Got Oracle? Got VMware? Going cloud? You could be stung for huge licensing fees

Oracle has been telling a number of organisations running its database software that they are breaking the company's licensing rules – and therefore owe it millions of dollars in unpaid licence fees.

The issue hit the headlines in January after US confectionery giant Mars took Oracle to court in the US over claims Mars had broken the rules. Mars had been audited by Oracle and developed a response plan with compliance specialist Palisade Compliance. The case settled before going to trial.

Dave Welch, chief technology officer and chief evangelist of House of Brick Technologies assessing the case, estimated a $100m spend by Mars on Oracle over a three year period - covering license, software update and support.

Mars was fighting a claim by Oracle that could, conservatively speaking, have doubled that - according to Welch.

But that’s nothing. The Register understands Oracle has gone to customers with claims five times that figure. One contact at a major channel reseller partner told The Reg he is encountering more and more customers running VMs being charged by Oracle for their entire estate.

“Life is very interesting for lots of customers,” our source said.

Not all Oracle database users are at risk; it’s those running Oracle’s premier database in conjunction with VMware’s virtualization software. Given VMware is the largest virtualization spinner and Oracle is the single largest relational database provider, however, the space for conflict in this Venn-style overlap is massive.

The reason Oracle is targeting the VMware base is Oracle does not accept VMware’s world view on licensing, and therefore its definition, of hardware partitioning. An Oracle partitioning document, here, shows Oracle only accepts Solaris Containers, IBM’s LPAR and Fujitsu’s PAR. VMware is not on the list of hard partitioning partners.

Since VMware’s release of vSphere 5.1 in August 2012, Oracle has insisted that you cannot simply license its database to a given number of virtual machines. Rather, you must license your entire server estate, on the basis that you have the potential to run Oracle on all those servers and cores, should you wish.

That could mean servers in the same room or servers in data centres on opposite sides of the world.

It’s a rule with massive ramifications for how much you pay Oracle. It produced Twitter punnery such as this:

The problem is that most VMware users are simply unaware of Oracle’s rules, or are buying into VMware’s definition – and world view – of what’s possible and what’s allowed.

Richard Spithoven, partner of license management expert b.lay, told The Reg that customers should be under no illusions when it comes to running Oracle: it’s Oracle that dictates the licensing practices and Oracle can change the contractual rights when new technologies emerge – as it did with vSphere 5.1 four years ago.

“A lot of people get emotional and upset about Oracle’s practices. Although I understand the strong emotions, typically these are the people that have not used the right people, processes and tools to manage their software assets properly allowing them to be 'surprised' during the course of an audit,” Spithoven told us.

B.lay’s man reckons he’s seen claims of more than $500m by Oracle.

Martin Thompson, founder and chairman of the Campaign for Clear Licensing, told The Reg: “Licensing Oracle on VMware is grey. Oracle like this, greyness in their licensing practices allows them to prop up flagging sales numbers with audit revenue. If not prepared, Oracle customers using VMware will find themselves being rinsed of cash via licensing terms that are not defined or agreed.”

vSphere 5.1 is four years old, but cases like Mars and the others The Reg has learned of are only now coming to the fore as existing license deals with Oracle come up for renewal and renegotiation. Also, Oracle customers are jumping on cloud and therefore virtualizing using VMware and therefore suddenly leaving themselves exposed to Oracle.

Often, those buying and running Oracle’s licensing aren’t up to speed on the nuances of Oracle’s license terms, or are simply unaware of the hard partition rules.

TmaxSoft branded Oracle’s virtualization licensing policy as “foggy” on Tuesday. It did so as it announced its Tibero Proof Program to help customers work out their licensing and compliance exposure to Oracle.

TmaxSoft also criticised Oracle for not making the partitioning document more widely available and for suggesting its policy will not form part of any agreement or contract.

Carl Davies, TmaxSoft's UK managing director said, in a canned statement: “This is obviously very perplexing and it isn’t surprising that some customers are accusing Oracle of promoting misuse of its software to then report that same customer to be out of compliance.”

These kinds of figures can’t just be whipped up from some budget somewhere: they will give the CFO a headache and they will make a dent in the quarterly performance of any publicly-traded company.

No wonder Mars went to court – and no wonder Spithoven expects others will also fight back.

Spithoven said: “The IT industry is maturing and Oracle clients get more knowledgable and better prepared. They will no longer accept everything Oracle does and with Oracle taking a larger footprint in corporate IT thanks to its acquisitions, the financial claims are getting bigger.

“Combined with an increased number or license compliance audits by Oracle – and other publishers for that matter – customers are confronted with more and bigger financial claims.”

Except for going legal, what are your options?

Nominating a designated expert to run and negotiate your Oracle licenses is one. Then either they, or you, should define your requirements and use of VMware upfront in the Oracle contract, says Martin.

Finally, limit Oracle to specific clusters to limit your potential exposure. Walling off sections of your data centre for the sake of one of your supplier’s software might seem contrary to the spirit of the times – that of masses of servers running elastic loads – but it might just be the price of doing business with Oracle. ®