Inside Oracle: A Former Employee’s Perspective on Oracle 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 tactic was primarily used 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, Oracle extensively discussed its 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

Oracle Licensing on VMware

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: No contractual clause states 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: Oracle licensing on VMware has various strategies. 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,” which lays out which virtualization technologies you can use to limit the CPUs you must 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’s policy document lists technologies that fall under soft and hard partitioning. 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

The licensing requirements for Oracle on VMware Licensing vary depending on the version of vSphere ESXi.

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. VMware’s blog post about Java and VMware provides more information.
  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

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 time-consuming and complex.

Oracle Audits VMWare – What are your options?

Oracle Audits VMWare - What are your options
  • Avoid sharing any data about the underlying infrastructure with Oracle. 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 potentially cancel the audit, but remember 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. This agreement 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

Oracle on VMware 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 VMware licensing 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.

Oracle Licensing VMWare per Product

Oracle Licensing VMWare per Product

Oracle Database Licensing on VMware

Oracle categorizes VMware as soft partitioning, necessitating licensing all physical cores accessible to the Oracle software across the entire VMware environment.

This means you must license all hosts within the cluster, the entire vCenter if used, or all vCenters connected. The Oracle Core Factor Table is applied to determine the total number of licenses required.

Java Licensing on VMware

Following Oracle’s 2023 licensing update, Java licensing now primarily considers the number of employees.

However, for those with legacy licensing metrics like CPU or Named User Plus (NUP), VMware environments require counting every core that the Java software can potentially use, applying this count to accurately determine your licensing needs.

Oracle WebLogic Licensing on VMware

Like other Oracle technology products, Oracle WebLogic adheres to VMware’s licensing principles.

This approach requires counting all physical cores on hosts where Oracle WebLogic is deployed or can potentially be deployed. This ensures compliance with Oracle’s licensing policies for technology products within virtualized environments.

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 VMware licensing 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 VMware is used.

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.

Additional FAQs

  1. What is Oracle’s official stance on VMware hard partitioning?
    • Oracle does not recognize VMware for hard partitioning, meaning all physical cores in a server or cluster must be licensed.
  2. Can Oracle audits extend to environments that do not directly run Oracle software?
    • Yes, Oracle may require licensing for all physical cores in servers or clusters that could potentially run Oracle software due to its non-recognition of VMware’s hard partitioning capabilities.
  3. How can organizations minimize the risk of non-compliance in VMware environments?
    • By carefully managing VMware clusters to limit the number of hosts that can run Oracle software and negotiating specific terms with Oracle.
  4. What are the consequences of non-compliance found during an Oracle audit?
    • Organizations may face substantial financial penalties and be required to purchase additional licenses at list prices.
  5. Are there any specific amendments or clauses that can be negotiated with Oracle to reduce licensing costs in VMware environments?
    • Yes, organizations can negotiate amendments that specifically outline the deployment of Oracle software within VMware environments to potentially limit licensing requirements.
  6. How does Oracle’s licensing policy affect cloud environments or migrations?
    • Oracle’s policies can complicate cloud migrations, especially to non-Oracle clouds, because they require licensing all potential physical cores.
  7. What strategies can be used during an Oracle audit to defend a VMware configuration?
    • Strategies include presenting detailed documentation of your VMware environment, demonstrating compliance with negotiated Oracle terms, and engaging experienced Oracle licensing consultants.
  8. Is it possible to achieve compliance without licensing every physical core in a VMware environment?
    • Yes, but this typically requires specific negotiations with Oracle and careful VMware cluster configuration.
  9. How frequently does Oracle update its licensing policies regarding VMware?
    • Oracle does not frequently update its public stance on VMware, but internal policies and audit practices may evolve.
  10. What role do third-party consultants play in Oracle licensing audits?
    • They can provide expertise in Oracle licensing, negotiation strategies, and audit defense to help organizations minimize costs and compliance risks.
  11. Can using Oracle-approved hard partitioning technologies reduce licensing requirements?
    • Yes, using Oracle-approved hard partitioning technologies can help reduce the required licenses, but VMware is not recognized as such.
  12. How can organizations track and manage their Oracle software usage to ensure compliance?
    • Implementing robust IT asset management solutions and regularly auditing internal use to ensure it aligns with licensing terms.
  13. What are the best practices for negotiating with Oracle on licensing terms?
    • Best practices include understanding your current and future Oracle software usage, leveraging legal and licensing expertise, and clearly defining usage rights and limitations in any agreement.
  14. How can organizations prepare for an Oracle audit?
    • Organizations can prepare by conducting internal audits, ensuring accurate usage tracking, and consulting with Oracle licensing experts.
  15. What alternatives to Oracle software might organizations consider to avoid complex licensing and audit issues?
    • Organizations may explore alternative database and software solutions that offer more straightforward licensing models and lower total cost of ownership.

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  • Fredrik Filipsson

    Fredrik Filipsson brings two decades of Oracle license management experience, including a nine-year tenure at Oracle and 11 years in Oracle license consulting. His expertise extends across leading IT corporations like IBM, enriching his profile with a broad spectrum of software and cloud projects. Filipsson's proficiency encompasses IBM, SAP, Microsoft, and Salesforce platforms, alongside significant involvement in Microsoft Copilot and AI initiatives, enhancing organizational efficiency.

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