Ask Your Oracle Licensing & Procurement Questions

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Even after the 2008 shutdown of TomorrowNow, we are often asked by company executives about third-party alternatives for Oracle support. While we understand that this is being driven by the need to reduce IT support costs, there are some distinct advantages and disadvantages.

Companies - such as newcomer Spinnaker - are creating opportunities for themselves with claims of cutting third-party support costs in half. And, since these alternative 3^rd party support providers are essentially cutting out the annual support and maintenance costs, it makes sense that they are saving you the cost of year-over-year annual fees. This can translate to millions of dollars. While, there are a lot of happy clients out there, enterprise IT organizations need to take into account whether or not it is prudent to completely cut out the annual support and maintenance.

Third-party support cannot always adequately fill the gaps left by the discontinuance of Oracle software updates and license support. It can, however, function in an important augmentative role to Oracle support (Though, we are told by one of the 3^rd party support firms that they have several clients that retain Oracle support in order to get access to a release). Several firms provide this support with various offerings, including long-term engagements for hosting, outsourced database administration, and performance tuning as well as one-time or short-term events such as migrations, upgrades and temporary or emergency staff augmentation. The costs associated with this additional support should be carefully assessed with regard to each organization’s unique requirements. Some firms primarily support Oracle Database, while others focus on Oracle Applications such as PeopleSoft, JD Edwards and Siebel.

Oracle offers software update and license support (SULS), which is mandatory for the first year, but clients can elect to discontinue SULS in subsequent years. However, we usually recommend against this for several reasons:

Other reading of interest:

Avoiding the Technical Risks of Third-Party Support

Is Oracle support or third-party support the better choice?

I keep getting request for information on one particular blog entry….I’m reblogging it here.

Oracle offers 3 licensing models for its installed applications to fit the unique needs of each organization: component pricing, custom applications suite pricing and enterprise pricing. Having different licensing models allow organizations to select the best combination for their operations. Not all products are available within each of the pricing models due to the Terms, Conditions and application features.

Oracle’s component pricing model is an a la carte pricing model that caters to customers with a limited number of users. This pricing model offers two basic licensing options - usage versus user-based licensing metrics.

Oracle’s customer applications suite (CAS) pricing model allows organizations to create custom bundles across all Oracle product lines including Siebel, PeopleSoft and JD Edwards to suit their users’ needs. CAS licensing is for customers standardizing on Oracle. Custom Suite User licenses are strictly defined as an individual authorized to use the application programs - whether (s)he is actually using them or not. There are a number of minimums and restrictions on CAS licensing.

Oracle’s enterprise applications pricing model assumes that Oracle is the standard enterprise software throughout the organization. The EA license model allows companies to license Oracle products for their entire organization without having to worry about keeping track of user licenses. This is, by far, the most costly option and the one with the most variants in its licensing metrics (there are 5 different pricing models with minimums requirements and restrictions on the EA licensing). The common metric is the minimum prerequisite of US$1 million in annual revenues.

The objective of these licensing models is to create a flexible enterprise software solution around an organization’s business, but licensing is rarely cut and dry.

It looks like there is a technical loophole that allows you to upgrade illegally. When Microsoft finally released Windows 7, there has been a lot of grumbling over Microsoft’s lack of direction on the upgrade process in the last few weeks from Microsoft Windows 7 testers.

Microsoft does not allow an upgrade from the pre-release version of Windows 7 - e.g. Windows 7 Beta or Windows 7 Release Candidate - to Windows 7 RTM. In fact, when you try, you’ll be blocked from the upgrade. As you’d expect, people are hacking the Windows 7 upgrade and circumventing the upgrade issue.  A number of bloggers out there have been spreading the word.

While Microsoft was unclear in its upgrading directions, it is clear that the Windows 7 Upgrade Install Hack is illegal. If you are getting around the EULA (End User License Agreement) by artificially upgrading to Windows 7 from the pre-release version, you’ve violated Microsoft’s intellectually property and have pirated the company’s software. With every MS install or download (including the test versions), you’re always asked to agree (or not) with the terms of the EULA. Lastly, if you purchase an Upgrade license for Windows 7, it very clearly states in the EULA - “To use upgrade software, you must first be licensed for the software that is eligible for the upgrade.”

Please remember that no OEM Microsoft Windows licenses can legally be transferred from one PC to another. We keep warning companies of the dangers of doing this.

Businesses in the U.S. aren’t the only ones suffering, according to a new study, less than half of UK businesses believe their software is correctly licensed. An overwhelming 71% of those businesses admitted to having licensing problems in the past. A further look at the respondents showed that 26% were over-licensed, 12% were under-licensed and the remaining 13% were unaware. The study asked over 100 IT directors in the UK about their software licensing. The results are quite eye-opening and similar to the experiences we are having here in the U.S. So many organizations recognize the risk of non-compliance and the realities of increased spending for over or under licensing, yet they continue to put a software asset management (SAM) program to the wayside. Here are some more interesting findings from the survey:

Software Asset Management is an important aspect of business operations, but some management teams are apprehensive about making a change either because they fear unexpected costs from implementation or the inability to understand that SAM will save them money over time.

The three main business drivers for SAM (for those of you who need some convincing) are:

You can’t control what you don’t know, I say this all the time. In order to save the most money and prevent unexpected costs - you need control. Software asset management is not a “nice to have” it’s a “need to have” for any organization or any size.

We’ve been included in some great articles in the media lately. Not that the articles are great because we’re in them, but because the articles are worth the read (with or without our commentary). They are very helpful pieces about licensing, virtualization and of course audits that are a good read! Enjoy!

PC World - October 08, 2009
Does Microsoft Complicate Its Licensing on Purpose?

Federal Computer Week - September 21, 2009
5 traps that can spoil virtualization savings

PC World - September 18, 2009
License Audits: Preparing Now Can Ease the Pain

At a recent event in London, Steve Ballmer was asked about Microsoft’s complex licensing policies to which he acknowledged that yes, Microsoft licensing isn’t simple, never has been and probably never will be. So, is there a chance for changes in the near future? Nope, of course not!  Ballmer even bolded stated that it just isn’t going to happen.

So, here’s our advice to combat this.

1. Start paying attention to the fine print. Look at your terms and conditions.
2. Be smart and don’t give any information away to Microsoft until you understand what you have and where you have gaps.
3. Review your business needs and align with your software solutions.
4. Ensure that there is an annual internal audit of all your software licensing.
5. Put in a good software asset management program – from creation of policies to procedures to an official procurement office.

Be proactive. Don’t wait until Microsoft’s growing licensing policies catch up to you. Remember, Microsoft and the ever present, ever watchful BSA is watching you.

I keep humming the lyrics Blister in the Sun while listening to Larry’s keynote.

And, if you’re interested in what we think will happen to licensing and pricing for Sun-Oracle offerings, read our previous post Sun-Oracle: Here’s how you could be affected?