Inevitable Events-How to Avoid Costly Fire Drills and Substantially Improve Software ROI by Proactively Managing Your Oracle Licenses

1. W H I T E PA P E R
Inevitable Events
How to Avoid Costly Fire Drills and Substantially Improve Software ROI by
Proactively Managing Your Oracle Licenses

2. How to Avoid Costly Fire Drills and Substantially
Improve Software ROI by Proactively Managing
Your Oracle Licenses
Executive summary 4. nsufficiently informed contract negotiation, poor alignment of
I
Oracle® products, including its popular database technology software spending with business needs, and imprecise budget
and E-Business Suite, are widely deployed in many companies. planning
Because Oracle does not automatically lock out unlicensed use
of its products – and because those products have such broad To avoid these consequences, IT organizations should pro-
business applicability – Oracle deployments can readily sprawl actively implement proven software license management best
far beyond their original scope. By the same token, for a variety practices – including the ongoing, automated monitoring of
of reasons, IT organizations often wind up buying more Oracle their Oracle deployments in relation to their current licensing
licenses than they need. agreements.
Either way, these IT organizations inevitably experience multiple These best practices enable IT organizations to handle the
events that result in Oracle license management “fire drills.” inevitable events associated with Oracle software ownership
These inevitable events include usage audits by Oracle, contract without the disruption and cost associated with rushed manual
renewal negotiations, license restructurings driven by business inventories. A proactive approach also enables IT decision-
change such as MA or corporate reorganizations, and license makers to avoid audit problems, better manage and negotiate
restructurings driven by infrastructure change such as server software license contracts and plan budgets proactively based
consolidations or platform migrations. on actual and documented software usage.
License management fire drills occur because IT organizations The cumulative result of these benefits is that IT can optimize the
lack accurate, up-to-date information about how Oracle products total return on its Oracle investments by both minimizing costs
are actually being used, accessed, and authorized across the and maximizing the value delivered to the business.
enterprise – and how their Oracle deployment compares to their
actual contracts. Inevitable events
IT organizations are constantly under pressure to deliver
So, when these inevitable events loom, IT staffs must scramble critical services to business users, to maintain the security of
to manually gather the necessary information as quickly as the enterprise computing environment, and to fix whatever
possible and then perform the appropriate reporting and problems happen to arise with infrastructure and applications.
analytics. Given the constant daily pressure of these immediately urgent
circumstances, it is not surprising that IT decision-makers may
IT organizations that rely exclusively on manual, event-driven fire not put much effort into preparing for events that they believe
drills to “true up” their Oracle licenses face several problems, are still quite a bit in the future – or that they believe might not
including: happen this year at all.
1. isruption of normal IT operations and diversion of resources
D This can be particularly true when it comes to Oracle license
from other essential tasks management. Once an IT organization acquires and deploys
2. onsistently incomplete and inaccurate information about
C Oracle software, it has a lot of work to do configuring
their Oracle deployments and customizing it, integrating it with the rest of the
3. xposure to substantial unplanned or unnecessary
E environment, training and supporting users, handling changes,
expenditures as a result of license violations or license over- troubleshooting problems, scaling up capacity, and keeping it
subscription (“shelfware”) secure. Software licensing is almost never something that anyone
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3. How to Avoid Cost ly Fire Drills and Substant ially Improve Software ROI by Proact ively Managing Your Oracle Licenses
thinks about on a day-to-day basis. After all, how likely is it that the total number of software licenses required to remain in
any kind of licensing-related issue will arise tomorrow? compliance. Software licensing needs can also be affected
by hardware platform migration, OS migration, server
Actually, it may not be very likely that a software licensing- consolidation, and the implementation of additional features
related issue will arise tomorrow. Nor may it be likely that such or interfaces.
an issue will arise next week or next month. It is, however, quite
certain that a software licensing-related issue or issues will occur Again, it is essential for IT managers and negotiators to have a
eventually. In fact, such events are inevitable. And they can be clear picture of how their Oracle deployments align with their
quite significant in their impact. current licensing agreement and/or the one for which they are
negotiating. Any failure to “right size” a new agreement will
These inevitable events include: result in either over-spending or exposure to the risk of
Oracle audits non-compliance.
Oracle can, at any time, audit its customers to determine if there
are any disparities between their customers’ software licensing Installations and upgrades
agreements and the actual implementation of the company’s In some sense, every Oracle installation or upgrade represents a
software products. An annual “true-up” is typically written into significant license management event. Standard downloads and
every Oracle contract. Plus, according to Forrester: media for Oracle’s database, for example, include the full range
of available options – regardless of whether or not the customer
Forrester clients report increasing audit threats from Oracle pays for authorization to use those options. IT staff who are
sales teams. Customers often experience an increase in audit not aware of the specific terms of their company’s contract
threats when the economy worsens. Savvy sales reps often with Oracle can therefore easily operate under the mistaken
use audit threats to begin a conversation about potential assumption that they are authorized to use all the components
overutilization to drive new license sales.1 provided in the download or media. This is yet another way
that companies make themselves vulnerable to violations of their
Contract renewals Oracle licensing agreements.
Contracts expire. When they do, new ones have to be re-
negotiated. Even Oracle’s Unlimited License Agreements (ULAs) It is important to emphasize the fact that every company will
– which, because of their name, may lead some IT staff to experience at least one of these events every couple of years.
mistakenly use Oracle software without restriction -- have to be Some will experience more than one of these events during
“trued up” after a set period of time. In either case, it obviously some years. They are simply intrinsic to the ownership of
benefits IT organizations to enter into negotiations with a clear Oracle software.
idea of how closely their existing contract aligns with their
current and planned Oracle software deployment – so that those It is also important to note that IT decision-makers can’t always
doing the negotiation know whether they need to add licenses, know when such events are about to occur. Oracle typically
reduce the scope of the agreement, and/or try to get additional only notifies customers approximately one to two months in
entitlements bundled into the new deal. advance of a software audit. And business change often occurs
with relatively little notice as well. In fact, sometimes regulatory
Restructurings driven by business change constraints actually prevent business executives from providing IT
Oracle contracts are subject to change whenever changes take with as much warning about such changes as they would like.
place in the business. These changes can include MA activity,
divestitures, re-organizations, expansions, facility closings, and/ IT organizations that do not proactively attend to core software
or layoffs. Of course, if a company has already licensed more license management tasks on an ongoing basis are thus very
software than it needs, there’s no reason for it to increase its likely to enter into multiple events related to their ownership of
Oracle budget following an acquisition. And, conversely, if a Oracle software with little or no time to prepare.
company is already under-subscribed, then it’s not in a position
to talk to Oracle about a price break in consideration of its The downside of fire drills
downsizing. So license management plays a role in the ability of So what exactly is the downside of not being fully prepared in
IT to appropriately respond to business change. advance for any of the various events associated with Oracle
software ownership? With so many other priorities competing
Restructurings driven by infrastructure change for the attention of IT staff, is there really anything so bad about
Oracle contracts are also subject to change whenever IT waiting for such events to arise before performing the license
makes certain types of changes to the enterprise computing management tasks necessary to address them?
environment. Virtualization, for example, can significantly
impact enterprise software licensing needs – since the often- Disruption of IT operations and diversion of IT resources
rapid proliferation of virtual machines can significantly increase When an IT organization is suddenly presented with an event
1 Base Your Oracle “Red Stack”Negotiations Strategy On Your Oracle Adoption Strategy by Ray Wang, John R. Rymer, and Noel Yuhanna, Forrester, March 13, 2009.
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4. How to Avoid Cost ly Fire Drills and Substant ially Improve Software ROI by Proact ively Managing Your Oracle Licenses
such as an Oracle audit or some re-structuring of the business, of dollars – or even millions – in software over-spending across
a license management fire drill typically ensues. IT staff have several years. Such massive over-spending is certainly not
to manually pore over multiple server audit logs to determine something that any IT executive wants to have to explain to
exactly how many users are accessing Oracle resources, which a CFO.
processors are utilizing Oracle, which features and options are
actually being used, and at what rate the Oracle deployment is Less effective negotiation, spending, and planning
trending upwards or downwards. Negotiators are always at an extreme disadvantage when they
don’t have the information they need. They don’t know exactly
The number of people who have to participate in the fire drill where to push for concessions from Oracle or whether such
and the percentage of their workdays they have to dedicate concessions will yield little in the way of real financial benefits.
to it depend on several factors – including the scope of the They may be unable to make volume commitments in situations
Oracle deployment, the size and complexity of the enterprise IT where such commitments are to their advantage – or they may
environment, and the amount of time between the start of the be drawn into making commitments that are inappropriate,
fire drill and the event deadline. Often, the disruption to normal given their actual use of Oracle’s various products. Plus, their
operations and the diversion of resources from other critical uncertainty about their needs ultimately weakens their overall
tasks is pretty severe. negotiating position. Such weakness at the negotiating table
can be very costly to companies over the long term.
So, ironically, by allowing the daily demands of the business to Of course, the disadvantages of inadequate insight into the use
prevent them from preparing in advance for inevitable events, IT of Oracle products extend well beyond any specific negotiation
organizations virtually guarantee that their ability to fulfill those with Oracle. Without accurate, up-to-date information about
daily demands will eventually be compromised by such an event. how Oracle is actually being used across the enterprise, IT
decision-makers can’t determine how to best prioritize the
Incomplete and insufficiently accurate information allocation of budget dollars – or accurately project what their
Manual processes are inherently unreliable, so the information budget requirements for Oracle licenses may be in the near
that large Oracle sites collect is likely to include all kinds of future. As a result, over- or under-spending can start to become
errors and omissions. Also, DBAs typically differ in the detail entrenched. This can wind up having implications well beyond
with which they account for the various options, entitlements, a company’s Oracle implementation, since any mistakes in the
and utilities being used in their individual management allocation of finite budget dollars to Oracle licenses affect the
domains. Many don’t even fully understand exactly how Oracle availability of those dollars for other critical IT projects.
licenses are structured – and therefore don’t know exactly what
to check for. And if this accounting work has to be done on Simply put, IT organizations expose themselves to a variety of
a rush basis, it is unlikely that there will be sufficient time to problems and unacceptable risks if they only worry about license
double-check the results. management when some triggering event pops up. The issue is
not whether or not there is an event on the horizon today. The
The problem of accounting accuracy tends to be compounded by issue is that such events are inevitable – and, without the right
the fact that, once an event has passed, whatever reporting was preparation, those events can be costly and disruptive in ways
generated for that event tends to remain the de facto benchmark that few IT organizations can afford.
for the IT organization from then on. An out-of-date accounting
(that probably wasn’t very accurate to begin with) may then Oracle license management best practices
compromise the organization’s ability to deal with the next Although the range of inevitable events that Oracle users face
inevitable event – and will distort trend analysis whenever the is somewhat diverse, there is actually a common set of Oracle
next assessment of the Oracle implementation is performed. license management best practices that can be applied to all of
them. These best practices ensure that IT organizations are well
Unplanned or unnecessary spending as a result of license prepared for such events when they occur – and that they can
violations or over-subscriptions consistently optimize the outcomes of these events.
One of the biggest problems with event-driven fire drills is that
they only reveal discrepancies between licensing and actual Key aspects of these best practices include:
deployment after the fact. In the event of an Oracle audit, this Proactive, consistent monitoring of Oracle deployment
may simply alert IT decision-makers that the company is in fact Rather than waiting until an event deadline approaches, IT
going to be found to be in violation of their agreement with organizations are better off monitoring their Oracle deployment
Oracle. Obviously, in such cases, Oracle will be in a position to proactively and continuously. This eliminates the frenzied
require full compensation for any differential – which is typically disruptions that occur when they are forced to react under tight
quite a bit more expensive than the payment that would have time constraints. By regularly keeping tabs on their Oracle
been arrived at in a normal contract negotiation. deployments, IT organizations can also pinpoint emerging trends
before they spiral out of control.
On the other hand, if the business’s contracted licensing turns
out to have exceeded its actual needs, then an event-driven Collecting complete, granular information
approach will only discover the over-spending after it has Oracle deployments and Oracle licensing can be quite complex,
occurred. This can potentially result in hundreds of thousands encompassing many instances on multiple platforms and
4 How to Avoid Cost ly Fire Drills and Substantially Improve Software ROI by Proact ively Managing Your Oracle Licenses
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5. How to Avoid Cost ly Fire Drills and Substant ially Improve Software ROI by Proact ively Managing Your Oracle Licenses
including a wide range of options, entitlements, and utilities. Oracle license management best practices are worth prioritizing
IT organizations must therefore be sure that their visibility into precisely because they provide advantages to IT as a whole – in
their Oracle deployments is both sufficiently complete and addition to optimizing returns on Oracle software investments in
sufficiently granular – including discovery of all processors and particular. These benefits include:
all named users.
Minimal disruption of day-to-day operations by
Use of automation inevitable events
IT organizations can obviously reduce the strain on their IT organizations that have to respond to inevitable events with
IT staffs and improve the accuracy of their information by fire drills consistently experience significant disruption of their
using automation appropriately. Automation also ensures the day-to-day operations. During these disruptions, other tasks are
scalability of monitoring processes. Automated monitoring left undone or are not performed as well as they need to be.
processes should be properly scheduled to avoid any impact Proactive software license management therefore safeguards
on the performance of critical business services. Most IT IT’s ability to maintain service levels across the enterprise – even
organizations will want to implement agentless automation in when a software license audit or contract re-negotiation is about
order to avoid additional management complexity. to take place.
Clear reporting against actual license structure Avoidance of costly license violations
Armed with a complete, accurate, and sufficiently granular If and when Oracle discovers license violations at the conclusion
inventory of their Oracle deployments, IT organizations then of an audit, they are entitled to full compensation for the
need to clearly understand how those deployments compare excess use of their software. By preventing such violations
to their actual current license entitlements. This understanding from occurring – whether at the time of installation or during
is typically provided through reports that highlight where the ongoing course of software ownership – software license
the deployment exceeds existing licenses and where there is management best practices protect companies from such
“shelfware” – i.e. licenses for entitlements that aren’t currently charges, allowing them to procure whatever additional software
being used. licenses they may need over time through normal contract
negotiations. This allows budget dollars to be preserved for
Full leveraging of deployment insights across all IT and other important IT priorities.
business functions
IT organizations that have developed the ability to maintain Reducing costs with insight into shelfware
proactive ongoing insight into their Oracle deployments must Companies often spend tens or even hundreds of thousands
also be diligent about delivering that insight wherever it is of dollars on software licenses they don’t need. Some spend
applicable across the organization – and about empowering millions. This wasteful excess of software licensing is often
appropriate individuals to use that insight as effectively as concealed in the form of value-added options and performance
possible. In addition to just developing the technical ability to utilities for core Oracle products. Left unchecked, such excess
monitor their deployments, they may therefore also want to spending can continue for years. Effective software license
tap into available sources of expertise in disciplines such as management can identify this excess spending so that it can be
negotiation, budget allocation, and budget planning. eliminated and/or leveraged at the negotiating table to obtain
discounts on future license purchases, services, training, support
The above is obviously a fairly simplified overview of Oracle and maintenance. In addition, IT organizations that know
license management best practices. The effective use of exactly how much shelfware they have can use those existing
deployment insight in business negotiations, for example, licenses to meet their needs as they grow, without spending
could easily fill an entire document by itself. These five aspects, more money unnecessarily. All of these tactics free up IT budget
however, serve to highlight the disparity between the manual, dollars for other critical business needs.
event-driven approach most IT organizations currently take to
manage their Oracle deployments and the best practices being Smarter, more effective contract negotiation
espoused by leading industry consultancies such as Gartner An accurate understanding of current and projected business
and Forrester. And without these best practices in place, needs is always a substantive advantage in negotiations
IT organizations will continue to be subject to the adverse with any vendor – since it empowers the negotiator to press
consequences that occur when inevitable Oracle ownership for advantages that are important, while making concessions
events result in inevitable license management fire drills. that won’t adversely affect either costs or business value. By
providing this understanding, software license management best
The benefits of proactive Oracle license management practices deliver significant long-term cost savings while also
IT resources are limited. And there are many business priorities easing the negotiation process itself.
competing for those limited resources. So why should an IT
organization commit any of its resources to the implementation Also, like any other software vendor, Oracle at times modifies its
of automated, proactive Oracle license management at a time licensing models. Without an accurate understanding of current
like this? What real benefits can they expect to gain from such an and projected business needs, IT organizations are typically
effort – and how quickly can they expect to gain those benefits? unsure how to proceed when such modifications are announced.
Actually, as the following list of proven benefits demonstrates, With accessible and reliable usage information, on the other
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6. How to Avoid Cost ly Fire Drills and Substant ially Improve Software ROI by Proact ively Managing Your Oracle Licenses
hand, they can quickly assess the impact of any new software About Flexera Software
licensing options and negotiate accordingly. Flexera Software is the leading provider of strategic solutions for
Application Usage Management; solutions delivering continuous
More accurate budget allocation and planning compliance, optimized usage and maximized value to application
When resources are tight and demands are escalating, it is producers and their customers. Flexera Software is trusted by
more important than ever to align spending with real business more than 80,000 customers that depend on our comprehensive
needs and to accurately project future budget requirements. solutions- from installation and licensing, entitlement and
IT organizations that maintain full visibility into their Oracle compliance management to application readiness and enterprise
deployments can find ways to save money, redistribute licenses, license optimization - to strategically manage application usage
institute chargeback’s, and/or institute any other measures to and achieve breakthrough results realized only through the
ensure that their Oracle budgets are allocated where they will systems-level approach we provide. For more information, please
deliver the most value to the business. go to: www.flexerasoftware.com
Support broader corporate governance, risk, and compliance
initiatives
The violation of Oracle software licensing agreements is not
an isolated issue. It is actually part of the broader challenge
companies face in maintaining compliance with their contractual
obligations and mitigate the risks associated with failures to
comply. Improved Oracle software license management is
therefore material to the integrity of corporate governance as a
whole – as well as a way to get maximum business value from
software spending.
It should also be noted that proactive, automated management
of software license compliance benefits Oracle as well. It is
fairly expensive for Oracle to mount a manual audit of a large
corporate customer. IT organizations that are able to provide
Oracle with reliable software audit documents can thus save both
parties a substantial amount of time, money, and aggravation.
The bottom line is that companies can realize a wide variety of
hard and soft benefits by implementing proactive management
of their Oracle entitlements. Such management will significantly
improve ROI for Oracle deployments by reducing costs and
ensuring that budget dollars are allocated where they will deliver
the most value. Best practices management will also benefit IT
and the company even more broadly by freeing resources and
mitigating risk. And these benefits will accrue in both the short
and long term as inevitable event after inevitable event occurs
over the course of Oracle ownership.
That’s why IT organizations should take action now to implement
best practices – or, at the very least, better practices – for Oracle
software license management. It is simply impractical to wait for
the next inevitable event to arise. The smarter course of action
is to initiate both 1) internal advocacy for a proactive approach
and 2) an investigation of the technology solutions available for
automating such an approach immediately.
IT decision-makers must be intentional about overcoming
organizational inertia by acting decisively even in the absence
of a known impending event. By doing so, they will ensure that
their company will begin realizing the concrete benefits of best
practices at the very next inevitable event. Failure to do so will
simply guarantee another costly, disruptive fire drill – and will set
the stage for post-event inertia to set in once again.
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