Complex and non-transparent Oracle licensing costing firms millions

Companies, including large multinationals that virtualise Oracle databases using VMware products, are finding it challenging to remain compliant with Oracle’s complex licensing policies. Such lack of compliance is costing them millions in penalties.

 “We are seeing an increasing number of global customers failing to remain compliant with Oracle’s licensing schemes amid growing virtualisation and this is largely because of Oracle’s non-transparent and complicated licensing policy,” said Judica Krikke, solicitor at European law firm Stibbe, at the VMworld Europe 2012 event in Barcelona.

Although virtualising databases using VMware products took off robustly two or three years ago, IT executives are only now finding compliance issues as they are consolidating or cleaning up their IT estate – or even looking to renew their contract with Oracle, experts said.

“One large enterprise virtualised Oracle using VMware products but didn’t put much thought into how they were doing it,” said Daniel Hesselink, a licensing expert at Licensing Consulting. “Oracle was going to conduct an audit at this company and its own audits beforehand showed that there was a $14.8m licensing compliance issue.”

But the fault is with the supplier experts insisted.

The text in Oracle’s licensing contract, called Software Investment Guide, is “utterly incomprehensible”, Krikke said. “No one understands it and no one can explain it.

“When Oracle issues warning to customers about licensing penalties they have incurred, customers write to Oracle saying ‘We did not know and it is not on the contract’,” Krikke continued. 

“Oracle’s response to such feedback is ‘if a certain type of usage is not described in the guide, it is not allowed’,” she added.

“But that’s not how contracts work – they should be clear and specific,” she added.

Customers should be very careful while virtualising Oracle databases using non-Oracle platforms such as VMware’s vSphere platform, the experts advised.  

“Having just ‘some’ virtualisation ‘somewhere’ could cost you at least $4.56m in Oracle non-compliance charges,” warned Hesselink.

They should conduct in-depth analysis of their infrastructure, they should re-evaluate their virtualisation deployment and they should look at the licensing agreement very carefully. Customers should read the contract’s “order document” page clearly and ensure the exact number of licenses they have purchased and the exact type of licensing, they added.

Another option is to buy Oracle products as part of a SAP package. 

“If you purchase Oracle databases from SAP, as part of the overall SAP contract, then Oracle licensing cannot touch you,” said Hesselink.

Oracle has yet to listen to customers and virtualisation suppliers such as VMware, with regards to its contentious licensing policy, experts said.

“Oracle’s goal is to maximise revenue through licensing costs and make users spend more,” said Hesselink. Oracle should introduce volume licensing strategy and get customers on that plan. 

“Oracle is the only supplier that does not have a simple volume licensing package and its existing single processor licensing can make IT professionals lose track amid mass virtualisation of their infrastructure,” he explained.

The experts admitted that licensing is an issue with many other suppliers, including Microsoft and SAP too, but insisted that Oracle’s licensing is the most complicated of all. 

“This is because most companies use Oracle databases and a majority of them use VMware platforms for virtualisation,” said Krikke.

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.