Oracle Java licensing changes lead to unsustainable costs for large organizations

Oracle announced one of the biggest ever changes in software licensing on January 23^rd 2023. As a result, many large organizations that run Oracle Java will be presented with an unprecedented increase in costs and be left with limited options to avoid them. Read on for the latest insight from our Oracle Course Leader Richard Spithoven.

What’s the change?

Oracle have introduced a new metric for measuring Oracle Java usage – the Employee metric. Previously, Oracle Java could be licensed under Oracle’s longstanding Named User Plus (NUP) or Processor metrics, based on usage of Oracle Java versions.

The Employee metric replaces NUP and Processor metrics with a single measure and definition. Specifically, an Employee in Oracle’s eyes is;

“(i) all of Your full-time, part-time, temporary employees, and (ii) all of the full-time employees, part-time employees and temporary employees of Your agents, contractors, outsourcers, and consultants that support Your internal business operations.”

The important change is that this metric does not consider usage. If you have one installation of Oracle Java in your organization then you need to pay the fee calculated on your total number of employees – including those who support your internal business operations but who work for a third party. Just one installation leads to a considerable financial exposure.

What’s the impact?

In short, a huge cost increase for most organizations.

Previously many large organizations paid for Oracle Java on a per-processor basis and carefully ringfenced Java usage architecturally – for example to a dedicated VMWare cluster with its own dedicated storage and ancillary services. Now that option is removed and instead a per employee fee is payable, regardless of whether those employees use OJ applications. Oracle’s own example makes for chilling reading in these times of tightened budgets.

“Your company has a total employee count of 28,000… Therefore, the price would be 28,000 * $6.75/month * 12 months = $2,268,000/year.”

Almost $2.3m per year for software that until 2018 your organization could use at no cost. Even following Oracle’s initial changes to OJ licensing this is a considerable uplift from what you are currently paying.

As a further example, the cost to a 5,000 user organization is $630,000 per year, well in excess of the cost of common business software such as Microsoft 365 Apps for Business.

For further details including pricing tiers see https://www.oracle.com/us/corporate/pricing/price-lists/java-se-subscription-pricelist-5028356.pdf

Processor restriction for very large organizations

In addition to the per user charge there is a clause relating to use of OJ on more than 50,000 processors. In that case a further license is required from Oracle although no further details are available at time of writing. In practice this is unlikely to affect many organizations but must still be considered. Bear in mind that the Oracle’s usual Processor definition applies here so it is not a simple chip count.

How should you respond?

Here are our three tips for responding to this licensing change.

1. Assume that somewhere in your organization someone or something is using a version of Oracle Java which is covered by this new metric. It’s almost certain that that is the case. Check your software inventory to confirm.
2. Calculate the applicable monthly fee based on number of employees, as per Oracle’s Employee metric. Remember to include an estimate of the number of third-party employees supporting your business.
3. Alert senior IT & Finance staff to the licensing change and likely financial impact.

The outcome of this initial assessment is likely to be a program to devise an Oracle Java strategy. Work with your Application Managers, Architects, and other stakeholders on that program.

Here’s more from Richard on the Java risk inherent in Oracle audit engagements:

What are your options?

1. Upgrade all Java installations to a fee-free version of Oracle Java.
2. Migrate from OJ to OpenJDK or a free version of Java from another vendor.
3. Contact Oracle and discuss options to move Java workloads to Oracle Cloud Infrastructure. Use of OJ is included in all OCI contracts.
4. Pay the license fee.

Why have Oracle done this?

In the short term we believe that this is a pure revenue play by Oracle. Many organizations will realize that in the short term the only option is to pay the subscription. In the longer-term Oracle will use this licensing change to get customers to purchase Oracle Cloud Infrastructure (OCI) subscriptions which include Oracle Java use rights. Oracle CEO Safra Catz said as much in a recent earnings call.

“In addition, of course, in technology, we also have our leading Java business, which on-premise is an extensive use and in the cloud is at no charge. So customers can be motivated to bring their Java to the Oracle Cloud and to use it at no charge, their Java program and to use it at no charge”

Source: Oracle Corporation (NYSE:ORCL) Q4 2022 Earnings Conference Call June 13, 2022 5:00 PM

Further Action

For help navigating the complex world of Oracle Licensing take our comprehensive course provided by renowned Oracle Expert Richard Spithoven from SoftwareOne. Richard covers all aspects of Oracle licensing including strategies for certifiying a ULA and dealing with an audit request.

To hear more from Richard on this subject join our LISA Live session on February 14th.