Virtualising Oracle software: Don't pay for what you don't need

Squeezing software cost savings from virtualization projects is tricky for lots of reasons, but can be particularly challenging when it comes to Oracle databases. Here's why, and some tips to help.

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virtualisation and private clouds have delivered hardware savings in a big way for most enterprises. Software savings, however, are proving more elusive, and that's been particularly true when it comes to virtualising Oracle databases, according to several sources.

While virtualisation has enabled server consolidation ratios of 3:1 or more, businesses may see little or no reduction in associated software costs. In some cases enterprise software licensing can be so expensive that it overshadows the cost of the rest of the system stack combined, says David Welch, chief technology officer at House of Brick Technologies, an integrator with expertise in Oracle software licensing issues.

(Editor's note: During the months of reporting this story, we contacted Oracle 13 times, and the vendor's spokespeople declined to comment on this story on three separate occasions.)

Some consultants and a handful of IT executives say they face licensing obstacles with many enterprise software vendors, but Oracle agreements can present some of the most confusing compliance issues, especially for customers that fall under Oracle's processor-based licensing models. "Using Oracle on VMware provides no licensing savings, just operational cost savings," says R Wang, principal analyst and CEO at Constellation Research.

"virtualisation is an area where customers get creamed all the time," says Craig Guarente, CEO of software auditing and compliance consultancy Palisade Compliance. Both Guarente and Welch say that, all too often, organizations end up overpaying for new Oracle licenses as well as software maintenance after consolidating servers or adding new licenses in a virtual environment.

Several IT executives contacted for this story declined to speak on the record. One executive, "Tom," has dealt with Oracle as the CIO for several Fortune 500 corporations, and agreed to speak only on condition that his name and company affiliation not be used. "Part of the challenge is knowing what others are paying," he says, and that information is considered confidential. But professional negotiators can be helpful because they know what the average company is paying for any given product, he adds.

Some Oracle customers are "p.o.'d" about virtualisation, Guarente says.

One client called Palisade after installing Oracle database software on two servers in an eight-server vSphere cluster. Oracle discovered the configuration during a software audit and demanded that the customer buy a license for every processor and server in the cluster.

We haven't noticed other enterprise software vendors that assert the full-cluster licensing claim. David Welch, chief technology officer, House of Brick Technologies

That's unusual, says Welch. "We haven't noticed other enterprise software vendors that assert the full-cluster licensing claim," he says. Oracle's per-processor licensing fees start at $47,500, so charges can add up quickly. To make matters worse, the customer had also unknowingly installed the more expensive Enterprise Edition of the Oracle database instead of the Standard Edition.

Before the audit, the company had been paying Oracle $50,000 per year. The list price for licensing the new configuration: Just over $1 million. The customer ended up reconfiguring the vSphere infrastructure to limit the number of servers in the cluster, and bought more Oracle licenses. Guarente wouldn't say exactly how much the customer saved, but did say the customer paid a fraction of that original $1 million bill.

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