Oracle Support Costs: 2 Savings Strategies - InformationWeek

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4/10/2014
12:15 PM
Doug Henschen
Doug Henschen
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Oracle Support Costs: 2 Savings Strategies

Oracle software maintenance costs have customers turning to growing ranks of licensing consultants and third-party support providers. Here's the skinny.

"Support is the Holy Grail for Oracle; it's 90% margin and how Larry [Ellison] gets an island in Hawaii," says Craig Guarente. "Everything they do is geared toward protecting that revenue."

Guarente knows whereof he speaks. He spent 16 years inside Oracle on the contracts, licensing, and software-audit teams. He was global VP of contracts, business practices, and migrations when he and Oracle parted ways in 2011. Guarente is now CEO of Palisade Compliance, a New Jersey-based firm that helps Oracle customers with software contracting, audit intervention, license "optimization" (meaning getting the most out of what you paid for), and compliance-assurance (making sure you're not using software you haven't paid for).

Palisade is thriving, Guarente told us, because it helps customers "take back control of licensing and contracts." Customers feel powerless, he said, because they're not exactly sure what software they're running and they're even less sure of exactly what their contracts entitle them to use. "Once you're in that position, you can't negotiate price and terms effectively, and any vendor has you over a barrel."

[Want more on licensing snafus? Read Software Audits: Are You Ready?]

The usual consultation involves determining what the customer is licensed to use and what software it's actually using. Palisade details the difference between the two in a License Scorecard report, but the next question is: Where do you want to go?

For example, "Do you have a new datacenter rolling out, a new disaster recovery plan, or are you moving into the cloud?" Guarente asks. "We lay out a roadmap and several options for moving from your current software roadmap to where you want to go from a licensing perspective."

It's easy to lose track of software because it's deployed on so many servers in so many different locations. What's more, enterprise software is seldom encumbered by software license keys, and vendors like Oracle make a habit of including every available feature in the software download, even if those features are typically extra-cost options. Finally, IT-oriented deployment and management tools that let you turn features off and on have no connection to or knowledge of your licenses and contracts.

It's common for Oracle database administrators to run Automatic Workload Repository (AWR) reports to diagnose database problems, for example, but that tool requires that you have a license for the Oracle Database Pack. "There's no message that flashes when you run that report: 'Make sure you have a license for the diagnostic pack,' " says Guarente. But use of AWR and other features will undoubtedly be uncovered if and when License Management Services (LMS), Oracle's audit arm, requests that you run scripts that gather details on all Oracle software usage. Commercial software contracts invariably give publishers the right to audit.

Cottage industries
Palisade is one of the newer firms in this niche, but search "Oracle license compliance" and you'll find plenty of competitors. Miro Consulting, for example, has been around for 14 years. It deals mostly with Oracle customers, but it also advises on Adobe, IBM, and Microsoft audits and contracts. The usual trigger for a consultation is a contract renewal, an audit, a planned hardware upgrade, or the start of a software asset-management program.

With the rise of software audits in recent years, many companies are installing software-asset-management tools to determine what software they are using, how often, and by how many people in the organization,

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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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RobPreston
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RobPreston,
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4/14/2014 | 5:04:34 PM
Re: Seeking Relief? Should you ask Oracle LMS
Doug, the "horror stories" you reference, about customers who seek cost reductions from Oracle winding up getting audited, reminds me of a tactic I used as an adjunct college professor: I warned students that if they came to me to complain about a grade I gave them, I'd review my grading of not only the question they single out, but also my grading of the entire test to see if I had been too lenient elsewhere. Very few students came to me complaining about their grades unless they were reasonably certain of their position. Oracle is taking the same tack...and I don't blame it.

 
D. Henschen
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D. Henschen,
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4/11/2014 | 12:20:01 PM
Rimini ruling will set the tone for third party support
Everyone will be watching the outcome of the Rimini ruling because it will set a precident for third-party support. Rimini is the oldest and largest player, and if the model is affirmed, it will clear the way for Spinnaker and others. What's the right comparison? Is software like a car, which you can bring to the dealer or to a third-party mechanic? Or is it something others can't legally touch? This case will drag on. Even if a court decideds next year, as expected, there will surely be an appeal. There's a lot of money at stake.
D. Henschen
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D. Henschen,
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4/10/2014 | 1:08:55 PM
Seeking Relief? Should you ask Oracle LMS
Guarente shared plenty of horror stories about customers seeking cost reductions from Oracle and winding up getting audited. I guess from Oracle's perspective, they have to know what you're using to if they're going to come up with a strategy to save you money, but Guarente says cusotmers tell him they try to drop unused software or lower the number of users but they still end up paying more. Is that a sales pitch for Palisade Compliance services? Share your experiences with Oracle LMS with a comment.
Laurianne
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Laurianne,
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4/10/2014 | 1:04:19 PM
Spinnaker and Rimini Street
Doug, how does Spinnaker's position compare to Rimini Street? Would it be similar legal ground for Oracle?
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