Cost Savings on Oracle – Themes for 2020 and Beyond

Oracle is one of the major publishers providing database and business software to enterprises of all sizes. It is also a big part of the spend portfolio in the IT budget for many organizations - an estimated $20B USD is spent by Oracle customers on product support annually. While Oracle offers a wide range of technology solutions, it also offers the opportunity to save on costs during the difficult time we are in. Let’s take a look at how you can achieve cost savings in your Oracle portfolio.

Oracle Master Agreements (OMA) is an important area to focus on as we expect an increase in M&A activities and disinvestments due to the current business environment, so major cost savings can be achieved by reviewing subsidiaries, territories, price hold, and pool of funds scenarios with Oracle contract negotiations. It is important to note that Oracle recently changed their audit clause to including “the running of Oracle data measurement tools on your servers and providing the resulting data to Oracle.” This needs to be discussed and negotiated by enterprises, taking into consideration data privacy concerns.

We have different customer segments but Oracle support cost calculations will mostly remain the same for all – 22% of net Oracle licenses paid, which increases every year due to indexation. Oracle has recently increased their indexation to 4% and enterprises must negotiate in order remove it. In addition to indexation avoidance, organizations should perform due diligence into Oracle product usage and ROI for their immediate cost savings.

For Unlimited License Agreement (ULA) customers, it is important to check Oracle product utilization and make a decision on ULA exit with certification. A ULA renewal vs. exit with certification could reduce multi-year Oracle contract spending by 40% or more.

Aside from ULA, customers could also use the Oracle Pool of Funds or enterprise license strategy (based on revenue) if they want to control their Oracle spend on multi-year commitments.

This is a critical exercise to support cost savings on Oracle spend – “delivering more on Oracle products with less cores.” All of the following may need non-standard approvals and negotiation on the territory clause with Oracle but are critical elements on optimization.

• Oracle on virtualization platform – Use a preferred strategy on Oracle VM hard-pinning or use VMware with vMotion and storage restriction. With the new release of vSphere 7, vMotion is also enhanced. Therefore, revisiting the Oracle on VMware scenario is essential from both the technical implementation and non-standard Oracle approval aspects.
• Oracle on an AWS dedicated host – An Amazon EC2 Dedicated Host is a physical server fully dedicated for use so a customer can address corporate compliance requirements. Oracle workloads can be migrated to high performance (less cores/vCPU) AWS dedicated host servers. However, since it is not a bare metal offering, this architecture needs to be defined and would require a non-standard agreement with Oracle.
• Oracle on Azure Dedicated Hosts – “Azure Dedicated Host provides physical servers that host one or more Azure virtual machines. Your server is dedicated to your organization and workload – capacity isn’t shared with other customers. This host-level isolation helps address compliance requirements. As you provision the host, you gain visibility into (and control over) the server infrastructure, and you determine the host’s maintenance policies.” Oracle workloads can be migrated to high performance (less cores/vCPU) Azure dedicated host servers. However, since it is not a bare metal offering, this architecture needs to be defined and would require a non-standard agreement with Oracle.
• Oracle on IBM LinuxONE – For Oracle workloads that are licensed based on CPUs, LinuxONE is an effective solution because the number of CPUs required on the machine is significantly less than those required in a distributed environment.
• Oracle on Google Cloud Sole tenant nodes – “In Google Cloud Platform (GCP), sole-tenancy lets you have exclusive access to a sole-tenant node, which is a physical Compute Engine server that is dedicated to hosting only your project's VMs. Use sole-tenant nodes to keep your VMs physically separated from VMs in other projects, or to group your VMs together on the same host hardware. VMs running on sole-tenant nodes can use the same Compute Engine features as other VMs, including transparent scheduling and block storage, but with an added layer of hardware isolation. It supports bringing your own licenses (BYOL) to Compute Engine.” Since GCP is not defined under authorized cloud by Oracle Cloud licensing policy, its usage would require a non-standard agreement with Oracle.
• Oracle on Oracle Cloud – This is the preferred option for cost savings on Oracle for enterprises with large Oracle license pools. Enterprises may activate the BYOL version of Oracle Cloud Service if available (not all Cloud Services have BYOL versions) and they will be charged the BYOL rate for the activated Oracle Cloud Service, provided they have a sufficiently supported on-premises license as required and specified in the Service Description for Oracle Cloud Service. Additional benefits include, for all Oracle IaaS Cloud Services, Oracle Linux Premier Support, free Oracle Java SE licenses, and free Oracle GraalVM Enterprise Edition licenses as stated by Oracle.

A major cost savings opportunity on Oracle support comes with the adoption of a 3rd party support model. This is the preferred strategy if enterprises have a stable Oracle product in their environment and they are not planning to perform version upgrades or migrate to vendor SaaS in the next 2-3 years. It can save up to 50% of Oracle contract support spend but requires a due diligence for Oracle contracts and compliance.

Oracle’s cost savings option will undoubtedly become a major theme for enterprises. However, licensing, contracts, optimization, terms & conditions, commercial and negotiations for non-standard contracts are key elements to consider to make it easier for enterprises to control Oracle’s total cost of ownership.

Oracle experts at SoftwareONE can help you make this decision quickly. We understand how crucial Oracle is to your business and can provide end-to-end services around licensing, cost optimization, audit support, non-standard approval, BYOL and technical workload assessment/migration – making us the perfect partner for your Oracle cost savings journey.