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  • Writer's pictureAndrey Khodunov

How to avoid sudden payments for Oracle Software?

Updated: Dec 4, 2023

Oracle license auditing has become more frequent. You definitely know that when you buy any vendor’s software and sign a license agreement, there is always a license auditing clause in it, which means the right of the vendor to perform a software license audit. And Oracle is not an exception. Indeed, license auditing is an Oracle contractual right and your contractual obligation as the buyer is to provide assistance to that auditing.

You can say – we won’t let anybody to get an access to our data anyway and nobody will be able to perform that kind of audit. Do you really want to take legal responsibility for breaking the contract? If you do, you can bear the following consequences:

  1. Oracle can cancel your technical support, which is written in your license agreement. Just imagine that your business based on Oracle products has been suddenly deprived of all Oracle support.

  2. Oracle as right holder can terminate all your software licenses and this is also written in your license agreement. And in this case all your multi-million investments in the Oracle software will go to the dogs.

  3. Oracle can bring a court action against you for violating its intellectual property rights.

You might say – OK, let them come, we will simply remove that software that is not covered by our licenses. But than again you will have a problem. Oracle insists that you should pay the whole period of use.

OK, let’s say, your company respects the intellectual property rights and ensures the proper use of the licensed software. But even in this case you are not protected against the risks of unlicensed software use. Here are some scenarios when companies, having fully paid their softwares, find themselves in a position when nevertheless they are using unlicensed software on a large scale (if you are not an IT-specialist, just ask your CIO whether he or she understands what we are talking about).

Scenario 1

You purchased Oracle software some time ago, your company is using it, and you might have even purchased additional licenses, but you have not arranged any kind of control of their proper use. The use and number of projects with underlying Oracle Database is growing and demand more computer performance. Suddenly Oracle comes with a license audit and it brings to your attention that the number of the products being used does not correspond with the purchased amount of licenses and suggests that you should purchase the licenses which you don’t have and that might cost you millions of dollars.

Scenario 2

You have purchased an Oracle software from your Oracle partner who assured you that the number of Oracle licenses was enough to cover your project requirements. It might be that your partner has either cheated you or your project requirements have expanded. When Oracle comes with the audit, it becomes evident that the number of licenses which you have is not enough and you have again to pay for the use of the Oracle software.

Scenario 3

You’ve bought an Oracle application, for instance Siebel or OEBS and you are customize your application in accordance with your needs. Do you know that you must have a license for the underlying Oracle software in case of customization, that is Oracle Database and Application Server? And this license must be for the most “advanced” and expensive Enterprise edition. And when Oracle comes with an audit, it will find the customizations and make you buy the software...

Scenario 4

Your partner has sold you his billing system if you’re a telecommunication company, or a CBS if you’re a bank. You know that it contains an underlying Oracle DB and your partner informed you that he had signed an agreement with Oracle and could sell Oracle ASFU licenses for a specific application. But he somehow failed to mention that he had licensed the billing or CBS by the user metric to save money instead of the processor metric. And when Oracle comes to you with an audit you are going to say that it is your partner’s fault. But in fact it’s yours! For if Oracle signs the license agreement directly with the customer and if the customer has not checked that his systems are licensed properly, he will have to pay for the licenses all the same.

Scenario 5

You are using virtualization technologies, which are of great convenience because they provide for platform independency, sharing resources etc. And they are from VMware, of course. You might have heard as well that Oracle does not support software virtualization, especially VMware. You might have even dedicated a cluster of servers in your VMware environment to be used on your Oracle software. Do you know that Oracle requires licensing of all physical servers, connected to one storage, regardless of the clusters, “host affinity” rules and so on? Didn’t you know that? Than you will have to pay for Oracle licenses as well...

These scenarios are most common. In fact the situation can be more intricate and, irrespective of the fact whether the customer uses the unlicensed software intentionally or he fails to manage the licenses properly, he has to go through the whole procedure of license auditing and pay for the licenses. And it’s always unexpected and painful for the customer’s budget. And your boss won’t be very happy with it. The shareholders will also be quite unhappy with their reduced dividends.

And where is the way out? One should think about proper licensing in advance and carry out one’s own license audits in good time. Provided that you have necessary experience and knowledge of Oracle license policies. They are extremely knotty, go far beyond the license metrics, are mentioned in various documents and can be interpreted in different ways. Do you know, for example, what a distinct user means? Have you heard about the levels of customization? What is multiplexing and why is it important for licensing? How should reserve systems and virtual environments be licensed?

You have to answer all these questions if you want to pass the license audit. It might be a good idea to turn to specialists. In countries, where intellectual property rights are protected by law such services are in great demand and companies closely monitor the proper use of the licenses. These services are provided by Software Asset Management (SAM) companies. But watch out – Oracle partners are more motivated to sell licenses or their own solutions than to secure proper licensing. And what is more important that Oracle partners do not possess such an expertise because Oracle does not support its partners in license auditing.

That's why the proper option for you is to find specialists who have knowledge and experience in license auditing. And do it now before Oracle pays you a visit.

Sincerely yours,


*the image for the article is generated by Midjourney

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