Does your team know exactly how many license entitlements you have purchased from Oracle? Can you provide a log identifying precisely how many Oracle licenses you are currently deploying to run your business?
Many companies don’t really know the exact answers to these questions. But if you think it’s wise to rely on Oracle to provide you with these figures, you are potentially exposing yourself to a bad deal. Whether you plan to make a new licensing purchase or you are concerned about being the target of an audit, the burden is on your organization to avoid over- or under-licensing.
The best way to know what you need is to know what you have
Organizations often project licensing requirements without a clear view of their current license usage. When considering new purchases, these companies not only risk getting hit with significant and unnecessary licensing fees but also risk being charged annual support fees for additional licenses that may not yet be fully deployed.
The lack of insight on license utilization also could prevent you from leveraging unoptimized licenses and unused support during negotiations for future purchases. Companies that understand their license usage and can identify compliance gaps based on that usage prior to an audit have a significant advantage. Identifying compliance gaps allows the adjustment of licensing usage and future purchase requirements to correct any areas that are out of compliance.
Putting license management processes in place
Whether you are an Oracle, SAP, or Microsoft ERP customer, every organization should establish and maintain processes to accurately track their contractual rights, license entitlements, and license deployments. But many fail to do so and consequently lose significant leverage while negotiating their next licensing agreement. In the case of a licensing audit, not maintaining accurate license deployment logs may result in serious financial risks.
Unless license management processes have been put in place and maintained throughout the course of a relationship with Oracle – in which multiple purchases, renewals, and addendums may have been negotiated – it is often a very challenging and time-consuming process to complete an accurate and comprehensive baseline assessment of license agreements, license entitlements and utilization.
Some organizations also struggle to align the licensing purchase requirements of various business units to determine a comprehensive future demand roadmap. The lack of a future demand roadmap may lead to making smaller contractual purchases instead of achieving cost savings opportunities and advantageous price protections by negotiating a larger proposal.
The solution: An Oracle Baseline Assessment
Engaging a third-party adviser to conduct an overall baseline assessment can provide a holistic view of your relationship with Oracle so that you can understand the available levers for future negotiations. A baseline assessment consists of:
- Agreement Assessment
This review is of your Oracle agreements and provides an understanding of the rights they provide. Through a full evaluation of your portfolio of agreements, addendums and order forms, you will obtain a complete mark-to-market assessment of historical and current discount and price hold protections as well as contractual rights. It will also identify improvement opportunities to address during future negotiations.
- Utilization/Optimization Assessment
In addition to providing a view of contractual rights, a full review of the agreements will be used to perform an inventory of license entitlements and their corresponding metrics. By comparing this information with the total level of utilization across business units, a full utilization assessment can reveal optimization opportunities.
- Compliance Assessment
Due to the complexity of Oracle’s licensing rules, some find themselves out of compliance by using more licenses than they have entitlements, especially through the use of virtualization tools such as VMware. Using proprietary tools based on Oracle’s licensing policies, a compliance assessment identifies any entitlement compliance risks and quantifies the corresponding financial exposures related to traditional non-compliance and third-party interfacing systems.
- Future Demand Assessment
Informed by the results of the other baseline assessment pillars, a future demand assessment is developed by identifying an organization’s long-term purchasing requirements. UpperEdge’s access to market intelligence and metrics to better understand Oracle’s pricing methodology would clearly benefit a company attempting to quantify its future demand roadmap.
As Oracle audits continue to rise, control over entire license management processes is needed more than ever. Failing to do so may result in over-licensing – by spending more on licenses that are not deployed – or under-licensing – which can translate into serious financial risks due to out-of-compliance exposure.
Take our 15 question Oracle Audit Risk Exposure Assessment that covers your audit risk in terms of IT system architecture, licensing usage, and your overall Oracle investment and relationship.
A baseline assessment can provide your organization with valuable insight to right-size your software investment, improve your overall relationship with Oracle, reduce audit liability, develop accurate demand for new or additional software licenses across business units, and create negotiation levers to achieve favorable pricing and commercial terms for the next purchase event.