Many organizations are moving away from Oracle to adopt open-source solutions like PostgreSQL. This article explores why enterprises should consider migrating from Oracle, evaluating cost savings, scalability, and the broader impact on software engineering culture.
Introduction
Migrating from Oracle to PostgreSQL offers significant benefits, including cost savings, improved scalability, and alignment with modern software engineering practices. This article provides a comprehensive analysis of why enterprises, especially large financial institutions, should consider this transition.
The Cost of Oracle vs. PostgreSQL
Oracle Licensing Costs
Oracle licensing is notoriously expensive. Let’s break down the typical costs based on Oracle’s official price list:
- Enterprise Edition License: Starts at $47,500 per processor.
- Support and Maintenance: 22% of the license cost annually.
- Options (e.g., Partitioning, Advanced Security, RAC, etc.): Each costs additional tens of thousands per CPU.
- Hardware requirements: Oracle often demands high-end hardware due to licensing policies based on processor cores.
- Oracle Support: Access to Oracle consultants is costly and often slow, delaying issue resolution and increasing downtime risks.
Real-World Cost Analysis: Large Financial Institution Use Case
To better understand the cost implications of using Oracle versus PostgreSQL, let’s consider a real-world scenario: a large financial institution processing credit information from major banks in a country. Given the need for high availability (HA) and scalability, we estimate the infrastructure requirements and associated costs for running Oracle Database.
Infrastructure Requirements
For a database of this scale, the system must handle:
- High SLA (99.99% uptime)
- Complex reporting workloads
- Heavy concurrent transactions
- Georedundancy for disaster recovery
To meet these requirements, we estimate the following infrastructure:
- Cluster of 10 high-performance database servers
- Each server with 2 CPUs (each 16-core), totaling 140 cores
- High-end storage (NVMe SSDs, SAN storage for redundancy)
- Load balancers and replication mechanisms
Oracle Licensing Costs
Oracle charges per processor core, with Enterprise Edition priced at $47,500 per CPU core. Additional costs include support and advanced features such as Real Application Clusters (RAC), Partitioning, and Security Options.
| Cost Item | Cost per Unit | Total (140 Cores) |
|---|---|---|
| Enterprise Edition License | $47,500 per core | $6.65M |
| Annual Support (22%) | $10,450 per core | $1.46M |
| Oracle RAC Option | $23,000 per core | $3.22M |
| Advanced Security | $15,000 per core | $2.1M |
| Partitioning Option | $11,500 per core | $1.61M |
| Total Initial Cost | - | $15.04M |
| Annual Recurring Cost (Support & Licenses) | - | $1.46M+ |
This excludes hardware and operational costs, which add millions in additional expenses.
Cost Projection Over 10 Years
Oracle’s pricing typically increases at an average rate of 5-10% annually. To illustrate the cost growth, let’s start with a smaller infrastructure of 2 servers (32 cores) and gradually scale up to the full 10 servers (140 cores) over 10 years. The following chart estimates the expected licensing cost growth over 10 years, assuming a conservative 7% yearly increase:
Explanation of the Chart:
-
Initial Phase (Year 1-3): The institution starts with 2 servers (32 cores) to handle initial workloads. The licensing costs are relatively lower but still significant due to Oracle’s per-core pricing model.
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Scaling Phase (Year 4-7): As the institution grows, it adds more servers, reaching 140 cores by Year 7. The costs increase exponentially due to the addition of more cores and the annual 7% price increase.
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Mature Phase (Year 8-10): By Year 8, the institution is fully scaled to 140 cores. The costs continue to rise due to Oracle’s annual price increases, reaching over $13M per year by Year 10.
This projection highlights how Oracle’s licensing costs can become unsustainable over time, especially for large-scale financial applications.
PostgreSQL Alternative: Massive Cost Reduction
Switching to PostgreSQL eliminates all licensing costs. The institution would only incur operational expenses such as:
- Commodity hardware and cloud infrastructure
- Optional paid support (EDB, Crunchy Data, etc.)
- Engineering and migration costs
Estimated cost reduction: 80-90% lower than Oracle over a 10-year period.
PostgreSQL: The Open-Source Alternative
- Zero licensing costs: No per-core licensing fees.
- No mandatory support costs: Optional paid support is available from vendors like EDB or Crunchy Data.
- Runs on commodity hardware: No vendor lock-in for infrastructure.
- Open access to knowledge: Unlike Oracle, where many solutions require expensive consultants, PostgreSQL has an active community and extensive free documentation.
A large enterprise running 10 Oracle servers could easily spend millions of dollars annually on licensing and maintenance alone. PostgreSQL eliminates these expenses, allowing funds to be allocated to innovation instead.
Technical Comparison: Scalability
Oracle’s Scalability Limitations
Oracle scales vertically (i.e., adding more powerful hardware), which quickly becomes cost-prohibitive. Horizontal scaling (sharding) in Oracle is complex and often requires Oracle RAC (Real Application Clusters), which incurs additional licensing fees and operational overhead.
Even with Oracle RAC, challenges include:
- Expensive shared storage: RAC requires high-end storage solutions like Exadata, significantly increasing costs.
- Inter-node communication overhead: RAC instances must synchronize data across nodes, which can degrade performance for high-transaction workloads.
- Complex administration: Setting up and managing RAC requires highly specialized DBAs, increasing operational costs.
PostgreSQL’s Scaling Advantages
PostgreSQL supports horizontal scaling using:
- Citus: A distributed PostgreSQL extension for seamless sharding.
- Logical replication and partitioning: Easier data distribution.
- Kubernetes-based deployment: Cloud-native architecture for automatic scaling.
- Decentralized approach: Instead of expensive shared storage solutions, PostgreSQL allows data to be spread across multiple cheaper nodes.
Real-World Examples of PostgreSQL at Scale
PostgreSQL is trusted by many large enterprises and organizations to handle massive amounts of data. Here are a few notable examples:
- Instagram (Meta):
- Use Case: Instagram, part of Meta (formerly Facebook), uses PostgreSQL as its primary database to store user data, posts, comments, and interactions.
- Scale: Instagram handles billions of posts, photos, and interactions daily, serving hundreds of millions of users worldwide. PostgreSQL’s scalability and reliability are key to supporting this massive workload.
- Spotify:
- Use Case: Spotify relies on PostgreSQL to manage user data, playlists, music metadata, and recommendation algorithms.
- Scale: With millions of users and billions of streams, PostgreSQL helps Spotify deliver a seamless music streaming experience while handling complex queries and large datasets.
- Apple:
- Use Case: Apple uses PostgreSQL to power parts of its ecosystem, including the App Store and iTunes.
- Scale: Apple’s services process enormous amounts of data related to app downloads, user accounts, and transactions. PostgreSQL’s robustness and scalability make it a reliable choice for these mission-critical applications.
These examples demonstrate that PostgreSQL is not only capable of handling large-scale workloads but also excels in environments where reliability, scalability, and cost-efficiency are critical.
Why PL/SQL and Database-Centric Development is Outdated
The Problem with Writing Business Logic in the Database
Historically, enterprises relied on PL/SQL (Oracle’s procedural language) for business logic. This approach has significant drawbacks:
- Limited Talent Pool: PL/SQL developers are niche specialists, while software engineers proficient in DDD ( Domain-Driven Design) and modern architectures are more widely available.
- Poor Maintainability: Embedding logic in stored procedures tightly couples business rules to the database, making refactoring and system evolution difficult.
- Scalability Issues: PL/SQL executes within the database, consuming precious DB resources instead of distributing load across application layers.
- Lack of Readable Tests: Writing tests for PL/SQL logic is cumbersome and lacks the readability of modern high-level programming languages. Allegro’s blog highlights the importance of readable tests in modern software engineering.
Modern Software Engineering Principles
Organizations should adopt DDD, Event Storming, and Modular Monoliths instead of embedding logic in the database:
- Domain-Driven Design (DDD) promotes clear separation of concerns and well-defined domain boundaries.
- Event Storming ensures better business alignment in system design.
- Modular Monoliths provide structured separation while avoiding the complexity of premature microservices adoption.
Before choosing microservices, companies must first understand their domain boundaries and scaling needs. Jumping into microservices without proper planning can lead to unnecessary complexity and operational overhead.
Recommended resources:
Organizational and Hiring Impact
Oracle-Centric Organizations are Less Attractive to Developers
- Modern Developers Prefer Open-Source: Talented engineers are more likely to be drawn to open-source stacks like PostgreSQL, which align with modern best practices.
- Software Engineers vs. Database Developers: The role of a Software Engineer in leading tech companies ( Google, Amazon, Microsoft, Allegro, etc.) involves much broader expertise than that of a Database Developer. Software engineers have a deep understanding of system design, cloud infrastructure, distributed computing, and DevOps, making them more adaptable and valuable across the software development lifecycle.
- Agility and DevOps: PostgreSQL integrates seamlessly into CI/CD pipelines, Kubernetes, and cloud platforms, making it a better fit for modern DevOps-driven teams.
The Reality for Financial Institutions
Many financial institutions and other enterprises with highly regulated environments choose to stay with Oracle due to perceived risks associated with migration. These organizations often have strict compliance requirements, legacy dependencies, and conservative risk assessments.
Additionally, board members and executive leadership in banks and financial organizations may be hesitant to approve such a transformation, as it presents a mental and strategic challenge beyond just technical feasibility. The fear of disruptions and regulatory scrutiny often outweighs the long-term benefits of cost reduction and scalability.
However, this reluctance can position these organizations as technologically stagnant in the eyes of both talent and customers. As innovative competitors adopt open-source, cloud-native solutions, institutions that remain dependent on Oracle may struggle to attract top engineering talent and risk falling behind in digital transformation initiatives.
When NOT to Migrate from Oracle to PostgreSQL
While PostgreSQL is a strong alternative, some businesses may still find Oracle necessary:
- Highly regulated industries: Banks, insurance companies, and financial institutions with deep compliance and auditing requirements.
- Stable, low-growth businesses: Organizations that do not need rapid scaling and innovation.
- Legacy-dependent enterprises: Businesses with large, mission-critical Oracle applications that are too costly to rewrite.
The Hidden Risks of Staying with Oracle
Staying locked into Oracle comes with serious business risks:
- Escalating Costs: As Oracle’s pricing continues to increase, long-term financial sustainability is at risk.
- Vendor Lock-In: Organizations become reliant on Oracle’s ecosystem, making future migrations even more difficult.
- Reduced Engineering Agility: Companies clinging to Oracle and PL/SQL-driven development struggle to attract and retain top engineering talent.
- Competitive Disadvantage: Organizations that fail to modernize risk falling behind competitors who adopt open, scalable, and cost-effective solutions.
Conclusion: Why You Should Migrate Now
Migrating from Oracle to PostgreSQL provides:
- ✅ Significant cost savings
- ✅ Better scalability with modern cloud-native architectures
- ✅ More maintainable and future-proof software engineering practices
- ✅ Improved attractiveness as an employer for top engineering talent
- ✅ Reduced dependency on proprietary vendors
For large-scale financial institutions, staying with Oracle locks them into exponentially increasing costs. PostgreSQL provides a cost-effective, scalable, and open-source alternative, enabling significant long-term savings and greater architectural flexibility.
FAQ
1. Is PostgreSQL as reliable as Oracle?
Yes, PostgreSQL is highly reliable and is used by many large enterprises for mission-critical applications. It offers high availability, replication, and backup solutions that are comparable to Oracle.
2. What are the main challenges of migrating from Oracle to PostgreSQL?
The main challenges include rewriting PL/SQL procedures, migrating data, and ensuring compatibility with existing applications. However, these challenges can be mitigated with proper planning and tools.
3. How long does it take to migrate from Oracle to PostgreSQL?
The migration timeline depends on the complexity of the existing system. For large enterprises, it can take several months to a year. However, the long-term benefits often outweigh the initial effort.
Tools and Resources
- Migration Tools: pgloader, Ora2Pg
- PostgreSQL Documentation: Official PostgreSQL Docs
- Community Support: PostgreSQL Mailing Lists
- Paid Support: EDB, Crunchy Data