Contents quick find: Can you run Oracle in a third-party cloud? | Which third-party cloud can I use? | How do you license Oracle running on a third-party cloud? | Will Oracle audit me if I move to a third-party cloud? | 5 things to do proactively as you move to the cloud
Licensing Oracle in any environment is extremely complex, often ambiguous, and fraught with risk for even the savviest of organizations. The cloud was supposed to make licensing software easier. In fact, many heralded the coming cloud-centric world as the end of license management as we know it. The reality has been the exact opposite. Using the cloud has added another layer of complexity to managing your Oracle licenses. Now, not only do you have to contend with Oracle’s onerous contracts and business practices for your licenses, you must also deal with Oracle’s ever-changing non-contractual cloud policies.
Although we cannot possibly get through every scenario in this short guide, we’ve done our best to hit the major questions and challenges Oracle users have when they want to take their Oracle deployments and move them into a third-party cloud environment.
Can you run Oracle in a third-party cloud?
This one is simple, and we can answer in one sentence. Yes, you can run your Oracle in a third-party cloud environment, unless there is a specific contractual provision preventing you from doing so. Such contractual provisions are few and far between. The big exception out there is the Oracle Unlimited License Agreement (ULA). If you have an Oracle ULA (either current or expired), there may be a provision that presents a short-term obstacle to your cloud deployments. Specifically, there may be a prohibition against “certifying” anything in a third-party cloud. Even that prohibition, however, is temporary, and your right to use your Oracle software in the cloud returns after certification. Oracle ULAs have evolved over time. Each one is different, and it is critical to understand the specifics contained in your ULA.
Which third-party cloud can I use?
Again, a very simple answer: You can use any third-party cloud you want, unless there is a specific contractual provision preventing you from doing so. It is extremely rare for an Oracle contract to have a specific provision against a particular cloud offering. You can find hundreds of Oracle contracts by doing a web search on government contracts with Oracle. Many of them are available under various Sunshine Laws. Have a look and you can see for yourself.
Oracle has a tendency to make licensing unclear. This area is no exception. Oracle put out a non- contractual “policy document” titled Licensing Oracle Software in the Cloud Computing Environment. In this document Oracle creates a new term called an “authorized cloud environment”. According to this “policy”, Oracle says AWS and Azure are “authorized”. The policy doesn’t speak of other cloud services, so many people mistakenly believe that Oracle’s policies mean they can’t deploy those in “non-authorized” clouds. That is simply wrong.
Thousands of Oracle customers have successfully deployed in third-party cloud environments like Google Cloud. Oracle knows it, and Oracle is not challenging their rights to do so. As for AWS and Azure, you can run Oracle there as well. And not because they are “authorized”. Rather, you can run on AWS and Azure because you have the contractual right to do so.
How do you license Oracle running on a third-party cloud?
This is the section where we could write a book. However, that’s not the purpose of this guide, and we doubt anyone would read it if we did! Oracle has made the issue so complex and convoluted that you as the Oracle customer bear the burden of figuring it out. The really good thing here, however, is that once you have a licensing strategy that aligns with your contracts, it will be nearly impossible for Oracle to dispute your logic and find you out of compliance, unless you let them.
Remember that document we spoke of earlier? Licensing Oracle Software in the Cloud Computing Environment? Well, it’s going to be a blessing and a curse for you. If Oracle uses it, it could be a curse. If you use it, it can be a blessing.
First, the good:
When you run your Oracle software on-premise and virtualized, Oracle has some very far-out policies on how many licenses you need for your environment. Oracle has had an issue with their customers running on third-party virtualization (like VMware) for years and has crafted non-contractual “policies” that have resulted in billions of dollars of revenue for Oracle. (Again, we can get into a long discussion about when these virtualization “policies” should apply, if ever, but we will not go down that path here. Let’s just assume for this discussion the policies do apply.)
Applying the virtualization “policies”, companies can have millions of dollars in non-compliance risk. However, when you run in an “authorized cloud environment” all that risk can go away because Oracle no longer expects you to license every processor where Oracle could potentially run in AWS and Azure. Rather than increasing your audit risk, moving from an on-premise virtualized environment to an “authorized cloud environment” can be a great way to reduce your risk of non-compliance and an Oracle audit. Unfortunately, according to Oracle, the virtualization licensing risks still apply to cloud environments that are not “authorized”. That position, however, is not stated in your contracts and can be easily disputed.
Now, the bad:
Oracle gives itself the right to change Licensing Oracle Software in the Cloud Computing Environment at any time. And they’ve exercised that right many times. One of the biggest changes they’ve made is how many Oracle licenses you need per virtual CPU in an authorized cloud environment. Again, none of this is in your contract, so there is plenty of room to maneuver in terms of license counts for the educated Oracle customer.
Whatever the legitimacy of this document, the fact that Oracle changes it is what really makes it problematic. Ultimately, when determining how many licenses you need in a specific third-party cloud environment, you should take into account your contract first, and only use the other policy documents when they are to your benefit (like running on an authorized cloud environment from an on-premise virtualized environment)!
Remember, whichever way you go, you have to be consistent in your logic and approach. One more tip: if you are going to use the policy document, use the one that was in effect when you acquired your licenses. Don’t give Oracle the power to change the rules after the fact.
Will Oracle audit me if I move to a third-party cloud?
More good news for you. Oracle doesn’t audit companies just for moving to a third-party cloud! Oracle’s audit process targets companies that are out of compliance so Oracle can generate more revenue for Oracle.
What this means for you is that you must always be vigilant about your Oracle compliance position. Whether you run Oracle on-premise, in a third-party cloud, or on the Oracle cloud, Oracle won’t audit you if they think you are in compliance. There is no reason for them to go through the time and expense and come up empty handed at the end of the audit.
Any time you have an IT transition, be it moving to the cloud, doing a hardware refresh of your on- premise environment, or changing how you virtualize, you should be sure of your compliance. Again, the power is in your hands. If you stay in compliance and manage your position, your audit risk will not rise.
What if Oracle does audit you? First, call Palisade Compliance! Second, you can treat it as any other Oracle audit. Contracts come first, second, and third. Control the audit process and control the audit result. For more insight, we recommend you download and read our Oracle Audit Self Defense Manual.
5 things to do proactively as you move to the cloud
- Get the right help. There are so many companies who will give you advice on licensing in the cloud. Oracle, AWS, Microsoft, VMware, and many others all offer some type of help when you are looking to make this move. Unfortunately, they all have a vested interest in you using their services. Ensure you are talking to an independent expert whose motivation is to help you make the best decision for your organization. The best time to find an expert advisor is before you make your cloud decisions. The second best time to find an advisor is today. In fact, it’s never too early, or too late, to get help from us!
- Know what’s in your contracts and what’s not in your contracts. Understanding your particular risks and opportunities is critical to a successful move to the cloud. The only way to know this information is to have a deep understanding of your contracts with Oracle. This means your license agreements, master agreements, support agreements, and any amendments to those documents. Knowing Oracle’s technical support policies is also important. Other non-contractual documents will also play a role in how you take charge and interpret your agreements and enforce your rights. Create a contractual cloud licensing position and force Oracle to refute it, rather than waiting for Oracle to create one and put you on the defensive. The other side to this is knowing what’s not in your contracts. What are Oracle’s policies? What is applicable and what is not? What will Oracle’s position be? What will Oracle do next? These are items you can’t read in a contract.
- Be compliant. For an Oracle customer, staying in compliance is critical. This is true whether you are on-premise or in the cloud. As you begin your move, you must understand your compliance position and manage it. There is a point in your cloud journey where you will have installs on-premise and in the cloud. That’s a great point of attack for Oracle’s LMS Audit and Sales teams. It’s called the double-bubble, and you must protect yourself when you are in the most vulnerable position.
- Keep Oracle in your sights. Just because you had decided to move to a third-party cloud, or you’ve actually made the move, does not mean Oracle Sales will stop calling you and auditing you to get you to move to their cloud. It’s important that you protect and defend your move and your licensing position. Unless you are moving off all Oracle products, you and Oracle are still working together, and you want to have a good working relationship. Knowing how Oracle works enables you to strategize and build a plan for success.
- Have a plan? A move to the cloud will be much more successful if you have a contractual and licensing plan to your destination. Creating a plan – and it does not have to be particularly complex – will enable you to quickly identify potential problems before Oracle does. Have all your relevant internal stakeholders review the technical plans, Oracle contracts and policies and the strategic direction of your company to create a logical and defendable licensing position that will be nearly impossible for Oracle to refute. If your review uncovers licensing gaps, this is the time to resolve them. Do not wait for Oracle to resolve them for you. Oracle’s typical resolution plan costs you unnecessary fees in Oracle cloud purchases.
More information:
Check out our Oracle Cloud Licensing Services page, and get in touch with us if you need further assistance.
