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Oracle Buyers Beware: Meta Group Warns of Misinterpretation in Database Licensing Policy


Oracle claims that more than 1,000 life sciences organizations hold licenses to its products. However, according to IT research and consulting firm Meta Group, clients using Oracle for data warehousing may not be fully aware of an aspect of the company’s licensing policy that could dramatically increase their licensing fees.

The problem stems from Oracle’s choice of licensing options and a dispute over the definition of “multiplexing” software or hardware, which is able to hide the number of actual users of a database. Oracle offers customers two licensing choices — a per-processor model (list price of $40,000 per cpu) or a named-user model (list price of $800 per user, with a minimum of 10 users per cpu). So, provided that the number of users is relatively low, customers can keep their license fees down by opting for the named-user model. Multiplexing comes into play in the case of transaction processing monitors, web servers, or other situations where the actual number of users is unknown. In such cases, customers generally opt for the per-processor model.

But according to Charlie Garry, a Meta Group analyst, the trouble starts in the data warehousing arena, which are populated by batch feeds from a variety of source applications, but generally offer access to a low number of end users. According to the Meta Group, it’s common practice for customers in these cases to purchase a named-user license for only those employees querying the database for analytical work. However, according to Oracle, batch feeds fall under its definition of multiplexing and a customer under a named-user license in this situation would be required to purchase licenses for each source of data that feeds into the warehouse or else convert to the per-processor model.

Either choice, according to Garry, adds up to “a lot of money.”

While “only a handful” of Meta Group clients have been affected so far, Garry estimated that 80 percent of Oracle users have named user licenses of some form, so “the potential is huge.” Furthermore, he noted, with the pricing advantage that the named-user model provided to Oracle customers out of the picture, Oracle is now “at least twice as expensive as its next competitor,” IBM’s DB2.


He Said, She Said


Oracle spokeswoman Kristin Hollins told BioInform that the policy is nothing new, but the situation has been brought to light due to a “misinterpretation of named-user licenses for batch process which is not consistent with Oracle’s stated policy or definition of named user.” Oracle provides an overview of its licensing policies on its website,, where “named user” and “multiplexing” are defined, although not in the context of batch processing.

“We’ve never seen a contract that reflected that a batch processing feed into an Oracle database would be considered multiplexing, nor is it a generally accepted definition of what multiplexing is,” countered Garry.

Oracle and Meta disagree on several other points. While Meta said that a number of its clients have been audited by Oracle so far, with at least one customer receiving a $2.2 million bill to remain in compliance, Oracle said that the company “is taking no action” against the “handful of customers who may have unintentionally licensed Oracle incorrectly.” Oracle is grandfathering anyone licensing named users as a batch process if the license occurred prior to 1999, said Hollins, who added that Oracle customers with questions about their licenses should contact Jacqueline Woods, VP of global practices, at [email protected].

One thing Hollins and Garry agree on is that customers should be fully aware of Oracle’s licensing policies — and those of any other software vendor, for that matter — before signing a license or renewal. Users “should be sure that the contract language is as explicit as possible to avoid reinterpretations as well as honest misunderstandings,” according to a Meta Group statement on the matter.

— BT

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