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omtco.euThe Licensing OfOracle Technology Products –Compliance, Metrics, Licensing Restrictions

Copyright 2012-2013 OMTCO. All Rights Reserved.– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –Executive Summary1Introduction2I.) Compliance Responsibility And Licensing Pitfalls3II.) Oracle Technology Products6III.) Oracle Licensing Metrics8IV.) Selected Licensing Restrictions12Conclusion And Recommendations To Oracle Customers14Appendix – Results Of The Case Study15– CONFIDENTIALITY NOTICE –OMTCO does not disclose clients’ names, client projects or data. The case study and datapublished in this report is generic and derived from years of compliance reviews. Allanalysis presented and information disclosed in this document are exclusively based onpublic information. Should you wish to learn more about our confidentiality practice orabout this case study, please contact an OMTCO representative.1

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –Executive SummaryThis report is aimed at those in IT leadership and Software Asset Management witha strong background and interest in software licensing. We will analyze Oraclelicensing, covering their main metrics for Technology Products and associatedlicensing restrictions. We give valuable advice and direction to Oracle customers onhow to deal with the challenges of such complex licensing.The report is presented in three chapters: Chapter (I.) gives an overview of compliance responsibilities andlicensing pitfalls. Customers are responsible for understanding andrespecting Oracle licensing. It is incredibly complex, and has many pitfalls –most commonly related to metrics, the counting of users and devices,virtualization, etc. Chapter (II.) details Oracle Technology Products. The family of OracleTechnology Products is comprised of: Oracle Databases (DB), InternetApplication Servers (IAS) and WebLogic Servers, Business Intelligence (BI)Technology Products, WebCenter (WCE) and Identity Management (IDM). Chapter (III.) explains Oracle licensing metrics. Oracle uses two mainmetrics for Technology Products: the Processor metric and the Named UserPlus metric (NUP). The Processor metric takes into account hardwareattributes and server/device configurations, such as the number and types ofprocessors (cores or sockets), server operations and virtualization. The NUPmetric takes into account the number of users, differentiated by user types(humans or devices), and user access (direct, indirect, or multiplexing). Chapter (IV.) presents selected licensing restrictions. Oracle imposesadditional licensing restrictions, such as the restrictions on soft partitioning.Product restrictions include the licensing of user minimums and productmaximums.In the Appendix we provide the solution to a case study on an incompliancesituation (compliance audit) and the potential settlement penalty.In subsequent publications we will provide further contemplation on Oraclelicensing, with advice on topics including metrics, licensing restrictions and serverand application operations. In the meantime, for those executives interested insharing their thoughts on Software Asset Management or licensing, we welcomeyour feedback and comments.1

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –IntroductionUnderstanding the metrics used for licensing Oracle product installations is crucialfor determining Technical Usage and License Demand. The License Demand isderived by applying the relevant licensing metrics and restrictions to technicalinstallations (the Technical Usage).In the following technical report, we explain the metrics and licensing restrictionsused in the Oracle Technology Products family (including Oracle Databases), withproduct examples.We will focus on the two metrics available for Technology Products: the hardwaremetric (Processor metric – “Proc”) and the user metric (Named User Plus metric –“NUP”).Licensing restrictions for Technology Products are: Installations (Technical Data) – Restrictions on product installations, e.g. onaccess and users, virtualization environments, high-availability and failoverservers, etc. Operations – Restrictions on product operations, e.g. on data transfers, highavailability and failover, standby and mirroring, etc. Licenses (Commercial Data) – Restrictions on licenses, such as enterpriseoptions, management packs, license terms, etc.The following document contains selected aspects of Oracle licensing based onOracle’s standard licensing rules. This document makes no claim of completeness,correctness and currentness – it should not be misunderstood as advisorydocumentation.Oracle customers should be aware that the following report is for information andillustration purposes only. The licensing of products depends on the edition andversion in use, and on many factors independent from Oracle: your infrastructure,licenses, enterprise contracts, etc. Always refer to the applicable Oracle licensingand to your individual customer agreements, and take into account your specificsituation.For comments and questions please contact OMTCO; contact details are listed atthe end of this report.2

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –I.) Compliance Responsibility And LicensingPitfallsOracle’s stance is very clear:Oracle Statement“The number one compliance issue is over-deployment. This occurs when userswho are not licensed for the software are using it. Naturally, Oracle expectscustomers to acquire licenses for all use of programs. When software is overdeployed, it is difficult for all parties involved.” (Oracle source)This leads to strict compliance principles, applicable to any Oracle customer: The customer is fully responsible for compliance, not Oracle. Oracle licensingrequirements must be observed to the letter. The customer’s obligation is tooapply applicable licensing to its license estates and technicalinfrastructure,ostay informed about new or modified licensing requirementspublished on Oracle website,ounderstand and correctly interpret Oracle licensing,oarchive and be able to retrieve the whole history of purchases, licensecontracts, licensing publications, etc.,oapply all licensing requirements at any time to the whole estate. Oracle has the right to verify compliance and to perform audits at customersites. If incompliance is discovered, customers must pay a penalty based on listprice, plus retrograde maintenance (exception: Oracle talks the customerinto an Oracle ULA – Unlimited Licensing Agreement – thus masking thepenalty as a commercial agreement).3

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –Oracle Licensing PitfallsOracle licensing is complex – and licensing pitfalls numerous. The most commonpitfalls are related to metrics, the counting of users and devices, determiningprocessor licenses, virtualization, failover clusters, and others. We can summarizeOracle licensing pitfalls with three categories: Product installations – The user and processor metrics are both full of pitfalls,often associated with metric calculations, virtualization, high-availabilityservers or failover clusters. Operations – Application operations and server environments, over which thecustomer has full control, often do not abide by Oracle’s strict restrictions,such as hardware restrictions for specific editions, or operations in failoverclusters. Licenses – Oracle licenses and customer agreements show high complexityand diversity regarding enterprise options and management packs, types oflicenses (FU – Full Use; ASFU – Application Specific Full Use; etc.) and theirassociated restrictions.These are summarized in the following overview table:Pitfall categoryExplanationInstallations (Technical Data)For Named User Plus (NUP) and legacy user metrics:pitfalls often associated with access and users, andwith mandatory licensing minimums.For Processor metrics (based on core and core factors)and legacy metrics (e.g. Power Units): pitfallsassociated with metric calculations, licensing ofvirtualization environments, and high-availability/failover servers.Application Operations And ServerEnvironmentsFor application operations: pitfalls associated witheditions, data transfers and restrictions.For server environments: associated with highavailability and failover, standby/mirroring.Licenses (Commercial Data)4Pitfalls associated with enterprise options,management packs, license types (e.g. FU, ASFU etc.)and restrictions.

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –For a detailed report on Oracle licensing pitfalls that we regularly discover duringcompliance reviews and audit support for our customers, please refer to “Top 60Licensing Pitfalls For Oracle Databases And Oracle Technology Products”, availableat: y-products/.Licensing Complexity And The Audit ProcessThe complexity of product licensing and the thoroughness of compliance audits(compliance process) differ between software vendors. Larger vendors – such asOracle or IBM – have complex licensing, partly due to their extended productpalette. Smaller software vendors – such as Attachmate or Informatica – posevarious challenges for their customers during audits and compliance reviews.Exhibit 1: Licensing Complexity And The Compliance Process5

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –II.) Oracle Technology ProductsOracle’s definitions of its product families are slightly ambiguous – families seem topartially overlap, as some products can be found in multiple families. For instance,the Oracle Technology Product family is comprised of Business IntelligenceTechnology Products (such as BI SE, BI SE1, BI Suite EE plus, etc.), but the BusinessIntelligence Application family also includes BI Applications (such as BI ApplicationsFusion Edition for CRM Analytics, ERP Analytics, etc.). Furthermore, Hyperion BITechnology Products are found in the Oracle Technology Product family, whereasHyperion Enterprise Planning Products belong to the Business IntelligenceApplication family.We define the main Oracle families as: Oracle Technology Products Oracle BI (Business Intelligence) Applications Oracle Fusion Applications Oracle E-Business Suite Applications Oracle Managed Cloud Services (On-Demand), which is a cloud-based serviceproviding existing Oracle products – this will be disregarded for the purposesof this report.Oracle Technology Products, Oracle’s most renowned product family, is comprisedof:FamilyOracle Database (DB)ProductsApplication Server (AS)Products6Products Available in six editions: EE, SE, SE1, PE, Mobile Server, No SQLDB EE) EE Options (16) DB Enterprise Management, also named Management Packs (6) Available in seven editions: Internet Application Server (IAS)SE1, IAS SE, IAS EE, TopLink and Application DevelopmentFramework, WebLogic (WL) Server SE, WL Server EE, WL Suite WL Suite Options (5) AS Enterprise Management (5)

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –FamilyBusiness Intelligence (BI)Technology ProductsProducts Several editions, including: BI SE, BI SE1, BI Suite EE plus, ServerEE, BI Mobile BI Server EE Options (5) BI Suite EE Plus Options (1) Hyperion BI Technology, Essbase WCE Suite Plus, WCE Portal, WCE Content, WCE Sites, WCE SitesSatellite Server, WCE Universal Content Management, WCEImaging, WCE Forms Recognition, WCE Capture, WCEDistributed Capture, WCE Real-Time Collaboration WCE Adapters (7) WCE Management (1) Various editions: Identity Governance Suite, AccessManagement Suite Plus Identity Management, Enterprise ManagementTools Management packs for DB/AS/BI/WCE/IDM, applicationmanagement, application testingCollaboration Oracle BeehiveApplication Products Oracle Application Specific Technology Products (manyproducts, eligible only for use with Oracle Applications)WebCenter (WCE)ProductsIdentity Management(IDM) ProductsAbbreviations: Products: DB (Database), IAS (Internet Application Server), BI (Business Intelligence), WL(WebLogic) Editions: EE (Enterprise Edition), SE (Standard Edition), SE1 (Standard Edition One)Caveat: Snapshot at the time of publication, June 2013 – subject to changes by Oracle. Classification by the author – no claim to completeness as some products have been excluded.It makes sense to consider the licensing of all Oracle Technology Products togetheras they have similar metrics and licensing restrictions, even if some restrictions andobligations differ by product, edition or version. The following chapter will reviewthe two main metrics used for Oracle Technology Products, the Processor(hardware-based) and Named User Plus (user-based) metrics.7

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –III.) Oracle Licensing MetricsOracle uses two main metrics for Technology Products: Processor metric (often abbreviated as CPU or Proc) – Based on number andtypes of processors (cores or sockets), server types and brands, serverconfiguration (high availability), and virtualization information. Named User Plus metric (abbreviated as NUP) – Based on number of users,user types (humans, human-operated devices, non human-operateddevices), user access (direct, indirect e.g. by daisy-chained applications,multiplexing e.g. access through a multiplexing platform).1.) The Processor MetricThe number of processor licenses required by an installation is determined by themetric and the licensing restrictions associated with the Oracle product installed(including its edition and version). The processor metric takes into account relevanthardware attributes, such as number and types of processor cores, serveroperations (high availability), and virtualization (hardware cluster virtualmachines).Enterprise EditionThe processor metric of the Enterprise edition Technology Products assesses thenumber of processor cores, counted on all processors to be licensed (alsoconsiders underlying hardware in the case of virtualization – exceptions apply), andthe PCF (Processor Core Factor), determined for the processor cores counted.Formula8

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –Notes: Roundup – The number of cores must rounded up to the next integer (foreach processor). The final result must again be rounded up to the nextinteger, for each product installation. #Cores – All hardware with Oracle installations must be licensed. Hardwarepartitioning is taken into account as a means to reduce technical usage.Software partitioning (LPAR) may not be taken into account as a means tolimit the #cores, i.e. all hosts in a hypervisor cluster must be counted(exceptions apply for Oracle cloud and for selected software partitioningtechnologies, such as LPAR AIX). Hyper-threading (HT) is not to be taken intoaccount (only the physical cores must be licensed). Deactivated cores neednot be licensed (example: IBM POWER). PCF – The Processor Core Factor is determined by the Oracle PCF Table.Possible values are 25%, 50%, 75% and 100%.Standard Edition, Standard Edition OneThe processor metric for Standard Edition and Standard Edition One (all softwarefrom the Technology Product family with either of these editions in the title) takesinto account the maximum of the number of occupied sockets (if sockets areoccupied with single-chip modules) or the total number of chips in the occupiedsockets (if sockets are occupied with multi-chip modules).FormulaNotes: #OccupiedSockets – the number of occupied sockets on the full underlyinghardware (in the case of a virtual cluster with several physical hosts) must becounted. This applies only if a one-chip module is mounted in the occupied9

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –socket: then for this socket, the number of occupied sockets(#OccupiedSockets) is counted, which for one-chip modules will be equal to#Chips, e.g. 1 occupied socket 1 chip. #Chips – If a multi-chip module is mounted on a specific occupied socket,then for this socket #Chips on the occupied socket is counted (and not theoccupied socket itself).2.) The Named User Plus MetricThe number of Named User Plus licenses required by an installation is determinedby the metric and the licensing restrictions associated with the Oracle productinstalled (including its edition and version). The NUP metric takes into accountattributes related to hardware and users.Exhibit 2: User And Access Types10

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions – Hardware – Certain Oracle Technology Products require a minimum absolutenumber of users irrespective of hardware (e.g. DB SE/SE1 requires 5 NUPlicenses per database installation), or a minimum relative number of usersdepending on the hardware (e.g. DB EE requires a minimum of 25 NUP perprocessor; IAS EE/SE requires 10 NUP per processor). In the latter case, thehardware configuration has to thus be assessed using the processor metric,before the user minimum can be calculated. Users – Users are defined by type, such as humans or devices (see 1, 2, 3 inthe following exhibit), and how they access the database, such as direct,indirect, or by means of multiplexing (see a, b, c in the following exhibit).The exhibit above shows how all nine possible combinations: 1a, 1b, 1c, 2a, 2b, 2c,3a, 3b, and 3c.3.) Case StudyDoes the hardware upgrade generate incompliance risks? If yes, calculate theincompliance financial risk. (The results are provided in the Appendix).Exhibit 3: Hardware Migration And Incompliance Risks11

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –IV.) Selected Licensing RestrictionsThe metrics and rules used to determine licenses needed are not all; Oracleimposes further restrictions on Technology Product licensing. These restrictionshave a direct impact on applying metrics and subsequently calculating thenecessary licenses. We will discuss two types of restrictions: Licensing restrictions – These have a direct impact on the calculation of thenumber of licenses needed for any particular installation Product restrictions – These have an indirect impact on license calculation, butimpose obligations upon the customer.Licensing Restriction: PartitioningPartitioning is categorized by Oracle as either soft or hard partitioning. Oracledefines hard partitioning as physically segmenting a server, by taking a single largeserver and separating it into distinct smaller systems (each with separate CPUs, OS,memory, I/O, etc.). Oracle defines soft Partitioning as segmenting the operatingsystem using OS resource managers, where the number of CPUs allocated to theOracle product is limited by the OS. Oracle imposes licensing restrictions on softpartitioning:Oracle statement:“Soft partitioning is not permitted as a means to determine or limit the number ofsoftware licenses required for any given server.”However, some selected soft partitioning technologies are approved by Oracle forqualifying as hard partitioning (no other technology or configurations qualify).Furthermore, some selected cloud computing environments are permitted byOracle, such as Amazon Web Services, Amazon EC2 and S3.Licensing Restriction: Licensing MinimumsOracle imposes licensing minimums, depending on the edition and versioninstalled. For instance, the licensing of certain products and editions using the NUPmetric requires a minimum to license. Examples: DB EE requires 25 NUP licensesminimum per processor license; DB SE/SE1 require 5 NUP licenses minimum.12

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –Product Restriction: Product MaximumsOracle imposes product restrictions, expressed as maximum values to be abidedby. These maximums depend on the edition and version installed. For instance,maximums are defined by hardware attributes (configurations) and number ofusers.Examples: SE and SE1 only permit a maximum of 4 and 2 sockets respectively –occupied or not – on the physical hardware where the database is installed(alternatively, on each of the single physical hosts of a virtualization cluster).Note: the sockets to be counted for the purpose of determining themaximum number of sockets permitted is defined for single hosts, andcounts all occupied and non-occupied sockets. This is a different method ofcounting compared to when calculating the necessary processor licenses(only occupied sockets in full underlying hardware). DB PE only allows 1 user per installation. DB XE imposes restrictions on further attributes: the number of processors,the size of the database in GB, and the RAM allocated to the database.The Five-One-Zero (111110) Rule For DB PE 11gThe Oracle Database Personal Edition (DB PE) 11g only permits: 1 – one single instance on any server where DB PE is installed 1 – one single processor for execution of the database (but the server mayhave more than 1 processor) 11 – eleven GB maximum of database data 1 – one GB maximum of RAM allocated to the database (but the device mayhave more RAM) 0 – zero support, zero upgrade, zero updateNote: A different rule applies to DB PE 10g (different restriction on RAM applies).13

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –Conclusion And Recommendations ToOracle CustomersOracle metrics and licensing restrictions – and hence the licensing pitfalls – arediverse and varied.Oracle licensing is detailed in the applicable Oracle licensing documentation and incustomers’ agreements and purchase history. Additional information needs to beobtained from supplementary Oracle licensing-relevant documentation, such asOracle white papers on virtualization, product-specific licensing documented inspecific Oracle publications, price lists, etc.The role of the Software Asset Manager is to understand the full spectrum ofmetrics and licensing requirements applicable to their IT assets. In doing so, theypermit their IT leadership to optimize assets, capital and operating expenditures.We recommend customers to seek assistance from Oracle product and licensingexperts, augmented by IT infrastructure understanding, to ensure that the metricsand licensing requirements are fully and correctly determined.OMTCO’s Oracle product and licensing expertise, supplemented by knowledge of ITinfrastructure, ensures competence above and beyond practical requirements.Should you wish for advice tailored to your specific needs, please call your OMTCOrepresentative directly or contact OMTCO at [email protected](Released October 2012, Updated June 2013)14

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –Appendix – Results Of The Case StudyThe hardware upgrade from Configuration 1 to Configuration 2, which is notpermitted with DB SE, generates incompliance (SE installed, but EE should belicensed). This incompliance is either corrected by the customer at the regular,discounted price – or is discovered in an Oracle audit and corrected with settlementlicenses at list price with a markup for retrograde maintenance on top.Exhibit 4: Results Of The Case Study15

– The Licensing Of Oracle Technology Products – Compliance, Metrics, Licensing Restrictions –The Licensing Of Oracle TechnologyProducts – Compliance, Metrics,Licensing RestrictionsTHE FINDINGS OF THE REPORT DEMONSTRATE THE IMPORTANCE OFUNDERSTANDING ORACLE LICENSING, INCLUDING THE CPU AND NUP METRICSAND LICENSING RESTRICTIONS. WHEN YOU CONDUCT AN INTERNALCOMPLIANCE REVIEW, OR WHEN AN ORACLE AUDIT CONFRONTS YOURORGANIZATION, OMTCO IS BY YOUR SIDE TO PROVIDE YOU WITH LICENSINGEXPERTISE AND COUNTER-AUDIT EXPERIENCE, AS WELL AS NEGOTIATIONSUPPORT.Dr. Yvan Philippe Luxembourgis a consultantat OMTCO Munich Office.Contact:00 49 170 [email protected] provides its clients with the best,thought-out advisory and line services,ranging from design-stage toimplementation in Operations, Management,Technology and Consulting.OMTCO works with the highest possible levelof expertise – taking into account our knowhow and our pragmatic experience frommarket analysis, competitive projects andprofessional references.OMTCO has licensing expertise at itsdisposal, in addition to extensive experiencein compliance reviews and customer-sidedcounter-audits.Should you wish for advice tailored to yourspecific needs, raise comments or askquestions, please contact OMTCO [email protected] or call your OMTCOrepresentative directly.Tim Sommer, MBA,is a consultantat OMTCO Vienna Office.Contact:00 43 699 [email protected] Oracle licensing expertise, visit:http://omtco.eu/references/oracle/For Software Asset Management, visit:http://omtco.eu/references/SAM/For counter-audit experience, visit:http://omtco.eu/references/counteraudit/For further references, visit:http://omtco.eu/references/This document is current as of the initial date of publicationand may be changed by OMTCO at any time. Not all offeringsare available in every country in which OMTCO operates. THEINFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS”WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED,INCLUDING NO WARRANTIES OF MERCHANTABILITY,FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTYOR CONDITION OF NON-INFRINGEMENT. This report is forinformation and illustration purposes only. It is not anadvisory document and does not take into account yourspecific customer situation. Please refer to the disclaimerpublished at http://omtco.eu/disclaimer.OMT-CO Operations Management Technology Consulting GmbH Wesendonkstr. 7, 81925 Muenchen, [email protected] http://omtco.eu16

additional licensing restrictions, such as the restrictions on soft partitioning. Product restrictions include the licensing of user minimums and product maximums. . Oracle licensing is complex – and licensing pitfalls numerous. The most common pitfalls are related t