Insider Secrets to Oracle License Management
Learn how to take control of your relationship with Oracle from an independent
license auditor

AgendaAgenda
1. The fundamentals of Oracle Licensing
2. License Compliance & Optimization
3. Dealing with Oracle
4. Virtualization
• Why move to the cloud
• Oracle in VMware and other environments
5. Oracle licensing in Disaster Recovery (DR) environments
6. Q&A

Meet the Speaker
Mohammad
Inamullah
Principal,
Redwood Compliance
Frank Arnett
Director of IB Sales,
OnRamp
Mohammad started his career at Deloitte & Touche where he
specialized in license compliance & software asset management
for IBM, HP, and Microsoft. He also worked as a license auditor in
Oracle’s License Management Services. As the Principal at
Redwood Compliance, he assists companies with all aspects of
Oracle license compliance, optimization, audit defense, and
procurement.
Frank has over 13 years of experience in
technology sales. At OnRamp, he helps
customers develop custom managed private
cloud solutions that fit their business today,
while ensuring scalability for tomorrow.

About Redwood Compliance
Oracle License Specialists
Based in Palo Alto, CA, Redwood Compliance consists of subject
matter experts with extensive experience in software licensing,
contracting, and sales.
Redwood Compliance delivers audit defense, contract negotiation,
license optimization and advisory services around Oracle licensing.
Redwood Compliance is independent of Oracle - it is neither an Oracle
partner nor reseller. This means we deliver independent, unbiased
services in the best interests of our clients.
Services
Compliance Check
Audit Defense
ULA Service
General Contracts & Advisory

About OnRamp: Compliance-Driven Services
HITRUST-certified clouds
designed to meet your
performance and budget
needs.
Managed security services,
disaster recovery, storage and
more.
HITRUST-certified colocation
services with 24/7 remote
hands assistance
Reduce risk and stay focused on your business with OnRamp’s deep
expertise in compliant hosting.

If you think compliance is expensive,
try non-compliance.
PA U L M C N U LT Y
F O R M E R U . S . D E P U T Y AT T O R N E Y G E N E R A L

1. The Fundamentals –Why Oracle license management is important
• License compliance risk.
• These can be significant; small installations can cause millions in compliance findings in the event of an
audit.
• Oracle license are on the rise as Oracle pushes its cloud services.
• There is an 80% chance that any given Oracle customer is non-compliant.
• Excess licenses and support costs.
• Lack of careful license management can lead to unwanted licenses on the shelf incurring annual
support costs.
• Impaired procurement decisions.
• Without a clear understanding of what licenses a customer owns and what they are using, uninformed
procurement decisions can be made.
• Long term consequences.
• Support commitments can be hard to get out of.
• Vendor lock-in.

1. The Fundamentals – Key Products & License Metrics
Key Products Common Metrics
Database Oracle Database (EE, SE, SE1, SE2),
Options & Management Packs, others.
• Processor based - "Processor" metric
• User based - "Named User Plus(NUP)" metric
Middleware WebLogic (Suite, EE, SE), GoldenGate,
Coherence, Identity Management,
Business Intelligence (OBI), Data
Integration, others.
• Processor based - "Processor" metric
• User based - "Named User Plus(NUP)" metric
Applications E-Business Suite, PeopleSoft, Hyperion,
Siebel, others.
• Processor based - "Processor" metric
• User based - "Named User Plus(NUP)" metric
• Enterprise/other metrics - Revenue, Orders,
Server-based, transactions, others.
• License Types include Perpetual, Term, Full Use, Limited Use, Application Specific.
• Applications products often require Database and Middleware pre-requisites. Depending on the Application product,
the Database and Middleware may or may not be included in the license.

• Oracle’s primary licensing metric is the “Processor” metric. This metric is dependent on
the number and type of processor cores, which are scaled by an Oracle-defined factor.
For most x86 chips with more than 1 core, that factor is 0.5.
• For example, consider licensing Oracle Database Enterprise Edition using the “Processor”
metric. As such, a server with two, quad-core Intel Xeon E5 chip will require:
2 processor chips x 4 (# of cores) x 0.5 (Oracle-defined core factor) =
4 “Processor” licenses of DBEE
• For “Standard Edition” products, a “Processor” is an occupied socket. Max socket
capacity and thread limits apply.
• All environments need to be fully licensed – production, test, development, DR, etc.
1. The Fundamentals – The Processor Metric

1. The Fundamentals – The Processor Metric
Processor: shall be defined as all processors where the Oracle Programs are installed
and/or running. Programs licensed on a processor basis may be accessed by Your
internal users (including agents and contractors) and by Your third party users. The
number of required licenses shall be determined by multiplying the total number of
cores of the processor by a core processor licensing factor specified on the Oracle
Processor Core Factor Table which can be accessed at http://oracle.com/contracts. All
cores on all multicore chips for each licensed Program are to be aggregated before
multiplying by the appropriate core processor licensing factor and all fractions of a
number are to be rounded up to the next whole number. When licensing Oracle
Programs with Standard Edition 2, Standard Edition One or Standard Edition in the
product name (with the exception of WebCenter Enterprise Capture Standard Edition,
Java SE Support, Java SE Advanced, and Java SE Suite), a processor is counted
equivalent to an occupied socket; however, in the case of multi-chip modules, each
chip in the multi-chip module is counted as one occupied socket.

1. The Fundamentals – The Named User Plus (NUP) Metric
• Based on individual named users and devices connecting to the Oracle software.
Includes “frontend” population.
• NUP minimums apply. For Database, at least 25 NUPs must be purchased for the
equivalent “Processor” license. For Middleware, it’s 10 NUPs per “Processor”. If
the user population is greater than the minimum, that is the number of NUPs
needed.
• In our example above, 4 “Processor” licenses for Database EE were needed for
the 8-core Xeon server. Alternatively, this could be covered by:
4 * 25 NUPs/Processor = 100 NUP licenses
• If the number of users is greater than 100, say 130 users, then 130 NUPs will be
needed.

1. The Fundamentals – Contract Types & Oracle Support
• Contracts. Oracle has several contracts currently and historically. These documents,
along with anything included by reference define your contractual relationship with
Oracle. Contracts define audit clause. Important contracts include:
• Oracle Master Agreement (OMA)
• OLSA (no longer used)
• Cloud Services Agreement (CSA)
• Order documents. These reference the signed contract and may indicate additional
terms and restrictions.
• Oracle Policies. Outside of the contracts, Oracle published and enforces “policy”
documents. Such documents include the partitioning policy (commonly applied to
Oracle-in-VMware scenarios) and their policy on licensing Oracle software in third party
clouds. These policies always favor Oracle to the customers detriment.
It’s crucial to note that Oracle Policies are contractually meaningless and should have
no part in your relationship with Oracle.

2. License Compliance & Optimization
• License non-compliance – using licenses outside the contractual terms.
• Using unlicensed products.
• Using beyond licensed quantities.
• Using licensed products outside of specific limitations (for example, licenses limited to
“Dev/test” being applied to production environments).
• Many other causes of Oracle license compliance issues…
• Optimization – minimizing the number of surplus licenses.
• Includes quantities of products partially in use, partially “on-the-shelf”.
• Includes products entirely not used (very common scenario).
• License compliance and optimization are tightly coupled.
• Overuse can cause non-compliance.
• Underuse can cause wasted support spend.

2. License Compliance & Optimization – A methodical
approach
A multi-step process that guards against compliance issues while identifying opportunities for
optimization and cost control.
1. Determine entitlement. Review contracts to establish entitled products, metrics, quantities,
and important contractual terms.
2. Deployment assessment. With Oracle, deployment assessment is always a 2-step process:
- Discovery – identify all instances of Oracle software.
- Measurement – perform technical assessment to identify specifically which products, modules, licensable
components are installed and/or in use. Typically done with a combination of specialized audit software, SAM tools,
and inquiry.
3. Reconciliation. By reconciling entitlements against deployment numbers, we simultaneously
identify compliance shortfalls and unused surpluses.
4. Resolution. Each item below is a major activity on its own.
- Identify remedial steps for any compliance shortfalls.
- Identify optimization and cost control options and devise appropriate strategies.
- Implement effective software asset management (SAM) strategy for Oracle software.

3. Dealing with Oracle
It’s important to know who’s who in your Oracle relationship.
1. Oracle Sales.
- Customers’ primary (often, sole) contact with Oracle.
- Very aggressively incentivized to sell Oracle Cloud.
- They can, and often do, make misleading claims and representations to customers that subsequently lead to
compliance trouble. For example, they may skip mentioning you need Database and WebLogic prerequisites when
purchasing E-Business Suite. Subsequently, and EBS audit can result in significant compliance shortages for Database
and WebLogic.
- They are not authorized to conduct a formal license audit, even though they often purport to do so.
- They can, and often do, threaten customers with audits and can escalate a customer to the license auditors.
2. Oracle License Management Services (LMS).
- The “auditors” – LMS is the only organization authorized in Oracle to perform formal license audits.
- LMS does audits in-house. Oracle does not outsource license audits to third parties.
- Just because they are “auditors” does not mean they don’t take significant liberty with applying licensing rules to
customers. They strongly apply Oracle’s contractually meaningless “policies” on virtualization and cloud licensing.
- They can escalate to Oracle Legal if a customer does not cooperate with an audit.
- Sometimes LMS proposes “Advisory” assistance to customers – it’s a wolf in sheep’s clothing. It’s highly inadvisable to
seek any assistance or guidance on licensing from LMS, for obvious reasons.

3. Dealing with Oracle
3. Oracle Legal.
- Often get involved in audits if LMS and Sales cannot move things or if a customer challenges findings.
- They use the “breach of contract” notice to threaten customers with contract termination within 30 days.
4. Oracle Partners and Resellers.
- They have a formal relationship with Oracle and mostly focus on reselling and technical work.
- Sometimes, they offer “licensing” services like compliance and audit defense, despite obvious conflict of interest.
- From a licensing and compliance perspective, they are Oracle’s agents – they have one ultimate loyalty.
- When it comes to license compliance, their assistance all too often results in the need to buy more licenses.
- They routinely relay details and deployment information about a customer to Oracle. Customers should assume that
anything they tell partners/resellers is being shared with Oracle Sales and LMS.

4. Virtualization: Why Move to the Cloud?
451 Research

4. Virtualization
Oracle in licensing in virtualized environments has long been an area of contention. Here are a few key points to keep
in mind:
1. Oracle contracts do not specify anything about VMware or other virtualization technologies.
2. “Processor” usage is based on physical processors.
3. Oracle uses its “Partitioning Policy” to address licensing in virtualized/partitioned environments.
- “Soft partitioning” – VMware, Hyper-V, Oracle VM, others.
- “Hard partitioning” – IBM LPAR, HP nPar, Solaris Zones, others.
4. “Soft partitioning” may not be used to limit the number of Oracle licenses required. This has significant
implications for VMware customers.
Key points on dealing with Oracle on this topic:
1. The “Partitioning Policy” is meaningless – customers should not allow Oracle to involve it in discussions.
2. Careful planning and architecture of the VMware environment can enable customers to avoid compliance issues,
and even deal with Oracle auditors with confidence.
3. OnRamp can help customers with VMware configurations needed to limit Oracle licensing requirements.

5. Oracle licensing in Disaster Recovery (DR)
environments
1. Oracle has no special language for DR licensing in its contracts, other then clustered failover and backup testing. Oracle
classifies DR implementations into 4 buckets, with the corresponding licensing requirements:
- Backup. Backing up data only to storage media.
No additional licensing required.
- Standby. Duplicate or standby installation of Oracle software, whether the DR server is on or off.
Requires full licensing.
- Failover. Clustered failover allows for up to 10 days of failover to the failover node per year, along with restrictions.
No additional licensing required – as long as failover rules are not violated.
- Mirroring/replication. DR between active, running instances of Oracle servers.
Requires full licensing.
2. Key guiding principle – any Oracle software (data structures and/or binaries) that are attached to processing resources
requires full licensing. Even if the server is switched off but the data and/or binaries are present and available to
processing resources, full licensing is required.
3. License metrics between production and DR much match. For Database Options and Packs, they must match between
production and DR as well.
4. OnRamp can help with DR implementations that reduce Oracle licensing requirement while maintaining license
compliance.

Questions?

Contact
Mohammad Inamullah
Principal, Redwood Compliance LLC
2225 E. Bayshore Road, Suite 200
Palo Alto, CA 94303
Cell: 512-917-4337
mohammad@redwoodcompliance.com
www.redwoodcompliance.com
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