Oracle’s licensing rules: Five common pitfalls to watch out for – Hot Tech Online

Oracle’s licensing rules: Five common pitfalls to watch out for

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Oracle’s
range of databases and applications are excellent and a critical part of many organizations’
IT infrastructures. While customers
generally agree about the benefits of Oracle products and the value they add,
they are less complimentary about the complexity of managing Oracle enterprise
licenses.

Enterprise
application licensing tends to be universally vague, but experts agree that the
rules governing Oracle’s licensing agreements are perhaps the most complicated
and difficult to grasp. This is because users are required to factor into
license entitlement calculations hardware processing power, details of whether
expensive management packs and options have been enabled and the numbers of
users requiring access – both directly and indirectly. Being able to do this
effectively requires ongoing license management.

Peter
Björkman, CTO of Snow Software outlines some of the top problems users
encounter as a result of not proactively managing their Oracle licensing
entitlements. In virtually every scenario, the outcome equates to unforeseen
(and often unnecessary) expenditure by the organization.

This comes in the form
of additional licenses to be purchased either as a result of non-compliance, or
because insufficient data exists to accurately negotiate a cost effective
enterprise licensing agreement. And that is without considering the possibility
of a penalty for non-compliance, which can easily reach millions of Pounds.

1. Insufficient visibility of management packs
and options

A very
common pitfall for organizations facing difficulties with their Oracle license
management comes from not having the right options granted and management packs
installed for their needs. When the Oracle enterprise database edition server
is installed, by default all the enterprise options are installed too and it is
important to know what you are actually using, and whether you need it.

There
are two aspects to this, firstly you need to know what databases are installed
and what editions they are i.e. standard or enterprise. Secondly, you need to
know whether any management packs have been ‘accepted’ or options “granted,” to
use Oracle’s terminology. Interpreting this incorrectly can significantly
affect licensing costs from anywhere between $163,000 (£10,000) and $800,000 (£50,000) per processor, because
options and management packs require additional licensing and should not be
present if not needed as this rapidly adds to the total cost.

2. Not appreciating the rules of virtualization

When
Oracle is run on virtualized servers, there are specific licensing rules to
follow and non-compliance can very feasibly and conservatively generate a
non-compliance penalty in the region of  5 million for a large enterprise.

Many organizations
have viewed virtualization as a quick and easy way to deploy more Oracle
databases without understanding the licensing rules. This has left them exposed
to compliance costs, especially where organizations have virtualized Oracle
databases using non-Oracle platforms. Oracle doesn’t support soft partitioning on VMware clusters, so it’s important to have full visibility of exactly where Oracle is deployed in the
estate and what the underlying virtual server architecture relates to.

A
common scenario we uncover when working with customers is that the IT
administrator installed Oracle database products on a virtual server, but
failed to recognize the licensing impact of this action. They may have assumed
that only the virtual server needed to be licensed, when in fact, they should
have taken into account the underlying architecture of the physical servers. Or,
in the case of a VMWare cluster, the whole cluster needs to be licensed for
every physical server where the virtual server could potentially be running.

Small “oversights”
like the one illustrated above can be very expensive mistakes to make – to the
tune of millions of dollars in penalties. It’s only really now that CIOs are
uncovering the extent of any non-compliance with Oracle licensing rules, as
they either renew their license agreements or respond to requests for an audit.

3. Project slippage creates unforeseen costs

The
commercial risk of not proactively monitoring Oracle usage extends beyond the
issue of compliance and penalties. A potentially far more expensive mistake to
make, which has an impact outside of compliance and is related to purchasing
license agreements, arises because of poorly calculated enterprise license
agreements.

For
many organizations, because they lack the data required to forecast current and
future licensing requirements, they are forced into purchasing an unlimited
license agreement (ULA) for a fixed time period. Here they end up over-paying
for an “all you can eat” version, simply because they want to protect
themselves from an audit. This “protection reflex” scenario can also arise
because the user is embarking on a project to implement Oracle over an
estimated time period, but subsequently finds that project timescales have
slipped.

When a
ULA is entered into, the organization is obliged to pay a fixed fee for
licensing and support, on the basis of deploying a pre-specified number of
users in a certain timeframe, regardless of whether those users are live or
not.

For example, a company may be implementing Oracle and purchases a ULA for
12 months based on deploying a 100 processor license but actually only deploys
50 licenses before the contract expires because of project slippage. They still
need those additional 50 licenses, and effectively end up paying for them
twice. In monetary terms, this can mean spending an additional two thirds of
the original ULA cost again, because the license was inefficiently managed.

Regardless
of the circumstances for purchasing a ULA, experience has shown they are not
for everyone and need careful management to ensure they deliver value for
money. Otherwise, your Oracle license agreement could end up costing a lot more
in real terms than if the organization purchased exactly what it needed. But to
achieve the latter position, requires data and proactive license management.
Ultimately, whether you choose a ULA or another form of Oracle license
agreement, you need to know exactly what your needs are for it to be financially
beneficial.

4. Not having a single window on Oracle assets

This is
an issue for Oracle license management but is equally relevant for any other
enterprise application. Traditional WINTEL environments of the past have been
superseded by heterogeneous platforms combining Linux, Mac, Windows,
virtualization and now, software as a service (SaaS) applications.

In the past,
companies would have used an array of disparate software asset management tools
to monitor usage in different environments. With Oracle database applications
being so complex, working in this way leaves too much room for error as it
becomes impossible to account for the interrelationships between these
different environments and groups of users. It can be unclear where the
responsibility for license compliance lays in such situations. What’s needed
is continuous monitoring of the entire Oracle estate across all platforms, with
data aggregated to a single view on an ongoing basis.

5. Underestimating the difficulty of creating
an Oracle Server Worksheet Report

Related
to the issue of inaccurate data, another pitfall would be to underestimate the
time required to gather licensing information for an Oracle audit. The vital
piece of information required is an Oracle Server Worksheet Report (OSW). This
provides an overview of the entire IT estate and shows what is installed and
used, plus how many users are accessing the Oracle database servers. In
addition it includes how they are partitioned, and what the processing power of
the hardware is.

A common mistake users make is underestimating the time
required to gather this information and compile the OSW. Without tools to
automate the process, Oracle licensing specialists claim manually gathering
this information can take up to four hours per server. In commercial terms, it
means that when negotiations with Oracle commence, the user is in an
unfavorable position, without the right data to back up their arguments. This
scenario is true for both audit/compliance negotiations and for enterprise
license renewals.

In the
end, all these pitfalls return to the same fundamental issues – good data, a
proactive mind-set and the need for continual monitoring. Even modest users of
Oracle licensing can accrue huge commercial risk running from tens of thousands
to millions of pounds to millions for not effectively managing their licensing
agreements.

These costs may proportional to the size of organization but the
impact of the risk is the same. Most IT directors are doing a fantastic job of
keeping ahead of technology, ensuring their organizations get the value they
need from IT and reducing its cost burden. It’s a shame if that good work
becomes overshadowed through being caught out by Oracle’s overly complex licensing
rules.

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