Licensing Oracle on Azure Constrained vCPU Environments

We all know Oracle takes amazing liberties with their licensing “requirements.” While your contracts with Oracle may say one thing, Oracle will publish non-contractual policies designed to confuse the Oracle user on how many licenses are required to run in various on-premise and cloud environments. Add to these non-contractual policies Oracle sales and LMS audit teams who can say almost anything without having to back it up, and you get Oracle customers buying more Oracle licenses than they actually need.

Recently we’ve heard from clients that Oracle is putting pressure on them to over-license their Microsoft Azure Constrained vCPU environments. In this article we will give a little background on this offering, what Oracle is doing and what you can do to ensure you have the appropriate number of licenses for your Constrained vCPU environment.

Reducing your Oracle costs with Azure

Microsoft Azure is a popular cloud service to run Oracle workloads. Azure has multiple offerings with various features. One offering is their Constrained vCPU model that provides their clients with a predefined number of vCPUs. Learn more about their Constrained vCPU offering.

At a high level, Microsoft disables vCPUs so their customers have fewer cores to license. Microsoft’s goal here, as stated on their website, is to “reduce the cost of [Oracle] software licensing”. And there is the rub: Microsoft wants to reduce your Oracle costs, and Oracle wants to increase your Oracle costs.

We’ve heard from customers now that Oracle salespeople are making licensing demands that go beyond what is in the Oracle contract. Nothing new here. In the Constrained vCPU model, Microsoft, not the customer, limits the number of vCPUs that are available to a customer for use in their environment. For example, while a typical environment may have 32 vCPUs, Microsoft limits, or disables, the customer’s access to 16 vCPUs. Oracle claims you need to license all 32. Palisade Compliance disagrees.

Using the example above, the way Microsoft delivers this service completely eliminates the customer’s ability to access all 32 vCPUs. They can only use 16. To access all 32, the customer would need to spin up a new environment and do a re-implementation. The difficulty and process required to access 32 vCPUs is enough to pass the licensing test that only requires 16 licenses.

When talking licenses, I always defer to a customer’s contracts, and not to some Oracle website document. However, for the purposes of this discussion let’s look at Oracle’s partitioning document. This document states:

Oracle recognizes a practice in the industry to pay for server usage based on the number of CPUs that are actually turned on – the “Capacity on Demand,” or “Pay as You Grow” models. Oracle allows customers to license only the number of cores that are activated when the server is shipped.

For Azure’s Constrained vCPU model, we can equate how a server is shipped to how the virtualized environment is delivered to the client. Again, there is nothing in your contract that talks directly to this issue, and the document referenced above is really just an opinion piece by Oracle and not a binding contract. You need to interpret all of these documents in a reasonable way. 

What do we recommend?

In general, Palisade Compliance’s recommendation is that companies using Microsoft’s Constrained vCPU model only licenses all the vCPUs that are available to them through their implementation. No need to license disabled vCPUs as you have no ability to use them. Note that our ultimate guidance would depend on your contracts with Oracle. Having said that, I know nothing in Oracle’s standard agreements that differs from our guidance above.

What is Oracle doing now?

Believe it or not (and I think you should!) Oracle salespeople are asking their customers to take photographs and screen shots of the Azure management portal so Oracle can see the exact details of how their customers are using Azure. What Oracle is trying to do is build some case of non-compliance using non-contractual website materials. 

Before you take out your Polaroid and hand Oracle anything, consider your contracts with Oracle. Is there anything in there that requires you to hand Oracle sales or LMS audit teams screenshots of non-Oracle products and services? I would think the answer to that is “NO!” Again, you should always be in compliance with your license contracts. But you do not have to jump through Oracle’s self-imposed hoops to prove yourself to them. The request for photographs is nonsensical. Remember, anything you send to Oracle may be used against you. Be very careful. If Oracle is asking for information, you should get some help. Hopefully from Palisade Compliance, but at the very least from an Oracle licensing expert that is independent from Oracle.

How to protect yourself from Oracle

What can you do to protect yourself from Oracle’s claims? The bad news is that whatever you do, unless you give Oracle more money, they are going to push you to buy more licenses. The key is to be ready for them. You are using Oracle’s technology and they do have the right to make sure you are in compliance with your contracts. That’s the key. You need to be in compliance with your contracts and not with some random Oracle statements. Anyone using Oracle products, regardless of where you deploy them, should know their compliance position, and have a plan for managing Oracle sales and LMS audit personnel. That is the price you pay for working with Oracle.

Palisade Compliance has helped hundreds of customers successfully deploy their licenses in the cloud.  This includes Azure! If you are moving to the cloud, please give us a call. We can review your Oracle agreements, analyze your deployments across all of your on-prem or cloud environments, and give you a license and contract optimization roadmap that will help you move to Azure and reduce your Oracle costs. But if you really want to keep giving Oracle more money than you have to, then you should probably call Oracle directly and have them “help” you!  

Picture of Craig Guarente
Craig Guarente
Craig is the President and Founder of Palisade Compliance, which he founded in 2011. Before 2011, Craig worked at Oracle for 16 years where he was the Global Vice President of Contracts, Business Practices, and Migrations. He was also the Global Process Owner for Oracle’s audit teams (LMS), a member of Oracle’s CIO advisory board, and on the Oracle User Group’s contract and licensing advisory board. Craig is now the leading expert on Oracle licensing, is quoted in dozens of publications, and assists with many high-profile Oracle disputes.