Key takeaways on Oracle licensing

1. It is important to understand the different licensing models for all the various Oracle products and choose the one that is right for your organization. This will help you to avoid overpaying for licenses and ensure that you are in compliance with Oracle’s licensing terms.
   • Enterprise Edition is licensed per core, Standard Edition is licensed per processor, resulting in differing licensing costs
2. Oracle regularly updates its licensing policies and procedures. It is important to stay up to date on these changes to ensure that you are in compliance.
3. Oracle has a strict audit process to ensure that customers are properly licensed. If you are found to be in violation of Oracle’s licensing terms, you may be subject to fines and penalties.
4. The three main Oracle licensing metrics are:
   • Processor licensing: used when it’s challenging to count or verify users, such as in web-based applications
   • Named User Plus licensing: allows you to pay per user, meaning any end node interacting with an Oracle database
   • Application User: Specific to run only with the defined application and may come with additional restrictions
5. Oracle license mobility lets you move your existing Oracle licenses to Azure, saving you money on licensing costs.
6. Oracle licensing can be complex, so it is important to seek professional help if you are unsure about anything.

Oracle’s software licensing is notoriously complex. The company’s acquisition of many companies over the years has resulted in a wide range of price lists, licensing options and definitions. Keeping track of changes that may affect your organization can be daunting.

What is Oracle?

Oracle is known for its database management systems to create and manage databases. It specializes in enterprise software, cloud computing and database management systems. Oracle is one of the biggest players in the world of software computing, together with Microsoft, Google and IBM.

What products does Oracle offer?

Oracle has a large range of thousands of products and services, incl. hardware, software and cloud computing. Their offer can be categorized in the following:

Popular products offered by Oracle:

• Oracle Database: A relational database management system that provides enterprise-grade scalability, security, and availability.
• Oracle Cloud Infrastructure: A cloud computing service that provides on-demand computing resources and services over the internet.
• Oracle Fusion Middleware: A product family of middleware software that enables enterprises to create and run apps.
• Oracle Applications: A suite of business apps that incl. enterprise resource planning (ERP), customer relationship management (CRM), human capital management (HCM) and supply chain management (SCM) software.
• Oracle Java: A programming language and computing platform that is used to develop apps for a wide range of devices, including computers, smartphones, and embedded devices.
• Oracle MySQL: An open-source relational database management system that is widely used for web apps.

The licensing for each product depends on its category and how it is deployed. This results in over 80 license metrics in use today, with many specific to certain products or groups of products.

Oracle Licensing Basics

What do you need to license?

For Oracle, every server with a processor installed or running Oracle software must be licensed. This includes production, test, development, and disaster recovery environments.

Oracle’s Software License grants customers non-exclusive and limited rights to use its software. These are the basic concepts to understand Oracle licensing:

• License types: Define how a customer can use Oracle software (e.g., perpetual, term, or cloud licenses).
• License metrics: Determine how software usage is measured.
  • Primarily includes Named User Plus or Processor metrics (more on this below).
• License term: Specifies the timeline for the customer’s usage (e.g., perpetual or for a defined period).
• List price for a Term License: Based on a specific percentage of the perpetual license price.
• Add-on products: Must match the number of licenses for the associated base product.
• Functional dependencies: Products that require separate licensing when used together.
  • Example: If you are using Oracle Middleware (e.g., Oracle WebLogic Server) to support an Oracle Database, you must license both the middleware and the database. Similarly, Oracle Real Application Clusters (RAC) must be licensed separately when used to enhance database performance.
• Actual usage or minimum, whichever is greater: Customers are billed based on either their actual usage or the predefined minimum license requirement, depending on which is higher.

What does “actual usage or minimum, whichever is greater” mean?

Oracle imposes minimum license requirements, which can exceed the actual usage in certain scenarios. This condition ensures Oracle customers maintain compliance even if their actual user or processor usage is lower than the minimum threshold.

What are the Oracle licensing models?

Oracle offers various licensing models depending on the product and deployment environment:

• Named User Plus (NUP): Licenses based on the number of users accessing the software.
• Processor Licensing: Based on the number of processor cores on servers where Oracle software is installed.

While some Oracle software, such as Oracle Express Edition, is currently free, licensing rules may change in the future. It’s crucial to stay informed about Oracle’s policies to avoid unexpected costs or compliance issues.

For more detailed information, please refer to the https://www.oracle.com/corporate/contracts/Oracle Global Pricing Site.

License types in Oracle licensing

Oracle offers a variety of license types to accommodate different customer needs, allowing businesses to choose the most suitable model based on their usage, financial preferences, and deployment strategy. The primary license types are:

1. Perpetual Licenses

A perpetual license is a one-time purchase that grants customers the right to use Oracle software indefinitely. Once purchased, the software can be used for as long as the customer needs it, but maintenance and support typically require annual fees. Perpetual licenses are common for on-premises deployments, where businesses prefer long-term use of the software without the need for ongoing renewals.

• Benefits: The software is licensed for an unlimited term, making it a good option for organizations that plan to use the software over a long period.
• Support and updates: Customers must pay an annual support fee for access to updates, patches, and Oracle’s technical support.

2. Term Licenses

A term license allows customers to use Oracle software for a specified period, often ranging from one to several years. Unlike perpetual licenses, term licenses are typically rented or leased for the duration of the agreement. At the end of the term, the customer must either renew the license or stop using the software.

• Benefits: Term licenses are ideal for businesses with temporary needs or those looking for flexibility. They can be more cost-effective in the short term, particularly if the software is only required for a set period (e.g., for a specific project or for a temporary increase in capacity).
• Support and updates: Term licenses generally include support and updates for the duration of the agreement, with renewal options available at the end of the term.

3. Cloud licenses

Oracle’s cloud licenses apply when customers use Oracle software in Oracle’s cloud environments, such as Oracle Cloud Infrastructure (OCI) or other Oracle-hosted cloud platforms. These licenses are often based on usage metrics like consumption, capacity, or number of users, rather than the traditional licensing model based on CPUs or cores.

• Benefits: Cloud licenses provide scalability, flexibility, and reduced upfront costs. Businesses can scale their use of Oracle software dynamically as their needs change, paying only for what they use.
• Support and updates: Cloud licenses typically include automatic updates and access to Oracle’s full suite of cloud services, including support, at no additional cost, depending on the service plan.

4. BYOL (Bring Your Own License)

Oracle also offers a BYOL model, which allows customers to transfer their existing Oracle licenses to Oracle’s cloud environment. This can be an attractive option for businesses that have already made a significant investment in Oracle software and want to leverage it in the cloud without repurchasing licenses.

• Benefits: BYOL allows customers to lower their cloud costs by utilizing existing perpetual or term licenses. It also offers flexibility in migrating from on-premises infrastructure to the cloud, often with less disruption and cost.
• Support and updates: Like cloud licenses, BYOL typically includes Oracle’s cloud updates and support services as part of the cloud subscription.

5. Oracle Subscription Licenses

Oracle’s subscription licenses are part of its cloud-based offerings, where customers pay for the right to use software on a subscription basis, often with monthly or annual payment schedules. This model is commonly used for Oracle’s cloud applications and platforms, such as Oracle ERP Cloud or Oracle Autonomous Database.

• Benefits: Subscription licenses are flexible and allow businesses to access Oracle’s latest cloud services with minimal upfront investment. They provide consistent access to updates, new features, and improvements as part of the subscription.
• Support and updates: The subscription model typically includes updates, patches, and ongoing support, which are included in the overall subscription price.

6. Enterprise License Agreements (ELAs)

An Enterprise License Agreement (ELA) is a type of contract that provides organizations with a simplified and cost-effective approach to licensing Oracle software across the entire enterprise. ELAs usually cover multiple Oracle products and are tailored to meet the specific needs of large enterprises.

• Benefits: ELAs offer volume discounts and flexibility to scale usage across various business units or departments. They can include a mix of perpetual, term, and cloud licenses, depending on the agreement.
• Support and updates: ELAs typically include comprehensive support services, and the terms can be customized to suit the enterprise’s needs, ensuring continued access to updates, patches, and support.

7. Processor-Based Licenses

Oracle also licenses software based on the number of processors (cores or CPUs) used to run Oracle products. This model is common in on-premises or private cloud environments where hardware capacity is an important factor.

• Benefits: This model is often used for customers with significant computing needs, as it allows them to license software based on their hardware configurations.
• Support and updates: As with perpetual licenses, customers must pay an annual maintenance fee for updates and support.

Oracle Database Licensing

For Oracle Database, the licensing model is based on two metrics, namely Named User Plus and Processor.

• Named User Plus is based on the number of users accessing the software, and it applies to both Oracle technology and application programs.
• The Processor metric, on the other hand, is based on the number of processor cores in the servers where the software is installed. It applies to Oracle technology programs.

Oracle Named User Plus Licensing

What is Named User Plus licensing?

Oracle Named User Plus allows you to pay for Oracle software based on the number of users who access it, regardless of whether they are actively using it. In this context a user is any end node interacting with an Oracle database. This metric is typically used for environments where the number of users can be easily counted, such as small businesses or organizations with a limited number of users. Oracle’s licensing policies do not restrict the number of database instances you can install on a server, nor do they differentiate between single server and networked environments. However, all users of all environments must be properly licensed.

Minimum order requirements

The minimum number of Named User Plus licenses you need to purchase depends on the edition of Oracle software you are using. For Oracle Database Standard Edition 2, the minimum is 10 NUP licenses per server. For Oracle Database Enterprise Edition, the minimum is 25 Named User Plus per Processor licenses or the total number of actual users, whichever is greater.

How does Named User Plus licensing work?

Here is an example of how Oracle Named User Plus licensing works:

• You have a small business with 10 employees who use Oracle Database Standard Edition 2. You need to purchase at least 10 Named User Plus licenses.
• You have a large enterprise with 10,000 employees who use Oracle Database Enterprise Edition on a server with 4 processors. You need to purchase at least 100 Named User Plus licenses (25 per processor x 4 processors).

Key points to consider for Named User Plus?

• All devices that connect to the Oracle Database must be licensed, even if humans do not operate them.
• All humans who use devices to connect to the Oracle Database need to be licensed.
• If both non-human-operated devices and human-operated devices are connected to the Oracle Database, all non-human devices, as well as all human-operating devices, must be licensed.

When is Named User Plus a good option?

NUP Licensing can be a good option for organizations with a small, easily countable number of users, such as test and development environments. It can also be cost-effective for small environments with limited users.

What are some disadvantages of NUP Licensing?

• You need to keep track of your users to ensure compliance with the licensing agreement. This can be challenging if your user base fluctuates frequently.
• Multiplexing software, like an application server, can be a typical “unknown” gateway to uncountable licensing populations, such as web users. This can lead to compliance problems.

Oracle Processor Licensing

What is Processor licensing?

Oracle Processor licensing allows a customer to pay for Oracle software based on the number of processor cores in the servers where it is installed. You calculate the number of licenses required by multiplying the total number of processor cores by a core factor. The core factor varies depending on the type of processor and the server on which it is installed. You can find the core factor table in Oracle’s official documentation. It’s important to note that Oracle has its own processor definition, which may not align with your hardware vendor’s definition. For example, a Standard Edition 2 (SE2) license defines a processor as a socket.

How does Processor licensing work?

All processors in a machine must be licensed if Oracle software is installed or running on that machine. This includes processors in cluster members, remote mirroring machines, and standby machines.

An example of how Oracle Processor Metric licensing works:

• You have a server with 4 x86 processor cores. You need to purchase 4 Oracle Processor Metric licenses.
• You have a server with 2 Ampere AltraMax processor cores. You need to purchase 4 Oracle Processor Metric licenses, because the core factor for Ampere AltraMax processors is 2.

When is Processor licensing a good option?

Oracle Processor Licensing is a flexible and cost-effective way to license Oracle software in certain scenarios. This model is typically used for environments where it is difficult or impractical to count or track users, such as web-based applications. Oracle Databases for web-based applications are a common scenario for Processor Licensing. This model allows you to run your web applications on Oracle Database without counting individual users or devices.

1. Large user base: If many users access your system, it may be more cost-effective to license based on processors than users.
2. Fluctuating user base: Processor licensing can provide more flexibility if the number of users accessing your system changes frequently.

How to calculate Processor licenses

The number of licenses required is calculated by multiplying the total number of processor cores by the core processor licensing factors specified in the Oracle Processor Table. All fractions of numbers are rounded up.

What are the advantages of Processor licensing?

One of the main advantages of Processor Licensing is that it eliminates the need to count or track users. This can save significant time and effort, especially in large organizations with many users.

What is the difference between Named User Plus and Processor Licensing?

The main difference between Named User Plus and Processor is how each counts usage. The Named User Plus metric focuses on the individuals accessing the software, while the Processor metric focuses on the hardware running the software.

In terms of cost, both metrics have their own advantages and disadvantages. The Named User Plus metric is generally more cost-effective for environments with a small number of users, while the Processor metric is more cost-effective for environments with a large number of users.

Virtualization & partitioning

Oracle’s licensing policies for virtualization and partitioning can be complex, varying based on several factors, such as the type of virtualization technology used, the number of processors or cores in the server, and the number of users accessing the software.

Processor licensing in virtualized environments

Processor Licensing can simplify licensing in virtualized environments. Instead of tracking individual users accessing each virtual machine (VM), you can license based on the number of processors allocated to run Oracle Database across your virtualized infrastructure.

Hard vs. soft partitioning

Oracle differentiates between hard and soft partitioning, with significant implications for licensing:

• Hard partitioning: Refers to methods that physically segregate server resources, limiting Oracle software to specific processors or cores. Only hard partitions created with Oracle-approved technologies must be licensed. Examples include Oracle VM and Oracle Solaris Zones, which can reduce the number of cores requiring licenses.
• Soft partitioning: Includes virtualization methods that do not physically restrict resource allocation, allowing VMs to migrate between processors or servers freely. In such cases, all processors in the server (or server cluster) must be fully licensed, regardless of Oracle usage.
• Capacity on demand: Oracle recognizes and allows this practice to license only the number of cores activated when a server is shipped.

Implications of non-Oracle virtualization technologies

Many customers use non-Oracle virtualization solutions, such as VMware, unaware of the challenges these technologies can pose under Oracle’s licensing policies:

• VMware and licensing scope: Oracle’s policies treat all physical servers in a VMware cluster as potentially hosting Oracle software, even if Oracle is not actively installed or running on every node. This means the entire cluster must be licensed, which can lead to significantly higher costs.
• Migration and compliance risks: VMware environments often enable dynamic VM migration. Unless properly managed, this can lead to unintentional non-compliance, as Oracle software may move to unlicensed servers.
• Licensing recommendations: To mitigate these risks, customers using VMware should:
  • Restrict Oracle workloads to dedicated hosts within the cluster.
  • Use hard partitioning to confine Oracle software to specific physical processors where possible.
  • Regularly document and validate Oracle deployments to ensure compliance.

By understanding the implications of different virtualization technologies and Oracle’s licensing policies, organizations can better optimize their licensing strategies and avoid unexpected compliance risks or cost overruns.

Other Oracle applications licensing

Three licensing models are available for Oracle applications:

1. Component pricing – is based on the number of components used in an application. The price is calculated based on the number of components used, regardless of the number of users or processors. This model is suitable for organizations that use a limited number of components in their applications.
2. Custom application suite pricing – is based on a pre-defined set of applications that are bundled together. The price is calculated based on the number of users or processors accessing the applications in the suite. This model is suitable for organizations that use a specific set of applications in their operations.
3. Enterprise pricing – allows customers to license an unlimited number of users or processors for a specific product or product family. The price is calculated based on the product or product family being licensed, and it provides flexibility to customers who require a large number of licenses.

Oracle licensing on cloud providers

Can I bring my Oracle license to Microsoft Azure?

Yes, Oracle license mobility allows you to move your existing Oracle licenses to Azure, provided you have active Software Assurance. Azure is an authorized public cloud platform for Oracle software. This can save you money on licensing costs, as you can use your existing licenses in the cloud without having to purchase additional licenses. Azure supports Oracle’s traditional on-premises licensing models, including Processor-based and Named User Plus (NUP) licensing. You can bring your own license (BYOL) and take advantage of Azure Hybrid Benefit to save on licensing costs.

How does Oracle License Mobility work?

To take advantage of license mobility, you must first register your Oracle licenses with Oracle. Once your licenses are registered, you can then request to move them to Azure. Oracle will review your request and, if approved, will issue you with new licenses that are specific to Azure. To determine the number of Oracle licenses required on Azure, calculate the number of vCPUs the software is deployed on. Oracle Standard Edition One and Standard Edition 2 may only be licensed on instances up to eight Amazon vCPUs or eight Azure vCPUs. If licensing Database Standard Edition 2 by Named User Plus (NUP) metric, the minimums are 10 NUP licenses per 8 Amazon vCPUs or 8 Azure vCPUs.

What are the benefits of using Oracle license mobility?

• Save money on licensing costs
• Increase flexibility and agility
• Simplify license management
• Reduce compliance risk

Oracle & AWS

While Azure is a popular platform for running Oracle workloads, organizations also leverage Oracle Cloud Infrastructure (OCI) and hybrid setups with AWS. Here is an overview:

Oracle Cloud Infrastructure (OCI)

OCI is Oracle’s native cloud solution, offering deep integration with Oracle applications and databases. OCI provides features like:

• Universal Credits: A flexible consumption-based model.
• BYOL (Bring Your Own License): Customers can bring existing licenses to OCI, benefiting from cost savings and seamless integration with Oracle software.

AWS and Hybrid Environments

Organizations using AWS or hybrid configurations can deploy Oracle workloads on:

• AWS EC2 instances: Oracle databases can run here with licensing calculated based on vCPUs and cores.
• Hybrid scenarios: Combining on-premises Oracle installations with cloud deployments can help optimize performance and costs. Be cautious about license compliance, as Oracle’s auditing policies extend to hybrid setups.

Key considerations:

• Oracle’s definition of processor cores and licensing terms differ across cloud platforms.
• Ensure compliance by aligning deployment strategies with Oracle’s licensing guides.

Audit preparation and compliance strategies

Oracle audits are known to be rigorous and often unexpected. To minimize risks:

Understanding Oracle Audits

• Scope: Audits assess whether customers are using Oracle software within the bounds of their licenses.
• Triggers: Triggers for audits can include unusual support requests, inconsistent usage patterns, or routine compliance checks.

Preparing for an audit

1. Maintain accurate records: Keep track of all license purchases, usage metrics, and contracts.
2. Perform internal audits: Regularly review your Oracle usage to ensure compliance.
3. Use SAM tools: Employ Software Asset Management tools to monitor license usage and identify potential non-compliance.
4. Establish clear processes: Document how Oracle software is deployed, including virtualized environments.
5. Consult professionals: Engage licensing consultants to review and optimize your Oracle usage.

Avoiding common pitfalls

• Unlicensed dependencies: Ensure all prerequisite and add-on products are correctly licensed.
• Multiplexing: Avoid indirect usage scenarios that could increase licensing obligations.
• Virtualization compliance: Oracle treats soft partitioning (e.g., VMware) differently from hard partitioning (e.g., Oracle VM). Missteps here can lead to hefty penalties.

Oracle cost optimization strategies

Effective cost optimization requires a strategic approach to Oracle licensing. Here are some tactics:

1. License Pooling

Combine licenses from different departments or regions into a single pool to:

• Reduce redundancy.
• Take advantage of volume discounts.
• Simplify license management.

2. License Optimization

• Rightsizing: Match licenses to actual usage patterns by reviewing usage metrics.
• Product standardization: Standardize on a fewer number of Oracle products to reduce licensing complexity.
• Downgrade unused features: If enterprise features are underused, consider switching to Standard Edition.

3. Third-party support

Third-party support providers can:

• Reduce annual maintenance fees by up to 50%.
• Offer longer-term support for legacy Oracle versions.

4. BYOL to cloud

Use Oracle’s license mobility to migrate existing licenses to OCI, Azure, or AWS. This avoids purchasing additional licenses for cloud deployments.

5. Renegotiate contracts

Engage licensing consultants to negotiate renewal terms or enterprise agreements. Our LicenseQ consultants can:

• Leverage insights into Oracle pricing trends.
• Advocate for custom terms to fit your organization’s needs.