How you can outsmart license audits

10 aug '17 - Richard Spithoven
how-you-can-outsmart-license-audits

Two examples of Oracle cases in which software asset management can save you millions

License audits can be very painful and costly. But here are two practical examples that show how you can save millions with thorough software asset management.

Of all the IT expenses, companies spend the biggest part of their budget on enterprise software, according to Gartner's latest figures. The higher the software costs, the greater the financial risks. Software asset management (SAM) is therefore more important than ever - especially for large organizations. Proactive management of licenses, costs and use of software provides organizations millions. Let me illustrate this with two Oracle Database examples.

Closing a gap of 13 million euros
Oracle is known for its complex licensing policy and aggressive audit practices. This is what a large energy network company also experienced. The organization received an audit letter for their Oracle Database software (and some other products) from Oracle License Management Services and SAM immediately became a priority. Knowing that Oracle often conducts an audit for a well-founded reason, the organization chose to conduct an internal audit to chart its compliance issues. This internal audit, which consisted of collecting and analyzing all relevant contracts and analyzing software installation and usage data, revealed a compliance issue of 13 million euros.

This information gave the energy network company the opportunity to close the compliance gap and align the licenses and usage, even before Oracle conducted the audit. Nevertheless, since all optimized data was shared proactively with Oracle, the software vendor decided to completely let go of the audit. But that was not all. In addition, the internal analysis revealed that the network company could save another 700,000 euros on support services. The entire internal audit and optimization process took a few months, but it was worth the investment. The financial benefits were the reason the organization decided to not have a one-time SAM adventure, but to choose a structural approach.

A claim of 260,000 euros
One of Canada's largest media companies buys its database software from Oracle on a large scale. When Oracle informed the company - without an audit - that they needed to purchase 260,000 euros worth of new licenses due to compliance exposure, the IT team realized they had little insight into the licensing and use of software. The license agreements date back to the ‘90s and over the years they had difficulty staying on top of all their contracts, license rights, and usage details. An internal audit proved again to be the answer, and the outcome also provided some surprising but, above all, much needed insights.

On the first hand, there was no license breach worth 260,000 euros, but no less than 1.7 million euros. This was - fortunately for the media company - not yet known by Oracle. If Oracle would have decided to conduct an audit, the organization would have had a major problem. Now, there was the opportunity to resolve compliance issues in the meantime, by reducing costs, including stopping unnecessary use of licenses. It even appeared unnecessary to purchase the above-mentioned additional licenses. That was a direct saving: if the company would have remained ignorant, it would probably have purchased the licenses. Additionally, 20 percent additional support costs could be saved, as many licenses were not used at all.

Strong starting position
Nothing is more annoying than explaining to the board how it happened that you've (again) exceeded your IT budget, because Oracle unexpectedly reported that you still owe them money. Nobody likes such unpleasant surprises, especially if they could have easily been prevented by better management. The above examples show how important it is to manage software licenses and their use structurally. The insight resulting from this gives your IT team a much stronger starting position, and this also applies to other vendors than Oracle. This insight prevents you from unknowingly buying unnecessary additional software or be confronted with a claim. Moreover, you can ensure that the audit letter actually never arrives and that you will be in the lead in future negotiations with your software vendor.

Oracle Database and Hardware Infrastructure

The required number of licenses for Oracle’s Database programs are (almost) at all times related to the hardware infrastructure on which the software is installed. Incorrect interpretation or understanding of whether the software is deemed to be installed and how the installed software should be licensed in a certain specific hardware infrastructure is by far the number 1 license compliance issue. 

Oracle Database and Hardware Infrastructure