Oracle licensing VMWare – Audit Strategies for 2022

If you are running Oracle on VMware and you are audited by Oracle, your alarm bells should go off immediately. Running Oracle technology on VMware is the nuclear bomb in IT Asset management.  If the Oracle audit has not begun yet, you have plenty of options for how to manage the Oracle license audit. But if you are reading this and you already have the audit report, your options are very different. Oracle have made billions of dollars on auditing Oracle customers running Oracle on VMWare claiming customers need to license servers not running any Oracle software. Oracle licensing in VMware is one of the most controversial IT topics around. It has not been resolved and companies have for the past 15 years been struggling with Oracle licensing in VMware in audits. This article will explain what is Oracle position when you need to license Oracle technology in VMware. Oracle contractual position is weak and their position is not found in their licensing agreements. Too many Oracle customers have entered Oracle ULA to solve this challenge.

 

When we worked at Oracle

We 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 during Oracle license audits. 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, Oracle licensing agreements are not referencing virtualization policies or the soft partitioning document.

We  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 the change with our 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 customers who were under audit.

 

Oracle licensing on VMware is a challenge

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 how to license Oracle on VMWare. Everyone 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 expert, 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 right. 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 Oracle licensing expert who can advise you on this topic.

There are different strategies for Oracle licensing and VMware, so I will share some of what our clients are choosing and what I hear other Oracle licensing experts talk about.

 

6 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 an Oracle ULA for 2-20m $. The customer incorrectly think that they have done a great deal with Oracle. Those companies remain in an Oracle unlimited license agreements or exit such agreement with a large quantity of licenses. When you are in an Oracle unlimited license agreement you don’t need to worry about Oracle licensing and VMware.
  2. Other companies work together with Oracle and sign a contractual amendment and agree to perform storage and network isolation. It’s quite restricted and most companies feel it’s an un-workable solution. However, its widely available, so I wanted to share this option with you. If you are exploring this option and want independent Oracle licensing advice, contact us.
  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 or heard a single case that ended in court. Usually, these Oracle licensing audits 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 follow VMware advice, which Oracle will not agree to at all. But you can read more on their blog post about Java and VMware.
  6. Move Oracle workloads away from VMware. There are many strategies they range from Oracle AWS or Azure as it allows you to license per vCPU. Others platform on Oracle Private Appliance and uses trusted partitions and VMware. Oracle Cloud or Oracle cloud at customer is also solutions that other companies migrate towards.

If you currently working at a company responsible for Oracle licensing and working with VMware.

 

Oracle licensing

 

Oracle licensing is calculated based upon the hardware that you are running the technology software on. Enterprise Edition products is core-based calculation and standard edition you license occupied CPU sockets.

Oracle licensing in virtual environments

 

Oracle has published a document “partitioning policy document” that lays out which virtualization technologies you are allowed to limit the CPUs that you need to license when deploying Oracle. Read our blog Oracle partitioning policy – How to fight back – Watch the video below when we review the contracts together.

 

Oracle Licensing in VMware and Contract Review

 

 

How is Oracle licensed on VMware?

 

    • Oracle has 2 different categories of virtualization technologies / sub capacity licensing. Oracle names them soft and hard partitioning technologies.
    • Hard partitioning approved technologies: You can limit the number of processors that you license on a server or a cluster of servers.
    • Soft partitioning technologies: Oracle says this is not allowed and you need to license the full server capacity and/or all the physical cores in a server of clusters.
    • Which technology is soft and hard is listed by Oracle is this
    • Oracle has defined VMware (all versions) as soft partitioning.
    • Oracle claims as with VMware ESXI 6.0 you can with vMotion move a virtual server across vCenters and therefore you need to all physical hosts / cores in all vCenters.

 

Oracle licensing VMware

 

To understand Oracle licensing position when using VMware, we must understand that VMware uses a technology named vmotion to move virtual machines within a cluster of servers, within a vCenter and across vCenters. VMware technology has improved over the years and Oracle has different licensing views depending on what version VMware you use.

 

Oracle licensing VMware 5.1 to 5.5

 

Virtual machines can migrate within the same vCenter, therefore Oracle’s view is that you need to license all physical hosts within that specific vCenter. This applies even if they are not using the same storage.

 

Oracle licensing VMware 6.0

 

Virtual machines can cross vCenter borders and therefore Oracle’s view is that you need to license all physical hosts in all your VMware environments.

 

oracle on vmware

 

Oracle licensing VMware and the network and storage isolation amendment

 

Oracle has in the last few years started to offer Oracle customers who wants to run on VMware a network and storage segregation amendment where you need to perform technical restrictions that prevents the Oracle licensed machines to migrate to different hosts. This is an negotiation betwen you and Oracle. The end result is then documented and put into an Oracle licensing amendment.

 

 

Oracle and VMware Licensing EXPLAINED!

 

Oracle on VMware – actions to take before the Oracle audit

 

    • How much Oracle is running on VMware? If you only a few environments, consider moving the Oracle deployments to a different technology platform. AWS, Azure, and Oracle cloud. This allows you to count vCPUs.
    • If you do not have the ability to move your Oracle deployments off VMWare.

 

Options for Oracle licensing for VMware

 

  • Do not share any data with Oracle about underlying infrastructure. Oracle will not agree and request the additional data, but once you share hardware specs on your physical hosts Oracle can put a financial number on the Oracle audit claim.
  • You can make a purchase for new software licenses from Oracle and Oracle can cancel the audit. The issue with Oracle on VMware will still remain, but Oracle will not audit you again for at least 3 years (You buy yourself time).
  • You can make a deal with Oracle and negotiate a network and storage isolation agreement where you can license Oracle in specific environments, if you can follow Oracle technical requirements.
  • Get expert help, an Oracle licensing expert can support you in the license audit and in all your communications with Oracle.

 

Oracle on VMware – actions to take at the end of the audit.

 

    • Get expert help, you are facing multi-million dollar claim from Oracle. You want to have someone on your team with expertise in Oracle audit negotiations.
    • Read up on the topic and create a strategy based around Oracle licensing, Oracle licensing policies, Oracle contracts and articulate why Oracle’s position on how to license on VMware is not contractually correct.
    • Oracle LMS will quickly notice if you are a sitting duck or someone who gets expert help. If you are attending Oracle LMS meetings unprepared, Oracle will take advantage of this.

 

 

Read more on our blog

Oracle Audit – Audit Defense Strategies for IT executives
Oracle on VMware Audit Strategies
Oracle license compliance scripts

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If you are audited by Oracle, and Oracle claims you need to license all physical hosts for  in your VMware environments including hosts that that you are not using for Oracle, contact us. We will be part of your team to aggressively fight Oracle’s claims. Oracle licensing on VMware is managable if you can build the right strategy for counter Oracles arguments.