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Beware the Oracle Licensing Traps

By Tara Seals, Contributing Writer

Oracle (News - Alert) has received plenty of attention regarding the software audit practices of its License Management Services (LMS) compliance arm and its pursuit of what it calls undeserved windfalls.

For instance, it recently came to light that all hosts in a VMware cluster must be licensed to capacity for an Oracle technology product, no matter what. Some see this as a strong-arm tactic to push companies into the recurring-revenue business model and Oracle’s expanding cloud services.

“{That’s even if there is only one VM running the product on a single host in the cluster – simply because Oracle does not recognize VMware as an approved ‘hard partitioning technology,’” explained Christopher Barnett, an attorney at Scott and Scott LLP, in a blog post. “Never mind the fact that this effective prohibition on the use of VMware with Oracle products may not be mentioned anywhere in the applicable license agreements or in any document incorporated in those agreements. In effect, LMS merely applies the assumption that since VMware makes it so easy for VMs to migrate to other hosts, the processors on those hosts must be licensed for the Oracle software.”

But it’s not just here that Oracle’s licensing agreements are full of traps. For instance, its widely deployed flagship Database software has installation files that include a catalog of added-cost options. If any of these are inadvertently clicked—even if the functionality is never used and even if it’s turned off five minutes later, it will show up in the logs as having been used, and therefore, the company will have to pay additional fees.

“Businesses considering significant Oracle software investments need to factor the costs associated with Oracle audits into their TCO calculations,” Barnett said. “In addition, they need to plan to be assiduous in documenting exactly what Oracle products will be installed on what systems and in studying and understanding the licensing obligations that those decisions entail. Finally, if working with an Oracle implementation partner, it makes sense whenever possible to shift the burden of non-compliant deployments to the vendor, forcing the other party to represent and warrant that the final implementation will be consistent with the license rights purchased by the company.”

Understanding the risks associated with all of these traps and to proceed with caution, is a complex endeavor, and only getting more so. And, Oracle is hardly the only vendor with such practices. Large IT transformation initiatives, such as virtualization, that drive hardware and facility consolidations, actually increase the amount of software that must be licensed. As servers and desktops are virtualized, all of the software on those boxes and virtual machines (VM) must be licensed and the host servers must also be licensed for operating systems, hypervisors and monitoring software.

That’s why solutions like the software asset management suite from Flexera Software are in demand to help navigate the hidden pitfalls.

“In essence, if you virtualize a server to run eight VMs on a single box, you actually have nine servers that must have licensed software running on them,” Flexera noted in a blog. “So, by working to reduce hardware and facility costs, IT is most likely increasing the cost of software to support these new environments. This is a prime area where software license management processes and technologies can really help organizations control costs.”