CIO expert guide to Oracle license management

Oraclelicensing is complex, elaborate and has a lot of “fine print” to it. With Oracle’s never ending acquisition of technology vendors, it is often challenging for an Oracle licensing analyst or CIO to keep up with the latest licensing policies and procedures.

While many historical license metrics like Concurrent Devices and Universal Power Units (UPU) still exist in the CIO’s license inventory, many more new license metric definitions are continually being added through acquisitions.

Mostly, old licensing metrics can be translated to the latest metrics, old products can be migrated to the newer, and the more-restrictive licenses can be upgraded to the less-restrictive licences. Oracle licensing policy states that any software installed and/or used needs to be properly licensed.

Therefore there are a few questions that the CIO or IT Director must not avoid:

  1. What Oracle licenses does your company currently own?
  2. Do you have adequate Oracle licenses for all your IT environments?
  3. Do you know if your Oracle licenses are being managed effectively?
  4. Do you understand the serious implications of a contractually abiding Oracle license audit?
  5. Does your team fully understand the Oracle licensing complexities, contractual rights and restrictions?
  6. Are of aware of any exposure to financial and operational risks, by means of license over-usage or under-usage?

According to analyst house Gartner, Oracle is one of the top four software vendors conducting licence audits and at the highest frequency. Gartner also states that, if an organisation has not been audited in the last three years, then there is a 65 per cent chance that the organisation may be audited in the next 12 months.

The audit clause in the standard Oracle license agreement states that Oracle may audit the customer once-a-year upon a 45-day notice. The clause also explains that that the customer must agree to pay within 30 days of written notification any fees applicable to the use of the programs in excess of the license rights.

It is imperative for an Oracle end-user to mitigate its financial, operational and legal risks by adhering to Oracle licensing best practices. On one hand, the Oracle customer is exposed for continually paying annual technical support fees (at 22 per cent of license cost) for procured but unused software licenses, while on the other hand, the customer may still be exposed for downloading/installing excessive unpaid-for licenses and thereby causing software over usage.

As an example to prove this, let us take the example of Oracle Database Enterprise Edition (DBEE). The current license cost of one processor of DBEE is $47,500. To receive technical support and software updates, the customer also has to pay an additional 22 per cent price of the license cost, i.e. $10,450, year on year. If the customer does not use the product DBEE and yet keeps paying the technical support fees, this means that they are exposed to financial risk by losing 22 per cent of the license cost every year.

Some of the reasons why a customer becomes non-compliant on Oracle licensing are:

  • Changes to corporate structure, increased growth, mergers and acquisitions.

  • Lack of understanding of licensing policies.Hardware refresh.

  • Mixed or old metrics, as part of license inventory.

  • Installing more software than permitted by the license agreement.

It is the CIO’s responsibility to oversee that his organisation does not stand the risk of revenue leakage due to the lack of Oracle license management, during a contractually-abiding Oracle license audit. It needs to be understood that there is little or no licensing implication, across Oracle product versions like 8i, 9i, 10g or 11g.

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