How an Indian Bank Reduced Java Licensing Costs by 85%

Introduction

A leading Indian bank, heavily dependent on Java for its core banking systems, faced a major challenge when Oracle introduced a new Java licensing model. The change resulted in a projected annual subscription cost of $2.7 million, making Java licensing a significant financial burden.

To tackle this issue, the bank partnered with Rythium Technologies, a software licensing consultancy, to optimize its Java deployment and reduce costs. Through a structured assessment, strategic negotiations, and alternative solutions, the bank successfully cut its Java licensing costs by over 85%.

This case study outlines the challenges, solutions, and key strategies that led to these significant savings.

Challenges Faced by the Bank

• High Java Subscription Costs: The new Oracle licensing model calculated costs based on total employee count, not actual Java usage.
• Lack of Visibility: The bank needed a detailed understanding of its Java deployments, including where and how Java was used across different environments.
• Complex Licensing Terms: Oracle’s licensing policies were difficult to interpret, increasing the risk of non-compliance and unnecessary expenses.
• Limited Alternatives Considered: The bank had not fully explored non-Oracle Java solutions that could lower costs without compromising performance.

Rythium's Approach to Cost Optimization

1. Discovery: Understanding Java Usage

Rythium conducted a comprehensive assessment of the bank’s Java usage, which included:

• Identifying all Java installations across servers, endpoints, and applications.
• Documenting Java versions used in development, testing, and production environments.
• Interviewing IT teams to understand Java dependencies and usage patterns.

2. Normalization: Standardizing Data for Accuracy

After discovery, the data was standardized to ensure accuracy in cost calculations. This involved:

• Identifying the specific Java versions in use, including Oracle JDK, OpenJDK, and other distributions.
• Aligning Java versions with Oracle’s licensing terms, such as the Binary Code License (BCL), Oracle Technology Network License (OTN), and No-Fee Terms and Conditions (NFTC).

3. License Calculation: Determining the Actual Need

Using the normalized data, Rythium calculated the actual Java licensing requirement based on Oracle’s past and present licensing models. The analysis included:

• Determining the correct licensing metric (e.g., per processor core or per desktop).
• Calculating the total number of licenses needed across different environments.
• Analyzing license usage for third-party applications to check for bundled Java entitlements.

4. Entitlement Review: Leveraging Existing Licenses

Rythium also evaluated existing Oracle product licenses to identify any overlapping entitlements. This step helped the bank:

• Avoid unnecessary Java license purchases by using entitlements from other Oracle products (e.g., WebLogic Server, E-Business Suite).
• Assess third-party applications that included Java licensing rights.

5. Optimization: Reducing the Licensing Footprint

To further lower costs, Rythium developed an optimization strategy, which included:

• Migrating from Oracle JDK to OpenJDK where feasible.
• Consolidating Java versions to simplify licensing and support.
• Adjusting deployment configurations to reduce licensing requirements.
• Exploring alternative licensing models (e.g., per-user vs. per-core pricing).

6. Price Discovery: Establishing a Fair Cost Benchmark

Rythium worked closely with the bank to determine a fair market price for Java. This step was crucial in preparing for negotiations with Oracle.

7. Negotiation with Oracle: Securing Better Terms

Rythium assisted the bank in discussions with Oracle, focusing on:

• Clarifying Oracle’s licensing terms to eliminate ambiguity.
• Presenting the bank’s optimized Java usage data to argue for cost reductions.
• Negotiating better pricing and contract terms based on findings from the optimization phase.

8. Contract Review: Ensuring Transparency

Before finalizing the new licensing agreement, Rythium carefully reviewed the Oracle contract to ensure:

• All agreed-upon pricing and terms were accurately reflected.
• No hidden fees or compliance risks were included.
• The bank’s long-term flexibility was maintained.

The Final Outcome: A Massive 85% Cost Reduction

After implementing Rythium’s strategy, the bank achieved remarkable savings:

• Total Java licensing costs were reduced by over 85%.
• Cost of ownership over a 5-year period dropped significantly.
• The bank avoided unnecessary spending by optimizing Java usage and leveraging alternative solutions.

These savings freed up financial resources that the bank could now invest in business growth, IT infrastructure, and digital transformation initiatives.

Key Takeaways for Businesses Facing High Java Costs

• Assess Your Java Usage: Understanding where and how Java is deployed is the first step toward cost reduction.
• Evaluate Existing Licenses: Many businesses already own Oracle products that include Java entitlements.
• Consider Alternative Java Solutions: OpenJDK and other distributions can provide significant savings.
• Negotiate with Oracle: Companies should challenge high pricing and seek fair value agreements.
• Engage Licensing Experts: Working with specialists like Rythium can help navigate complex licensing terms and secure cost-effective solutions.

How Rythium Technologies Can Help

With over a decade of experience in software license management, Rythium Technologies helps businesses:

• Analyze Java deployments to find cost-saving opportunities.
• Optimize licensing strategies to reduce expenses.
• Negotiate better agreements with Oracle.
• Transition to non-Oracle Java solutions where beneficial.

By working with Rythium, companies can reduce Java costs by up to 85% and make informed decisions about their licensing strategy.

If your organization is struggling with high Java licensing costs, Rythium Technologies can provide expert guidance to help you achieve significant savings.