Oracle Must Reform, Says Software Licensing Group - InformationWeek

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Oracle Must Reform, Says Software Licensing Group

Oracle gets poor marks on audit and licensing practices, according to the Campaign for Clear Licensing, so the group is calling for change.

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Oracle must improve trust and communication with customers, and it needs to help educate and proactively assist its customers with licensing training and management practices.

These are among the recommendations offered by the Campaign for Clear Licensing (CCL) in an open letter, published Tuesday, to Oracle executive chairman Larry Ellison and the Oracle board. Founded in 2014, the CCL is a not-for-profit, member-supported UK organization that bills itself as a champion of clear licensing terms, manageable license programs, and the rights of business software buyers.

The open letter is a followup to a scathing report published by the CCL in November that found that 92% of customers say that Oracle does not clearly communicate licensing changes. The report is based on a survey of more than 100 Oracle customers worldwide, including six of the 100 largest companies on the London Stock Exchange.

[Want more on license optimization and audit survival strategies? Read Software Licensing: Move From Defense To Offense.]

An Oracle spokesperson declined to comment on the CCL letter, which predicted that Oracle will struggle to move to the cloud unless it changes its ways. Its licensing terms and changes are "poorly communicated," and audit requests are "often unclear and difficult to respond to," according to the letter. "With just 5% of [Oracle] revenue deriving from cloud services, you have a long way to go before cloud becomes a major part of your business, and we believe there are significant challenges to overcome along the way. Not least of all is overcoming the deep-rooted mistrust of your core customer base as a result of your auditing and licensing practices."

Oracle also declined to comment on the CCL's November report, "Key Risks In Managing Oracle Licensing," which uncovered overwhelmingly negative perceptions of Oracle audit practices, Oracle License Management Services (LMS), and Oracle communications regarding licensing changes.

  • On auditing: Only 2% of respondents "strongly agree" and 10% "agree" with the statement: "Oracle audit requests are clear and easy to manage respond to," while 44% "disagree," and another 44% "strongly disagree."
  • On Oracle LMS: No respondents "strongly agree" and 22% "agree" with the statement: "Oracle LMS has been helpful during the audit, contract renewal, and negotiation process," while 41% "disagree," and 37% "strongly disagree."
  • On communication: Only 2% of respondents "strongly agree" and 5% "agree" with the statement: "Communication from Oracle regarding licensing changes has been clear and straightforward," while 46% "disagree," and another 46% "strongly disagree."

A few of the seven recommendations for Oracle reforms outlined in the CCL letter included establishing one voice of authority on all licensing matters, creating a well-organized knowledge base on licensing terms, and establishing clearer communications on audit activities and expectations. The CCL also called on Oracle to adopt its audit code of conduct, which outlines principles that vendors and customers alike should follow when licensing software.

The fledgling CCL currently draws its membership from Europe, but it has plans to extend its reach to North America. To that end, it's planning a Jan. 29 workshop in New York on "Managing the Complexity of your Oracle Licensing Agreements." Among the speakers will be Christof Beaupoil, president of the software license optimization vendor Aspera Technologies, and Oracle Licensing consultant Craig Guarente of Palisade Compliance. Both executives shared their advice in recent InformationWeek reports on license optimization and audit survival strategies.

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Doug Henschen is Executive Editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data and analytics. He previously served as editor in chief of Intelligent Enterprise, editor in chief of ... View Full Bio

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David Wagner
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David Wagner,
User Rank: Strategist
1/8/2015 | 11:02:29 AM
Re: Public pricing meets confusing usage terms
I have to say I'm a little skeptical. This seems like the problem of being big as opposed to the problem of being unclear. It also seems like one of those things that always surveys different than people "vote." It is like the environment. Everyone is an environmentalist until they vote.

Everyone hates Oracle until they buy another Oracle product. It is the same problem Microsoft faces. 

 
danielcawrey
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danielcawrey,
User Rank: Ninja
1/7/2015 | 4:51:25 PM
Re: Public pricing meets confusing usage terms
This is not good for customers, beneficial for Oracle probably. 

I think that many organizations must rely on Oracle's enterprise database services, and they are sort of like hostage to them. Not good. 
MartinT789
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MartinT789,
User Rank: Apprentice
1/7/2015 | 11:31:10 AM
Re: Public pricing meets confusing usage terms
Lorna, you are right the CCL has no legal authority. We represent the customer and act as a group. Our power is in making positive recommendations to Oracle as a collective, sharing information and key risks between customers, and escalating matters to government bodies who wish to preserve fair play in competitive markets. 
D. Henschen
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D. Henschen,
User Rank: Author
1/6/2015 | 3:50:43 PM
Re: Public pricing meets confusing usage terms
Oracle is getting competitive pressure in that the CCL has put the spotlight on Oracle and Oracle alone. Oracle's approach of letting customers download software and turn on features without retraints has made it difficult to manage the software and ensure compliance from a licensing perspective. Without license key lockouts or pop-up warnings about unlicensed features, companies end up with more surprises, true-up fees and fines during Oracle audits than they experience with other vendors.
Laurianne
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Laurianne,
User Rank: Author
1/6/2015 | 3:36:35 PM
Re: Public pricing meets confusing usage terms
Lorna brings up a good point. Oracle must feel competitive pressure if the situation is to change, right?
Lorna Garey
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Lorna Garey,
User Rank: Author
1/6/2015 | 3:32:41 PM
Re: Public pricing meets confusing usage terms
Well, maybe between pressure from groups like CCL and a squeeze by customers choosing SaaS options, licensing will improve. And who knows, this Congress might even tackle that tax code!
D. Henschen
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D. Henschen,
User Rank: Author
1/6/2015 | 3:27:25 PM
Re: Public pricing meets confusing usage terms
CCL is a very young organization and doesn't have many members. It's also Euro/U.K.-centric at this point. CCL's clout is in its bully pulpit, and it's using it. The group is talking about licensing and audit issues that customers have been griping about for years, and it's calling for sensible changes. Increased audit activity by vendors in recent years has brought this topic to a head, so they've brought it on themselves.

Let's be clear: software is valuable intellectual property and vendors deserve their due, but licensing terms and audit practices should be clear, open, and consistent. As things stand today, enterprise software licensing is about as simple, clear, fair and consistent as our Federal tax code.

 
Lorna Garey
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Lorna Garey,
User Rank: Author
1/6/2015 | 2:43:13 PM
Re: Public pricing meets confusing usage terms
Doug, How much clout does the CCL have? Clearly it has no legal authority, but is it well-known enough that Oracle is likely to take notice of its findings?
D. Henschen
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50%
D. Henschen,
User Rank: Author
1/6/2015 | 2:22:02 PM
Public pricing meets confusing usage terms
It's ironic that Oracle has become the poster child of everything wrong with software licensing when it's also one of the few vendors that publishes software license pricing online. It's just that actual pricing often has little to do with the official rate card, and Oracle takes an honor-system approach to the use of software. Customers can download and use software at their will, but that's how they get into trouble. Other vendors require license keys or have pop-ups and warning message when you're about to use a feature that you haven't actually licensed.

If vendors can create software that's smart enough to run a huge enterprise, it would be easy enough to include monitoring capabilities that show what software is installed, how it's being used by how many users, and what the costs will be for the use of the software. When vendors do audits, they run scripts to uncover these facts and they use that information to impose fines and true-up fees.

It's time to make software usage and cost open and visible, reported through standards-based systems in a consistent, measurable way that's fair and clear to vendors and customers alike.
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