Our latest podcast covers Oracle Java licensing analysis from LicenseFortress and Beeman & Muchmore. We’re approaching 12 months since Oracle made major changes to their Oracle Java licensing policy. In this podcast we’re joined by:
- Mike Corey, LicenseFortress
- Dean Bolton, LicenseFortress
- Art Beeman, Beeman & Muchmore
- Joel Muchmore, Beeman & Muchmore
The group provides their analysis on how the Oracle Java licensing changes are impacting organisations across the globe, what options you may have to mitigate or avoid large bills, and what to watch for when dealing with Oracle.
If you want to get tips to help you plan your next Java negotiation/renewal, insights into where difficulties may lie in the future, and suggestions on the next steps to take – then this is the podcast for you!
Table of contents
Welcome to the ITAM Review podcast, news, reviews, and resources for ITAM, SAM, and software licensing professionals.
Rich Gibbons:
Hello everybody. Thank you very much for joining us and welcome to this latest IAM Review podcast. I am joined by some absolute stars today. I’ve got Mike and Dean from LicenseFortress, and then we’ve also got Art and Joel from Beeman and Muchmore. Four great people, great speakers, and lots of content to talk about today. We’ll be discussing everyone’s favorite subject of 2023, Oracle Java. So we’re going to look at what’s happening and what will happen. To kick things off, I’ll hand over to you, Mike.
Why Java? The New Licensing Model Explained
Michael Corey:
Thank you, Rich, for the opportunity. Why Java? On January 23rd of this year, Oracle turned the business world on its head by significantly changing how Java is licensed. It went from a desktop or processor-based model to an employee headcount model, but Oracle’s definition of headcount is expansive. Let me quote the Oracle documentation. Oracle is defined on the Oracle subscription price list as one, all your full-time, part-time, temporary employees, and two, all of your full-time employees, part-time employees, and temporary employees of your agents, contractors, outsourcers, and consultants that support your business’s internal operations. Simply put, not only your headcount but the headcount of everyone you work with and who they work with. This represents a drastic price increase for most customers. A tenfold increase is not unheard of. It’s also a potential minefield of future problems, and frankly, that’s what we want to start talking about today.
The Expansive Employee Metric
Rich Gibbons:
Perfect. That was a succinct, comprehensive overview. I like that. You touched on a few different points, and I guess to drill down into the changes, you mentioned people supporting your environment. This, I think, is something some people may have missed. The user-to-employee change was well-publicized, but when it comes to people supporting your company or environment, what exactly do Oracle mean by that?
Arthur Beeman:
Well, just I think as an initial reaction to what Oracle has done here, let’s go to how they’re describing it. The way it found its way into the market as the change was the so-called “employee metric.” Well, “employee” as understood by most businesses in America means something specific. When you have an employee, it invokes certain employment obligations and employment law. Most businesses can distinguish between people they view as their employees and someone they’ve hired under contract—like a gig worker or a consultant. The problem here is that Oracle’s “employee metric” goes beyond conventional thinking as to who are your employees. To the point Mike made in his remarks, it expands into a world where most businesses have no comprehension of how many employees their consultant has brought onboard. And they are part of the metric. Therein lies, I think, the real danger for businesses today.
The Burden Shifts to the Customer
Dean Bolton:
Let me just add to that, Art. It’s not just about the danger of this expansive metric; it’s also about how Oracle puts the burden on the customer. There’s no going back and forth where you agree on an employee count with Oracle. Oracle just says, “Here’s the metric, and it’s up to you to comply.” So, a customer might look at their full-time employees and think, “We’ve got a thousand employees.” They engage with Oracle based on that number. But because they don’t understand the new metric or how expansive it is, they may still be out of compliance. Oracle isn’t helping customers understand it on both sides.
Rich Gibbons:
Absolutely. And with that consultant element, what I’m wondering is, how do you define a third party’s number of employees? If you’re working with a company that has 150 consultants, but you only pay for five, do you have to pay for all 150 in case they work on your system? And I doubt Oracle will clarify that unless it’s on a case-by-case basis.
Oracle’s Galaxy Pricing
Michael Corey:
Oracle has clarified it, Rich. As I like to call it, this is “Galaxy Headcount Pricing.” They’re very clear: it’s not just about everyone you work with directly, but everyone in the organization you contract with—every contractor, everyone they use. It’s galaxy pricing, and you never really know what that number is. And then what happens when someone leaves in the middle of the year and is replaced? Is that one license or two? This is a major minefield.
Joel Muchmore:
And we’ve been limiting the discussion to counting agents, contractors, and outsourcers. But what does “support your internal business operations” mean? This phrase has been in Oracle contracts for decades but never defined. How far does it go? Does the janitorial staff count? This vagueness is deliberate, so Oracle can swoop in later and claim, “It was all there, and it’s on you to figure it out.” Many companies think they’ve bought the licenses they need, but 99% of them remain non-compliant because they didn’t dig into this. Oracle is leaving it murky to catch customers off-guard later.
Dean Bolton:
That 1% would be those who engage us or you to help figure this out.
Joel Muchmore:
Exactly. We’ve managed to narrow the window of uncertainty through negotiation, but it’s like pulling teeth to get Oracle to commit to a clear number.
The Legal Burden of Compliance
Arthur Beeman:
Beyond the informal burden shift, this is happening in a legal context. Oracle contracts are viewed as part of a commercial transaction. In law, a consumer gets the benefit of the doubt for their lack of sophistication. In commercial transactions, though, both parties are considered equals. Under law, you’re expected to understand the provisions, and if you don’t, you’re still liable.
Rich Gibbons:
That’s an important point. This is under U.S. law, but I imagine it’s similar elsewhere. Most of the people in this position are likely in the U.S., but I’ll follow up to see if it’s the same in places like the UK or France.
Arthur Beeman:
In the U.S., this comes from the Uniform Commercial Code (UCC), adopted by all 50 states. The same distinction between consumer and commercial transactions is recognized in other Western democracies as well. It’s a time-honored legal distinction.
Engaging Professional Help
Michael Corey:
When a vendor approaches you about licensing, the lesson here is clear: don’t move forward without professional advice. Engage a company that understands the vendor playbook and has lawyers supporting them. You don’t want to end up in a situation where, four years later, Oracle audits you, and you’re in trouble because you made a mistake, not them.
Rich Gibbons:
Absolutely. And this brings up an important point for Java customers. Even if your renewal is two years away, it’s critical to start planning now.
Dean Bolton:
I agree. As Mike said earlier, we’ve seen costs increase tenfold for some customers. You want to know that’s coming so you can make business decisions. Are you getting enough value out of Java to pay ten times more? If your renewal is next year or later, you should start exploring alternatives now.
Java Alternatives and Planning for the Future
Rich Gibbons:
Exactly. You need to plan for changes ahead of time, especially if you’re moving away from Java. How long would you say companies should plan ahead for this?
Dean Bolton:
I’d recommend planning at least 12 months in advance. Java’s client-side is easier to replace if you have a good configuration management tool. But the server-side and third-party application support are more difficult. With Oracle’s change, customers have been pressuring third-party vendors to support alternatives, so support matrices are expanding, but it’s still going to take time.
Rich Gibbons:
Interesting. Are Oracle’s practices risky here? Could they lose too many customers?
Dean Bolton:
It’s hard to say. They likely believe they can afford to lose some customers if they gain subscriptions from others. Even with alternatives, moving off Java isn’t free, so Oracle probably sees the overall net gain.
