8 ms·

A customer explains how Oracle tried to strong-arm it into a cloud sale

88 points by miralabs 11y ago

jpollock 11y ago
Key quote: "threatening customers with big bills for software they’re using but haven’t paid for" The _really_ key bit: "haven't paid for". The customer is not in compliance with their software license. At that point, they are probably looking (the very least) substantial per-core fees for the esoteric Oracle Enterprise features that they are using in production. I worked for a software firm that was selling telecommunications software to carriers. We charged per subscriber per year. If the carrier wasn't paid, we didn't get paid. However, the carrier didn't keep their license up to date with the number of subscribers they had. Anyways, up comes the support contract for renewal. They complain about slow performance, slow releases and high fault rates - aiming for a discount. We, pull out their 3 month old press release showing record numbers of subscribers, exceeding their license by 50%. To the tune of ~$500k/yr. Yeah, the contract got renewed, with no discounts. You see, they'd already received the discount. Take Away: If you're going to use software with a license, make sure you're in compliance with that license. If you use Oracle, make sure you have a scripted install and that you audit the feature set against the license. This script and feature set needs to be re-audited for every new release, since the pricing and built-in features will change. It is UP TO YOU, the deployer to ensure that you are in compliance with your license. Oracle has automated audit tools, and when it comes time to renew, they know what you are using. If you use Open Source, make sure you keep it SEPARATE from your main code base and read the terms of the license you are using. BSD (with advertising) vs GPL vs LGPL vs AGPL have very different impacts on your code.
- deleted 11y ago
  [deleted]
  - jpollock 11y ago
    Actually, no they're not. Oracle has a per-core license for Enterprise. Even on their own hardware (my knowledge is a couple of years old, so it may have changed), you either had to license the entire machine or link the database to a subset of the cores. We ran into just this situation where we had large combined nodes with a database tier and an application tier running in different LDOMs (Solaris VM-equivalents) on the same hardware. Limiting the database server to just the cores it needed dropped the license costs insanely. If a job is able to float around a cluster, the entire cluster would need to be licensed. As the article says, VMWare has a document stating exactly this. From VMWare: "Scenario B: Partially Licensed Clusters When a customer does not have enough Oracle application instances to justify creating a dedicated cluster for those applications, only a subset of the hosts in the cluster are licensed for the Oracle application. In this situation, the customer must be careful to restrict the movement of Oracle application instances and virtual machines to only those hosts that are licensed to run the product." http://www.vmware.com/files/pdf/techpaper/vmw-understanding-oracle-certification-supportlicensing-environments.pdf http://www.vmware.com/files/pdf/techpaper/vmw-understanding-...
- Oletros 11y ago
  Problem is that the rest of the article show no sign of using software without paying
  - gcb0 11y ago
    oracle gave them the software on a quasi-good-will and the client had no means to prove where they used or not used the software. The article calls it "a tricky to not pay oracle" which is idiotic and should read "lack of due diligence". i'm not defending oracle. i think everyone who signs with them deserve all that. but in contract law, they are pretty mundane, for that one case. Their IP lawsuits are another history.
rodgerd 11y ago
> At that point, they are probably looking (the very least) substantial per-core fees for the esoteric Oracle Enterprise features that they are using in production. Nope, this is Oracle with their "you can only virtualise on our virt stack, or you have to pay for the whole farm if a single vCPU is on" trick. Except their licensing model is even more absurd than that - if you have cores switched off at the BIOS, they still count for licensing in Oracle land. The substance of the article is quite correct: Oracle is using customer-hostile tactics to pump their numbers, so investors don't realise how badly their non-core activities are actually doing.
- jpollock 11y ago
  They do that with their own stack too (or at least they did). To avoid costs, you have to set up the VM such that it is locked to certain cores, and then that avoids the virtualisation portion of the license issues. Oracle's always had very flexible, very hard to understand licensing. I know I never understood it. Pricing per-core,per-feature? Ugh. Then they make it really easy to add new features without knowing how much it costs. Double Ugh. We had a developer add a feature that cost us $100k/core just to process some XML. We quickly replaced it. We had a customer drop their Oracle license fees by 90% by locking their Oracle processes to specific cores (from 20 cores to 2). Personally, I've never liked Oracle. Whenever I interact with them, it hasn't been fun (and I worked for them for a couple of years). Although, Oracle's Cloud Licensing doc is clear about the requirements saying that every vcore is a core. [1] [1] http://www.oracle.com/us/corporate/pricing/cloud-licensing-070579.pdf http://www.oracle.com/us/corporate/pricing/cloud-licensing-0...
  - DrStalker 11y ago
    Have you ever tried to buy a server with only a single core for licensing reasons? It's impossible with modern hardware, the best we were able to do was a double core/single CPU system to run some oracle bits to talk to other oracle stuff. This server processed around half a dozen tiny xml files a day and buying a dedicated physical server saved a few hundred thousand over any other option we could figure out.
nateguchi 11y ago
Is it old fashioned to try and keep your customers happy?
- gpvos 11y ago
  Did you read the article?
gcb0 11y ago
tl;dr: typical case of customer losing the tab on bar and complaining about paying the fee for lost-tab. company A signed with Oracle on a contract that says they will pay per user and per server. oracle asks them how many servers are running oracle software, company A has no logs, oracle says for them to pay for a big number of servers based on how many servers company A has available or pay a fixed "cloud" price. company A now thinks they are too smart despite having made the asinine decision of supporting such contract in the past and goes to the press.
- nemo 11y ago
  "typical case of customer losing the tab on bar and complaining about paying the fee for lost-tab." It's more the customer getting a bar tab for a huge number of drinks they could potentially have ordered but claim they didn't while the barkeep doesn't keep track but just assumes the maximum number theoretically conceivable. Oracle's approach of letting customers hang themselves then putting their feet to the fire to prove they didn't use their software the way Oracle fantasizes is seriously ruthless (though this in no way exhausts their approaches to ruthlessly piling fees on customers - I'll never deal with them ever again).
  - XorNot 11y ago
    My company recently had an Oracle audit, and yeah, the big concern was that the audits basically tend to find some non-compliance "but you'll be totally covered if you buy N cloud-services from us". Why anyone uses Oracle is a god damn mystery to me. Why we use Oracle even more so - we have no use nor need for it's featureset.
  - gcb0 11y ago
    you just described the agreement between you and the bar for when you lose the bar tab. (in those places where the customer holds the paper tab instead of leaving the credit card at the bar, that is)
- venomsnake 11y ago
  That is also the formula RIAA and MPAA use for estimating torrenting losses.
adrianN 11y ago
I'm not a database person, but I wonder what makes Oracle databases so much superior to free alternatives like, say, Postgres, that companies put up with the enormous costs and hostile attitude. Can somebody explain why it makes sense from a business perspective to use Oracle products?
- endymi0n 11y ago
  1. Like SAP or Salesforce, they don't sell to sane IT guys, but to enterprise executives that are far away from ops and just let them deal with it. 2. Ass insurance. You pay enormous amounts of money for the knowledge there's a dependable fix to the database in X hours, should there be a problem. 3. Certifications and tutorials. How do you know a DBA is any good if you don't know about databases yourself? 4. Permissions. Oracle let's you shield the database like no other competitor can. If you need DBA's that can't look into the database or character-level permissions because you don't trust the people you work with, Oracle is an enterprises' wet dream.
  - imglorp 11y ago
    > You pay enormous amounts of money for the knowledge there's a dependable fix to the database in X hours That's a problem right there. If you're paying ludicrous or plaid amounts, say 7 or 8 figures, then X might be reasonable and you'll get a decent team to work with you and fix your issue. However, if you're only paying enormous amounts, then X becomes "whenever they feel like it", and a fix specifically requested for you is out of the question. You have to wait for the next patch cycle and hope your bug is fixed in the next patch. Anybody you talk to will begin every sentence with "I'm sorry you're having this problem," and they will be offshore. Source: my company used a shitty db which oracle bought to squash competition and drive you towards the Big O product. We paid only 6 figures for support and got nothing useful. Then they bought Sun, which we were also into, and the same thing happened to us.
- bni 11y ago
  Legacy systems hardcoded to Oracle; Bought from 3rd parties that companies cannot change to work with other databases. The people bribed to buy Oracle are probably long gone from the company.
dankohn1 11y ago
Can anyone name a startup (let alone a YC startup) running Oracle software? Why would anyone open themselves up to these kinds of issues in a greenfield deployment? And, if not, how much longer can Oracle keep up their growth by selling only to established companies? (Yes, they can sell maintenance forever, but how about growth?)
- LoSboccacc 11y ago
  Different story here, but being strongarmed into using IBM I can tell there are some advantages that under a certain light and told in certain ways omitting specific details do resonate well to higher ups.
- rakoo 11y ago
  Any startup that uses HotSpot, so if it uses Java, Clojure or Scala there's a chance it is tied to Oracle.
  - threeseed 11y ago
    This is nonsense. Pretty much everyone uses Oracle's JDK. But I've never heard or seen anyone paying for a license for it.
    - yunghup 11y ago
      He didn't ask who was paying for Oracle software, he asked who was running Oracle software, so the answer is not nonsense.
      - threeseed 11y ago
        "Tied to Oracle" means they are somehow locked in to Oracle. No one who uses Java/Clojure/Scala falls into this. OpenJDK exists and is fine.
      - venomsnake 11y ago
        And he forgot MySQL. But the way the original question was asked it was strongly implied that it is about their payed, enterprise offers. Not the open source software they unwittingly bought. They do nice work of killing mysql though.
jkot 11y ago
This is not just Oracle, but it is pretty common for software dinosaurs (Microsoft, SAP...). We migrated to Redhat since Microsoft was unable to tell us exact price. Managers would risk criminal offense, by using software with unclear licensing terms.
djhworld 11y ago
I worked for a company a few years ago that fell foul to this, I wasn't privy to the exact details, but it was explained to me that Oracle did an audit and found the company were using the database on more cores than licensed for or maybe something like the VMWare situation. To "make good" the company were offered the option to buy two Exadata racks and support contract at a very high cost, which they took up, and meant I had to spend a good few months migrating all of our applications over to the new Exadata database.
- raverbashing 11y ago
  Sure, textbook tactics Expect a future shakedown for those who bough it
davidgerard 11y ago
To repeat the tale: We're discovering that literally everything is better with Postgres. Mostly because instead of a single expensive point of failure, every app gets its own clustered PG pair. Because we can, because we don't have to think about licensing ever again. Just everything not having to play nicely with anything else makes a huge difference. The other nice thing is that PG is administerable by clear-thinking (and understand relational databases) non-specialists who can read a manual. You don't actually need big-ticket support unless you do. And, guess what? Our Oracle support was most keen to offer Postgres support, because they too can tell which way the wind is blowing. WHAT WE DO: PG 9.3 out of Ubuntu 14.04 repos. Failover pair with a primary and standby. Primary streams write-ahead log records to standby as they’re generated. Some script gaffer-tape to watch for primary failure and fail over (I think we haven’t ever yet actually had to invoke this). Conversions done by hand with ora2pg then faff and twiddling and unit tests. Gotchas: malformed sql that Oracle accepts but PG chokes on. All cobbled together just following the docs, almost certainly better ways to do all this. Postgres is in fact the 99% solution.
falcolas 11y ago
From my experience at a previous company (who Oracle acquired, ironically), even if you're not using any Oracle software at all, Oracle will still demand to audit you because "any company over a certain size has to be using an Oracle product". And of course, you can get out of it by purchasing a license for their product. The cost of declining? Dancing with Oracle's lawyers for months or years. The company opted to allow Oracle in, and no Oracle software was to be found (this was pre-Sun acquisition, so they couldn't even attempt a claim at MySQL or Java). These tactics are nothing new for Oracle.
- deskamess 11y ago
  How is this even legal? How can one just walk into any business and ask them to show your 'technical' books? Is there some legal backing/construct to allow a company to do this? Was there compensation for time and materials spent?

88 points by miralabs 11y ago

Key quote: "threatening customers with big bills for software they’re using but haven’t paid for" The _really_ key bit: "haven't paid for". The customer is not in compliance with their software license. At that point, they are probably looking (the very least) substantial per-core fees for the esoteric Oracle Enterprise features that they are using in production. I worked for a software firm that was selling telecommunications software to carriers. We charged per subscriber per year. If the carrier wasn't paid, we didn't get paid. However, the carrier didn't keep their license up to date with the number of subscribers they had. Anyways, up comes the support contract for renewal. They complain about slow performance, slow releases and high fault rates - aiming for a discount. We, pull out their 3 month old press release showing record numbers of subscribers, exceeding their license by 50%. To the tune of ~$500k/yr. Yeah, the contract got renewed, with no discounts. You see, they'd already received the discount. Take Away: If you're going to use software with a license, make sure you're in compliance with that license. If you use Oracle, make sure you have a scripted install and that you audit the feature set against the license. This script and feature set needs to be re-audited for every new release, since the pricing and built-in features will change. It is UP TO YOU, the deployer to ensure that you are in compliance with your license. Oracle has automated audit tools, and when it comes time to renew, they know what you are using. If you use Open Source, make sure you keep it SEPARATE from your main code base and read the terms of the license you are using. BSD (with advertising) vs GPL vs LGPL vs AGPL have very different impacts on your code.

deleted 11y ago
[deleted]
- jpollock 11y ago
  Actually, no they're not. Oracle has a per-core license for Enterprise. Even on their own hardware (my knowledge is a couple of years old, so it may have changed), you either had to license the entire machine or link the database to a subset of the cores. We ran into just this situation where we had large combined nodes with a database tier and an application tier running in different LDOMs (Solaris VM-equivalents) on the same hardware. Limiting the database server to just the cores it needed dropped the license costs insanely. If a job is able to float around a cluster, the entire cluster would need to be licensed. As the article says, VMWare has a document stating exactly this. From VMWare: "Scenario B: Partially Licensed Clusters When a customer does not have enough Oracle application instances to justify creating a dedicated cluster for those applications, only a subset of the hosts in the cluster are licensed for the Oracle application. In this situation, the customer must be careful to restrict the movement of Oracle application instances and virtual machines to only those hosts that are licensed to run the product." http://www.vmware.com/files/pdf/techpaper/vmw-understanding-oracle-certification-supportlicensing-environments.pdf http://www.vmware.com/files/pdf/techpaper/vmw-understanding-...
Oletros 11y ago
Problem is that the rest of the article show no sign of using software without paying
- gcb0 11y ago
  oracle gave them the software on a quasi-good-will and the client had no means to prove where they used or not used the software. The article calls it "a tricky to not pay oracle" which is idiotic and should read "lack of due diligence". i'm not defending oracle. i think everyone who signs with them deserve all that. but in contract law, they are pretty mundane, for that one case. Their IP lawsuits are another history.

rodgerd 11y ago

> At that point, they are probably looking (the very least) substantial per-core fees for the esoteric Oracle Enterprise features that they are using in production. Nope, this is Oracle with their "you can only virtualise on our virt stack, or you have to pay for the whole farm if a single vCPU is on" trick. Except their licensing model is even more absurd than that - if you have cores switched off at the BIOS, they still count for licensing in Oracle land. The substance of the article is quite correct: Oracle is using customer-hostile tactics to pump their numbers, so investors don't realise how badly their non-core activities are actually doing.

jpollock 11y ago
They do that with their own stack too (or at least they did). To avoid costs, you have to set up the VM such that it is locked to certain cores, and then that avoids the virtualisation portion of the license issues. Oracle's always had very flexible, very hard to understand licensing. I know I never understood it. Pricing per-core,per-feature? Ugh. Then they make it really easy to add new features without knowing how much it costs. Double Ugh. We had a developer add a feature that cost us $100k/core just to process some XML. We quickly replaced it. We had a customer drop their Oracle license fees by 90% by locking their Oracle processes to specific cores (from 20 cores to 2). Personally, I've never liked Oracle. Whenever I interact with them, it hasn't been fun (and I worked for them for a couple of years). Although, Oracle's Cloud Licensing doc is clear about the requirements saying that every vcore is a core. [1] [1] http://www.oracle.com/us/corporate/pricing/cloud-licensing-070579.pdf http://www.oracle.com/us/corporate/pricing/cloud-licensing-0...
- DrStalker 11y ago
  Have you ever tried to buy a server with only a single core for licensing reasons? It's impossible with modern hardware, the best we were able to do was a double core/single CPU system to run some oracle bits to talk to other oracle stuff. This server processed around half a dozen tiny xml files a day and buying a dedicated physical server saved a few hundred thousand over any other option we could figure out.

nateguchi 11y ago

Is it old fashioned to try and keep your customers happy?

gpvos 11y ago
Did you read the article?

gcb0 11y ago

tl;dr: typical case of customer losing the tab on bar and complaining about paying the fee for lost-tab. company A signed with Oracle on a contract that says they will pay per user and per server. oracle asks them how many servers are running oracle software, company A has no logs, oracle says for them to pay for a big number of servers based on how many servers company A has available or pay a fixed "cloud" price. company A now thinks they are too smart despite having made the asinine decision of supporting such contract in the past and goes to the press.

nemo 11y ago
"typical case of customer losing the tab on bar and complaining about paying the fee for lost-tab." It's more the customer getting a bar tab for a huge number of drinks they could potentially have ordered but claim they didn't while the barkeep doesn't keep track but just assumes the maximum number theoretically conceivable. Oracle's approach of letting customers hang themselves then putting their feet to the fire to prove they didn't use their software the way Oracle fantasizes is seriously ruthless (though this in no way exhausts their approaches to ruthlessly piling fees on customers - I'll never deal with them ever again).
- XorNot 11y ago
  My company recently had an Oracle audit, and yeah, the big concern was that the audits basically tend to find some non-compliance "but you'll be totally covered if you buy N cloud-services from us". Why anyone uses Oracle is a god damn mystery to me. Why we use Oracle even more so - we have no use nor need for it's featureset.
- gcb0 11y ago
  you just described the agreement between you and the bar for when you lose the bar tab. (in those places where the customer holds the paper tab instead of leaving the credit card at the bar, that is)
venomsnake 11y ago
That is also the formula RIAA and MPAA use for estimating torrenting losses.

adrianN 11y ago

I'm not a database person, but I wonder what makes Oracle databases so much superior to free alternatives like, say, Postgres, that companies put up with the enormous costs and hostile attitude. Can somebody explain why it makes sense from a business perspective to use Oracle products?

endymi0n 11y ago
1. Like SAP or Salesforce, they don't sell to sane IT guys, but to enterprise executives that are far away from ops and just let them deal with it. 2. Ass insurance. You pay enormous amounts of money for the knowledge there's a dependable fix to the database in X hours, should there be a problem. 3. Certifications and tutorials. How do you know a DBA is any good if you don't know about databases yourself? 4. Permissions. Oracle let's you shield the database like no other competitor can. If you need DBA's that can't look into the database or character-level permissions because you don't trust the people you work with, Oracle is an enterprises' wet dream.
- imglorp 11y ago
  > You pay enormous amounts of money for the knowledge there's a dependable fix to the database in X hours That's a problem right there. If you're paying ludicrous or plaid amounts, say 7 or 8 figures, then X might be reasonable and you'll get a decent team to work with you and fix your issue. However, if you're only paying enormous amounts, then X becomes "whenever they feel like it", and a fix specifically requested for you is out of the question. You have to wait for the next patch cycle and hope your bug is fixed in the next patch. Anybody you talk to will begin every sentence with "I'm sorry you're having this problem," and they will be offshore. Source: my company used a shitty db which oracle bought to squash competition and drive you towards the Big O product. We paid only 6 figures for support and got nothing useful. Then they bought Sun, which we were also into, and the same thing happened to us.
bni 11y ago
Legacy systems hardcoded to Oracle; Bought from 3rd parties that companies cannot change to work with other databases. The people bribed to buy Oracle are probably long gone from the company.

dankohn1 11y ago

Can anyone name a startup (let alone a YC startup) running Oracle software? Why would anyone open themselves up to these kinds of issues in a greenfield deployment? And, if not, how much longer can Oracle keep up their growth by selling only to established companies? (Yes, they can sell maintenance forever, but how about growth?)

LoSboccacc 11y ago
Different story here, but being strongarmed into using IBM I can tell there are some advantages that under a certain light and told in certain ways omitting specific details do resonate well to higher ups.
rakoo 11y ago
Any startup that uses HotSpot, so if it uses Java, Clojure or Scala there's a chance it is tied to Oracle.
- threeseed 11y ago
  This is nonsense. Pretty much everyone uses Oracle's JDK. But I've never heard or seen anyone paying for a license for it.
  - yunghup 11y ago
    He didn't ask who was paying for Oracle software, he asked who was running Oracle software, so the answer is not nonsense.
    - threeseed 11y ago
      "Tied to Oracle" means they are somehow locked in to Oracle. No one who uses Java/Clojure/Scala falls into this. OpenJDK exists and is fine.
    - venomsnake 11y ago
      And he forgot MySQL. But the way the original question was asked it was strongly implied that it is about their payed, enterprise offers. Not the open source software they unwittingly bought. They do nice work of killing mysql though.

jkot 11y ago

This is not just Oracle, but it is pretty common for software dinosaurs (Microsoft, SAP...). We migrated to Redhat since Microsoft was unable to tell us exact price. Managers would risk criminal offense, by using software with unclear licensing terms.

djhworld 11y ago

I worked for a company a few years ago that fell foul to this, I wasn't privy to the exact details, but it was explained to me that Oracle did an audit and found the company were using the database on more cores than licensed for or maybe something like the VMWare situation. To "make good" the company were offered the option to buy two Exadata racks and support contract at a very high cost, which they took up, and meant I had to spend a good few months migrating all of our applications over to the new Exadata database.

raverbashing 11y ago
Sure, textbook tactics Expect a future shakedown for those who bough it

davidgerard 11y ago

To repeat the tale: We're discovering that literally everything is better with Postgres. Mostly because instead of a single expensive point of failure, every app gets its own clustered PG pair. Because we can, because we don't have to think about licensing ever again. Just everything not having to play nicely with anything else makes a huge difference. The other nice thing is that PG is administerable by clear-thinking (and understand relational databases) non-specialists who can read a manual. You don't actually need big-ticket support unless you do. And, guess what? Our Oracle support was most keen to offer Postgres support, because they too can tell which way the wind is blowing. WHAT WE DO: PG 9.3 out of Ubuntu 14.04 repos. Failover pair with a primary and standby. Primary streams write-ahead log records to standby as they’re generated. Some script gaffer-tape to watch for primary failure and fail over (I think we haven’t ever yet actually had to invoke this). Conversions done by hand with ora2pg then faff and twiddling and unit tests. Gotchas: malformed sql that Oracle accepts but PG chokes on. All cobbled together just following the docs, almost certainly better ways to do all this. Postgres is in fact the 99% solution.

falcolas 11y ago

From my experience at a previous company (who Oracle acquired, ironically), even if you're not using any Oracle software at all, Oracle will still demand to audit you because "any company over a certain size has to be using an Oracle product". And of course, you can get out of it by purchasing a license for their product. The cost of declining? Dancing with Oracle's lawyers for months or years. The company opted to allow Oracle in, and no Oracle software was to be found (this was pre-Sun acquisition, so they couldn't even attempt a claim at MySQL or Java). These tactics are nothing new for Oracle.

deskamess 11y ago
How is this even legal? How can one just walk into any business and ask them to show your 'technical' books? Is there some legal backing/construct to allow a company to do this? Was there compensation for time and materials spent?