Inevitable Events

Executive summary

Oracle® products, including its popular database technology and E-Business Suite, are widely deployed in many companies. Because Oracle does not automatically lock out unlicensed use of its products – and because those products have such broad business applicability – Oracle deployments can readily sprawl far beyond their original scope. By the same token, for a variety of reasons, IT organizations often wind up buying more Oracle licenses than they need.

Either way, these IT organizations inevitably experience multiple events that result in Oracle license management “fire drills.” These inevitable events include usage audits by Oracle, contract renewal negotiations, license restructurings driven by business change such as M&A or corporate reorganizations, and license restructurings driven by infrastructure change such as server consolidations or platform migrations.

License management fire drills occur because IT organizations lack accurate, up-to-date information about how Oracle products are actually being used, accessed, and authorized across the enterprise – and how their Oracle deployment compares to their actual contracts.

So, when these inevitable events loom, IT staffs must scramble to manually gather the necessary information as quickly as possible and then perform the appropriate reporting and analytics.

IT organizations that rely exclusively on manual, event-driven fire drills to “true up” their Oracle licenses face several problems, including:

  1. Disruption of normal IT operations and diversion of resources from other essential tasks
  2. Consistently incomplete and inaccurate information about their Oracle deployments
  3. Exposure to substantial unplanned or unnecessary expenditures as a result of license violations or license oversubscription (“shelfware”)
  4. Insufficiently informed contract negotiation, poor alignment of software spending with business needs, and imprecise budget planning

To avoid these consequences, IT organizations should proactively implement proven software license management best practices – including the ongoing, automated monitoring of their Oracle deployments in relation to their current licensing agreements.

These best practices enable IT organizations to handle the inevitable events associated with Oracle software ownership without the disruption and cost associated with rushed manual inventories. A proactive approach also enables IT decisionmakers to avoid audit problems, better manage and negotiate software license contracts and plan budgets proactively based on actual and documented software usage.

The cumulative result of these benefits is that IT can optimize the total return on its Oracle investments by both minimizing costs and maximizing the value delivered to the business.

Inevitable events

IT organizations are constantly under pressure to deliver critical services to business users, to maintain the security of the enterprise computing environment, and to fix whatever problems happen to arise with infrastructure and applications. Given the constant daily pressure of these immediately urgent circumstances, it is not surprising that IT decision-makers may not put much effort into preparing for events that they believe are still quite a bit in the future – or that they believe might not happen this year at all.

This can be particularly true when it comes to Oracle license management. Once an IT organization acquires and deploys Oracle software, it has a lot of work to do configuring and customizing it, integrating it with the rest of the environment, training and supporting users, handling changes, troubleshooting problems, scaling up capacity, and keeping it secure. Software licensing is almost never something that anyone thinks about on a day-to-day basis. After all, how likely is it that any kind of licensing-related issue will arise tomorrow?

Actually, it may not be very likely that a software licensingrelated issue will arise tomorrow. Nor may it be likely that such an issue will arise next week or next month. It is, however, quite certain that a software licensing-related issue or issues will occur eventually. In fact, such events are inevitable. And they can be quite significant in their impact.

These inevitable events include:

Oracle audits

Oracle can, at any time, audit its customers to determine if there are any disparities between their customers’ software licensing agreements and the actual implementation of the company’s software products. An annual “true-up” is typically written into every Oracle contract. Plus, according to Forrester:

Forrester clients report increasing audit threats from Oracle sales teams. Customers often experience an increase in audit threats when the economy worsens. Savvy sales reps often use audit threats to begin a conversation about potential overutilization to drive new license sales.1

Contract renewals

Contracts expire. When they do, new ones have to be renegotiated. Even Oracle’s Unlimited License Agreements (ULAs) – which, because of their name, may lead some IT staff to mistakenly use Oracle software without restriction -- have to be “trued up” after a set period of time. In either case, it obviously benefits IT organizations to enter into negotiations with a clear idea of how closely their existing contract aligns with their current and planned Oracle software deployment – so that those doing the negotiation know whether they need to add licenses, reduce the scope of the agreement, and/or try to get additional entitlements bundled into the new deal.

Restructurings driven by business change

Oracle contracts are subject to change whenever changes take place in the business. These changes can include M&A activity, divestitures, re-organizations, expansions, facility closings, and/ or layoffs. Of course, if a company has already licensed more software than it needs, there’s no reason for it to increase its Oracle budget following an acquisition. And, conversely, if a company is already under-subscribed, then it’s not in a position to talk to Oracle about a price break in consideration of its downsizing. So license management plays a role in the ability of IT to appropriately respond to business change.

Restructurings driven by infrastructure change

Oracle contracts are also subject to change whenever IT makes certain types of changes to the enterprise computing environment. Virtualization, for example, can significantly impact enterprise software licensing needs – since the oftenrapid proliferation of virtual machines can significantly increase the total number of software licenses required to remain in compliance. Software licensing needs can also be affected by hardware platform migration, OS migration, server consolidation, and the implementation of additional features or interfaces.

Again, it is essential for IT managers and negotiators to have a clear picture of how their Oracle deployments align with their current licensing agreement and/or the one for which they are negotiating. Any failure to “right size” a new agreement will result in either over-spending or exposure to the risk of non-compliance.

Installations and upgrades

In some sense, every Oracle installation or upgrade represents a significant license management event. Standard downloads and media for Oracle’s database, for example, include the full range of available options – regardless of whether or not the customer pays for authorization to use those options. IT staff who are not aware of the specific terms of their company’s contract with Oracle can therefore easily operate under the mistaken assumption that they are authorized to use all the components provided in the download or media. This is yet another way that companies make themselves vulnerable to violations of their Oracle licensing agreements.

It is important to emphasize the fact that every company will experience at least one of these events every couple of years. Some will experience more than one of these events during some years. They are simply intrinsic to the ownership of Oracle software.

It is also important to note that IT decision-makers can’t always know when such events are about to occur. Oracle typically only notifies customers approximately one to two months in advance of a software audit. And business change often occurs with relatively little notice as well. In fact, sometimes regulatory constraints actually prevent business executives from providing IT with as much warning about such changes as they would like.

IT organizations that do not proactively attend to core software license management tasks on an ongoing basis are thus very likely to enter into multiple events related to their ownership of Oracle software with little or no time to prepare.

The downside of fire drills

So what exactly is the downside of not being fully prepared in advance for any of the various events associated with Oracle software ownership? With so many other priorities competing for the attention of IT staff, is there really anything so bad about waiting for such events to arise before performing the license management tasks necessary to address them?

This is an excerpt. Download the entire pdf: Inevitable Events