Oracle licensing and LMS audits have a reputation for being confusing, confrontational, and costly. Unfortunately, the process might be getting even worse.
At Palisade, we help clients who are being audited by Oracle, and we’ve noticed a troubling trend. Historically, Oracle, like many software vendors, issued a preliminary audit report before issuing the “final report.” The preliminary report gave the audit target a chance to review and refute any analysis or assumptions embedded in Oracle’s findings. It was a critical step because Oracle licensing is rarely black and white, and it allowed both parties to reach a shared understanding of their unique environment.
By skipping straight to the final compliance report, Oracle exerts tremendous pressure on audit targets to resolve outstanding issues on Oracle’s terms. When the final report is issued, the contractual 30-day clock to resolve compliance findings starts counting down. Consider all of the tasks you’re expected to complete in those 30 days: review the final report, research the findings, present your findings to Oracle (which may take multiple meetings), correct the findings in the final report, reconfigure your environment (where applicable), negotiate pricing, negotiate terms and conditions, and complete the purchase of any required products or licenses.
That’s a lot of pressure to place on the customer. And with every passing day, the pressure builds — with constant reminders that you are out of compliance and escalation emails. Before you know it, you are negotiating based on a false narrative. With the 30-day window in the rear-view mirror, Oracle is firmly in the driver’s seat. By now the words “legal” and “escalation” are being thrown around. Oracle LMS may even throw out the “nuclear option” and talk about contract breach and license terminations. The stakes are high!
It’s no wonder customers struggle to gain control in these situations and negotiate on equal footing. But there are steps you can take to level the playing field. First, you can ensure you are in compliance with your license grant. This, unfortunately, may not be enough. Oracle audits are so complex and subject to interpretation that the audit process itself may actually dictate the results. One of the most important things to do is to remember that you have leverage in negotiating a fair and open and honest audit process. Is the audit process defined in your contract? No, it’s not. So why let Oracle dictate it? Ensure your company has clearly defined software audit policies that Oracle (or any vendor) must follow. Make sure you create a process that puts you in control. There are many, many ways to do an Oracle audit. It’s critical to know which method will deliver the best results.
It’s too soon to tell if the recent rush to a “final report” is a new standard Oracle LMS practice or just an outlier for a few unlucky Oracle customers. We need more data points to know for sure. However, if this practice proves successful for Oracle (i.e., it brings in more money), then you can be sure Oracle will exploit it.