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Get Out of the License Cost Trap

License costs for Oracle databases are mainly a challenge in virtual environments; but with the right platform you can reduce your license costs significantly. 

December 03 2020Jürgen Kreinz

Private Cloud Appliance reduces Oracle license costs

Oracle databases are a prime example of exploding license costs in virtualized environments. With a suitable platform such as Private Cloud Appliance, companies can avoid unpleasant surprises with their software licenses.

Cloud and Oracle: Two worlds collide

a white pen and a black pen touch

Cloud and enterprise software seldom makes for a love story. Sometimes the relationship ends in tragedy, while other times an outsider might diagnose it as a War of the Roses. And the ones who suffer most are the IT departments in user companies. Oracle databases are an excellent example of the IT culture clash between the established enterprise IT world and the wild, young world of the cloud. The lack of compatibility is by no means a technical matter, but rather a question of approach and costs. Oracle quite intentionally allows flexibility to pay off in virtual environments. But a clever platform strategy can help IT departments use Oracle on modern platforms as well. 

License costs increase the price of cloud solutions

Many applications in large companies are not stand-alone solutions. When a user works with an application, this often means, for example, that an Oracle database is running in the background. And this necessary “invisible” function running under the hood is by no means free. 

In the case of Oracle databases on traditional platforms, finance and IT have come to an arrangement for this cost category. In the cloud world, by contrast, the use of Oracle databases has occasionally made IT departments break out in a sweat and finance departments gasp for breath. The Oracle licensing model is only minimally compatible with cloud architectures and leads to excessive (and sometimes unexpected) costs for lift and shift approaches.

A parking garage with special conditions

An empty parking garage

Imagine you are driving your car into a parking garage. You park there for two hours and have to pay € 1,200 on your way out. That’s a little unexpected, isn’t it? You had expected four euros. The justification for the bill: “We offered you 300 parking spaces and you could have parked in any one...”

On the one hand, you can be glad you didn’t drive into an even bigger parking garage. On the other hand, this metaphor describes Oracle software’s license model really well. The license fees are based on the maximum available range of functions, in other words, the available cores of the platform on which the software runs. 

Cloud computing: A money printing machine? 

Let’s take a look at how databases behave in a cloud environment from a cost standpoint. This example assumes Oracle database workloads that require 40 vCPUs. 

The NIST defines the cloud as a “...shared pool of configurable computing resources...” However, like many other enterprise software providers, Oracle does not consider “pool” a satisfactory quantifying unit for measuring license fees. When in doubt, the company therefore always uses the maximum available capacity of the platform as the measure of things. 

Paying for unused cores

An Oracle database that is run in a shared ESX environment of 3 times 8 CPUs (with 24 cores per CPU), for example, therefore uses only 40 of the available 576 cores. The licensing is therefore based on the complete “pool,” the shared ESX security zone with 24 CPUs, or a total of 576 cores, because it is not clear which of the cores the database runs on. The blessing of virtualization... See where this is going? With a core factor of 0.5 (Oracle defines a core factor independently of the respective CPU type), the result is a required 288 Enterprise Edition (EE) licenses. Price for the user: € 7.3 million. Plus support to the tune of € 1.3 million per year. And this is without taking into account other systems and customers that may likewise be connected to the shared ESX. Phew.

Licensing 536 cores that Oracle doesn’t use hardly makes a lot of sense for a user. Four cores for the payload, 536 cores for hot air. Plus a hearty dose of aggravation and an unnecessary hole in the wallet.

Get out of the cost trap

The obvious solution: Get away from virtualization. A dedicated platform with, say, only 4 CPUs (and 24 cores apiece) drastically reduces the dummy load during usage. The move from 24 to 4 CPUs reduces the number and cost of software licenses by one sixth (€ 1.2 million plus € 221,000 for support). However, scalability is obviously lost in the process – and 58 unused cores still have to be paid for. 

Private Cloud Appliance as cost limiter

The Private Cloud Appliance (PCA@T-Systems) is even better at meeting the requirement for saving money. On the one hand, it allows for a certain technical scaling, while on the other it supports a more suitable license model, as billing is limited to the 40 vCPUs that are actually used. On the PCA platform, only one EE license is required for every 4 vCPUs. So only 10 licenses are required for 40 vCPUs. Costs: € 255,000 (plus € 46,000 for support). Granted, this hardware only reduces infrastructure costs by around five percent (as opposed to 10 in a public cloud), but it scores points on the license side. The bottom line? A good deal. And proof that it pays to think about costs across the entire stack, especially when it comes to continuous operation of enterprise applications. Several of our customers have succeeded in reducing their Oracle license costs by up to 50 percent with this PCA@T Systems service, which we offer in cooperation with Oracle.  

About the author
Jürgen Kreinz – Global Business Operations Asset & License Management

Jürgen Kreinz

Global Business Operations Asset & License Management, T-Systems International GmbH

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In another post, we illustrate the added value of Platform Follows Licensing with the help of an Oracle example

In another post, we illustrate the added value of Platform Follows Licensing with the help of an Oracle example

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