vCenter Server requires a database to store and organize server data. You can either use the bundled PostgreSQL database that can be installed and configured at deployment time, or you can set up an external database.
vCenter Server for Windows supports Oracle and Microsoft SQL database, while the vCenter Server Appliance supports only an Oracle database as an external database.
You can configure an external database manually or by using a script. In addition, the data source name user must have a specific list of permissions.
The database passwords are stored in clear text on the Windows virtual machine or physical host on which you install vCenter Server and in the vCenter Server Appliance. The files containing the passwords are protected by using the operating system protection, that is, you must be a Windows local administrator or a Linux root user to access and read these files.
vCenter Server instances cannot share the same database schema. Multiple vCenter Server databases can reside on the same database server, or they can be separated across multiple database servers. For Oracle databases, which have the concept of schema objects, you can run multiple vCenter Server instances in a single database server if you have a different schema owner for each vCenter Server instance. You can also use a dedicated Oracle database server for each vCenter Server instance.
You cannot install vCenter Server and point to an older external vCenter Server database. You can upgrade the old vCenter Server database to the latest version only by upgrading the vCenter Server instance connected to that database. For information about upgrading vCenter Server, see vSphere Upgrade.