Oracle is a mess & customers pay the price!

Chaos that is Oracle

Clients are rapidly adopting open source technologies in support of purpose-built applications while also shifting portions of on-premises workloads to major Cloud providers like Amazon’s AWS, Microsoft’s Azure and IBM’s SoftLayer.  These changes are sending Oracle’s licensing revenue into the tank forcing them to re-tool … I’m being kind saying it this way.

What do we see  Oracle doing these days?

  • Aggressively going after VMware environments who use Oracle Enterprise products for licensing infractions
  • Pushing each of their clients toward Oracle’s public cloud
  • Drastically changing how Oracle is licensed for Authorized Cloud Environments using Intel servers
  • Latest evidence indicates they are set to abandon Solaris and SPARC technology
  • On-going staff layoffs as they shift resources, priorities & funding from on-premises to cloud initiatives

VMware environments

I’ve previously discussed for running Oracle on Intel (vs IBM POWER), Intel & VMware have an Oracle problem. This was acknowledged by Chad Sakac, Dell EMC’s President Converged Division in his August 17, 2016 blog in what really amounted to an Open Letter to King Larry Ellison, himself. I doubt most businesses using Oracle with VMware & Intel servers fully understand the financial implications this has to their business.  Allow me to paraphrase the essence of the note “Larry, take your boot off the necks of our people”.

This is a very contentious topic so I’ll not take a position but will try to briefly explain both sides.  Oracle’s position is simple even though it is very complex.  Oracle does not recognize VMware as an approved partitioning (view it as soft partitioning) method to limit Oracle licensing. As such, clients running Oracle in a VMware environment, regardless of how little or much is used, must properly license it for every Intel server under that clients Enterprise (assume vSphere 6+).  They really do go beyond a rational argument IMHO. Since Oracle owns the software and authored the rules they use these subtleties to lean on clients extracting massive profits despite what the contract may say. An example that comes to mind is how Oracle suddenly changed licensing configurations for Oracle Standard Edition and Standard Edition One. They sunset both of these products as of December 31, 2015 replacing both with Standard Edition 2. What can only be described as screwing clients, they halved the number of sockets allowed on a server or in a RAC cluster, limited the number of cpu threads per DB instance while doubling the number of minimum Named User Plus (NUPs). On behalf of Larry, he apologizes to any 4 socket Oracle Standard Edition users but if you don’t convert to a 2 socket configuration (2 sockets for 1 server or 1 socket for 2 servers using RAC) then be prepared to license the server using the Oracle Enterprise Edition licensing model.

The Intel server vendors and VMware have a different interpretation on how Oracle should be licensed.  I’ll boil their position down to using host or cpu affinity rules.  House of Bricks published a paper that does a good job trying to defend Intel+VMware’s licensing position. In their effort, they do show how fragile of ground they sit on with its approach  highlighting the risks businesses take if they hitch their wagons to HoB, VMware & at least Dell’s recommenations.

This picture, which I believe House of Bricks gets the credit for creating captures the Oracle licensing model for Intel+VMware environments quite well. When you pull your car into a parking garage – you expect to pay for 1 spot yet Oracle says you must pay for every one as you could technically park in any of them. VMware asserts you should only pay for a single floor at most because your vehicle may not be a compact car, may not have the clearance for all levels, there are reserved & handicapped spots which you can’t use. You get the idea.

oracle_parking_garage

It simply a disaster for any business to run Oracle on Intel servers. Oracle wins if you do not virtualize, running each on standalone servers.  Oracle wins if you use VMware, regardless of how little or much you actually us.  Be prepared to pay or to litigate!

Oracle and the “Cloud”

This topic is more difficult to provide sources so I’ll just stick to anecdotal evidence. Take it or leave it. At contract renewal, adding products to contracts or new projects like migrating JD Edwards “World” to “Enterprise One” or a new Oracle EBS deployment would subject a business to an offer like this.  “Listen Bob, you can buy 1000 licenses of XYZ for $10M or you can buy 750 licenses of XYZ for $6M, buy 400 Cloud units for $3M and we will generously throw in 250 licenses …. you’ll still have to pay support of course. You won’t get a better deal Bob, act now!”.  Yes, Oracle is willing to take a hit for the on-premises license revenue while bolstering their cloud sales by simply shuffling the Titanic deck chairs. These clients, for the most part are not interested in the Oracle cloud and will never use it other than to get a better deal during negotiations. Oracle then reports to Wall Street they are having tremendous cloud growth. Just google “oracle cloud fake bookings” to read plenty of evidence to support this.

Licensing in the Cloud

Leave it to Oracle Marketing to find a way to get even deeper into clients wallets – congratulations they’ve found a new way in the “Cloud”.  Oracle charges at least 2X more with Oracle licenses on Intel servers that run in Authorized Cloud Environments (ACE). You do not license Oracle in the cloud using the on-premises licensing factor table.  The more VM’s running in a ACE,  the more you will pay vs an on-premises deployment. To properly license an on-premises Intel server (remember, it is always an underlying proof that Oracle on POWER servers is the best solution) regardless if virtualization is used, assuming a 40 core server, would equal 20 Oracle Licenses (Intel licensing factor for Intel servers is 0.5 per core). Assume 1 VMware server, ignoring it is probably part of a larger vSphere cluster.  Once licensed, clients using VMware could theorectially run Oracle as many VM’s as desired or supported by that server. Over-provision the hell out of it – doesn’t matter. That same workload in an ACE, you pay for what amounts to every core.  Remember, if the core resides on-premises it is 1 Oracle License for every 2 Intel cores but in a ACE it is 1 OL for 1 core.

AWS
Putting your Oracle workload in the cloud?  Oracle license rules stipulate if running in AWS, it labels as vCPU’s both the physical core and the hyperthread. Thus, 2 vCPU = 1 Oracle License (OL). Using the same 40 core Intel server mentioned above, with hyperthreading it would be 80 threads or 80 vCPU.  Using Oracle’s new Cloud licensing guidelines, that would be 40 OL.  If this same server was on-premises, those 40 physical cores (regardless of threads) would be 20 OL ….. do you see it?  The licensing is double!!!   If your AWS vCPU consumption is less vs the on-premises consumption you may be ok. As soon as your consumption goes above that point – well, break out your checkbook.  Let your imagination run wild thinking of the scenarios where you will pay for more licenses in the cloud vs on-prem.

Azure
Since Azure does not use hyperthreading, 1 vCPU = 1 core.  The licensing method for ACE’s for Azure or any other ACE if hyperthreading is not used, 1 vCPU = 1 OL.  If a workload requires 4 vCPU, it requires 4 OL vs the 2 OL if it was on-premises.

Three excellent references to review. The first is Oracle’s Cloud licensing document. The second link is an article by Silicon Angle giving their take of this change and the last link is for a blog by Tim Hall, a DBA and Oracle ACE Director sharing his concerns. Just search for this topic starting from January 2017 and read until you fall asleep.

Oracle
Oracle offers their own cloud and as you might imagine, they do everything they can to favor their own cloud thru licensing, contract negotiations and other means.   From SaaS, IaaS and PaaS their marketing machine says they are second to none whether the competition is SalesForce, Workday, AWS, Azure or any other.  Of course, analysts, media, the internet nor Oracle earnings reports show they are having any meaningful success – to the degree they claim.

Most recently, Oracle gained attention for updating how clients can license Oracle products in ACE’s as mentioned above.  As you might imagine, Oracle licenses its products slightly differently than in competitors clouds but they still penalize Intel and even SPARC clients, who they’ll try to migrate into the cloud running Intel (since it appears Oracle is abandoning SPARC).  The Oracle Cloud offers clients access to its products on a hourly or monthly in a metered and non-metered format on up to 4 different levels of software. Focusing on Oracle DB, the general tiers are Standard, Enterprise, High-Performance and Extreme-Performance Packages. Think of it like Oracle Standard Edition, Enterprise Edition, EE+tools, EE+RAC+tools.  Oracle also defines the hardware tier as “Compute Shapes“. The three tiers are General Purpose, High-Memory or Dedicated compute

Comparing the cost of an on-premises perpetual license for Oracle Enterprise  vs a non-metered monthly license for the Enterprise Tier means they both use Oracle Enterprise Edition Database. Remember a perpetual license is a one-time purchase, $47,500 for EE DB list price plus 22% per year annual maintenance.  The Enterprise tier using a High-memory compute shape in the Oracle cloud is $2325 per month.  This compute shape consists of 1 OCPU (Oracle CPU) or 2 vCPU (2 threads / 1 core).  Yes, just like AWS and Azure, Intel licensing is at best 1.0 vs 0.5 for on-premises licensing per core. Depending how a server might be over-provisioned as well as the fact an on-premises server would be fully licensed with 1/2 of its installed cores there are a couple of ways clients will vastly overpay for Oracle products in any cloud.

The break-even point for a perpetual license + support vs a non-metered Enterprise using High-memory compute shape is 30 months.

  • Perpetual license
    • 1 x Oracle EE DB license = $47,500
    • 22% annual maintenance = $10,450
    • 3 year cost: $78,850
  • Oracle Cloud – non-metered Enterprise using High-Memory shape
    • 1 x OCPU for Enterprise Package for High-Compute = $2325/mo
    • 1 year cloud cost = $27,900
    • 36 month cost: $83,700
  • Cross-over point is at 30 months
    • $79,050 is the 30 month cost in the Cloud
  • An Oracle Cloud license becomes significantly more expensive after this.
    • year 4 for a perpetual license would be $10,470
    • 12 months in year 4 for the Cloud license would be $27,900
    • Annual cost increase for a single cloud license over the perpetual license = $17,430
  • Please make your checks payable to “Larry Ellison”

Oracle revenue’s continue to decline as clients move to purpose-built NoSQL solutions such as MongoDB, RedisLabs, Neo4j, OrientDB, Couchbase as well as SQL based solutions from MariaDB, PostgreSQL (I like EnterpriseDB) even DB2 is a far better value.  Oracle’s idea isn’t to re-tool by innovating, listening to clients to move with the market. No, they get out their big stick – follow the classic mistake so many great clients have done before them which is not evolve while pushing clients until something breaks.   Yes, Boot Hill is full of dead technology companies who failed to innovate and adapt. This is why Oracle is in complete chaos.  Clients beware – you are on their radar!

 

 

Will there be a Cloud Bubble?

“The Network is the Computer” was the tagline used by Sun Microsystems for years. It captures the essence of what we take for granted today using our smart phones, wireless laptops and general World Wide Web usage.

Today, many customers are actively looking at hosted computing that has become ubiquitous with the word “cloud”. This “cloud” is a virtual pool of computing resources; servers, storage, network and applications. Many of these services have been around for 15 years such as Googles Gmail, Hotmail owned by Microsoft now moved to Outlook.com. Consumers would open a browser, login to send, receive and store emails. This was followed by retailers such as Amazon and ebay then social media such as MySpace, Facebook, Twitter and LinkedIn. Corporate customers cut their teeth with SalesForce.com as one of the early innovators of cloud services.

Now we have not just a plethora of web services from Dropbox, YouTube, Twitter to every major retailer having a web presence and countless more. Corporations though are looking at cloud providers: both major players, custom players and boutique players. The major players consist of offerings like Microsoft Azure, Amazon Web Services (AWS), Google Cloud, Oracle Cloud, IBM’s SoftLayer and VMware’s vCloud Air. Some of the custom cloud providers may have a mix of “CoLo” or Co-Location where customers place their own compute resources into someone else’s datacenter. They may retain their own administrative resources or use a managed service offering from that CoLo facility. Examples that come to mind are ATT, OVH, SuperNap, ScaleMatrix and TeraGo. Boutique clouds tend to be high touch, white glove and often specialize in specific services. Examples of Boutique cloud providers are SIS (www.thinksis.com) who I currently work for, Black Mesh and Global IT.

Regardless of what online services you use as a consumer or which corporate cloud provider they use, what are the threats to using these services? Clearly, one of the most insidious and ever increasing threats has been cyber terrorism. These threats, attacks, damage and thefts are ongoing. Some of the cyber terrorists are individuals and criminal syndicates; often from the former USSR countries and the Eastern Bloc countries. Other cyber terrorism is state sponsored meaning it is backed by the government of a country such as China, North Korea, Russia, Iran and others. Lastly, there are corporate terrorists. These are sometimes linked with state sponsored terrorists where the corporation is used as a front for their malicious activity.

Other threats to cloud users is the provider itself. They suffer outages due to infrastructure failures, failures outside of their control such as a construction crew putting in a new water line accidentally digs up a data line carrying network traffic out of the cloud providers. Most of the issues described by the latter issue are addressed as the better providers have redundant everything from Power, networking, cooling, facilities, etc.

The general concept for a cloud provider to make money is to deploy as inexpensive of infrastructure as they can, deploy as many customer workloads onto as few servers as possible driving up the system utilization just to the point of pain then dial it back 1 notch. This businesses model is at risk if they are not diversified or have other revenue streams as they only make money between the cost of goods provided and cost of goods sold. They are constantly trying to identify ways to reduce the cost of servers, disk drives, storage, adapters, network components as well as using lower cost resources to manage the operations desk or provide administration. Depending on the business, employee cost is at the top of expense cost. Finding resources with most of the needed skills for 25% less cost is probably good enough. The sum of these cost saving efforts can lead to a weakened environment due to increased operator error. Compatibility with software due to the use of white-box servers is less predictable leading to problems often not seen until specific features are needed. Reliability may be lessened with white box servers because they build the servers themselves such as Google does or obtain from a no-name provider who delivers a basic server consisting of cpu, memory and I/O with no bells and whistles that translates into lacking reliability & serviceability features. This may all be managed by resources that are junior, lacking professional certifications, experience and skills handling not just the day to day processes but also when there is a critical event. Do they do the proper triage, problem analysis and determination implementing a logical plan to resolution?

Of course, every provider is different and cloud providers are not the only ones at risk as many customers have computing operations far worse than most clouds. This may be why they are looking to cloud providers to improve their situation. In many, if not most cases, placing workloads often described as “Systems of Engagement” into the cloud makes sense while retaining “Systems of Record” at the customers premise. Cloud providers are especially vulnerable to cyber attacks because of the many holes coming into their facilities to support the customer diversity. Once inside the network an attacker will wait patiently to learn information about the environment to plan their next attack. With regard to the infrastructure, some shops invest in both architects and engineers to build, deploy and maintain their infrastructure. With discipline and skill they overcome the challenges that lesser providers struggle with; maintaining cash flow while keeping the lights on and payroll met.

We just have to look at the recent outages at AWS http://fortune.com/2015/09/20/amazon-cloud-snafu/ over the past week (Sept 26, 2015) to see how it can impact a business. we all have probably felt the impact of this whether it is our bank using internet banking, logging into a school computer down for maintenance or using a major internet service like NetFlix. How many customers like this will endure frequent outages before they decide to move back to an on-premise solution or at least a hybrid solution? With regard to cyber attacks, the list of companies attacked in 2015 would double the size of this blog to write them all out. How many of those will occur before businesses decide they cannot afford to not be in control of their network backbone, interview and hire their own people so they know the capabilities of the resources responsible for solution remaining safe and available.

I am not predicting a bubble but have to wonder why we wouldn’t expect one due to the security and availability threats.

Tell me what you think in the comments section.

Thank you