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  • Writer's pictureAndrey Khodunov

License Management Strategy in big service providers

Updated: Dec 6, 2023


In modern big companies all the services are somehow connected to IT. It is difficult to imagine a big company that do not use Oracle software. When you pay your electricity bills or withdraw money in a “hole in the wall”, all these transactions are being reflected, very often, in Oracle databases. Thus, all these big companies, when they charge you, they use Oracle software to earn money. The point is – how Oracle charges them for its software use? Does it really matter for these big service providers how much do they pay for the Oracle software, if they earn much more on their services supported by the Oracle software?


In the other words – does it make sense to try to reduce the payments for the software in case of you benefit from it? In a recent discussion around the article “Oracle ULA – is it beneficial?” there was an idea, that in large majority ULAs are beneficial for the customer, in case the ULA covers the customer needs in Oracle software and fully reduces the risk on unlicensed usage. The idea is that despite of the ULA renewal is not needed for the new deployments - as long as the customer will continue to buy corresponding licenses on Business As Usual (BAU) -, it is needed to mitigate the risks. Anyway, when the Oracle software cost is included into the service cost, it doesn’t affect the final income, does it?


OK, you will say that it will affect the cost of end service. For instance, you will pay more for your electricity bill or banking transactions. That’s correct, but it is difficult to evaluate how big is this impact because it consists not only of Oracle software, but other vendor’s, cost of IT-infrastructure, it’s support and other affecting factors.


It seems wise to try to reduce these cost influence factors, but every services provider decides what he is ready to do for this, what risks he takes and what is his strategy for Software Asset Management.


The only undisputable thing is awareness about the state of the IT-infrastructure that must be covered with software licenses. This is definitely needed for negotiations with vendor (e.g. vendor management), budget evaluation, product awareness, deployment procedures, disposal process and many other IT-tasks.


Based on the written above, it is possible to think about 2 common scenarios of License Management strategies.


The first scenario is aimed to the cost reduction and in this case, the CIO and License Manager have to perform something like:

  • to become aware about the IT-infrastructure that to be covered with licenses.

  • have a deep and clear vision of the license’s contracts T&C (Terms and Conditions) to map with their IT uses.

  • to find a best strategy for cost reduction (e.g. ULA certification, contract cost reduction, support reduction).

  • to optimize the software usage (reduce the usage to reduce the costs).

  • to be always prepared to defend from vendor’s license audit.

  • to build strategies to switch to open-source software (PostgreSQL, Kubernetes, OpenShift and others) for appropriate applications.


Second scenario is aimed to keep using vendor’s (Oracle) software and reduce the risks of unlicensed use, including the software cost into the cost of service. In this case, the actions of CIO and License Manager will look like:

  • to become aware about the IT-infrastructure that to be covered with licenses.

  • to have a deep and clear vision of the license’s contracts T&C to map with their IT uses.

  • to optimize the software usage (to be on the safe side and keep control over the IT-environment).

  • to evaluate a software budget and cost of the service with a part of the software in it.


How we see, it is not necessarily to be worried about the license audit from software vendors (if you are aware about your IT-infrastructure, why you should be worried?) and to invest into the open-source software implementation (which is also a quite costly headache), particularly for your critical applications running with majors software vendors. And the purpose of the optimization is not so challenging in this case.


Does it mean that the 2nd scenario is better than the 1st one? No, it doesn’t. Every service provider and every Oracle customer is choosing a scenario that preferable for their business. There are many examples in real practice showing how the business model triggers the license management strategy.


Since in the both scenarios it is important to be aware about the IT-infrastructure that to be covered with software licenses, it is necessary to think about the tools that can help you with this. Let’s talk about this in next article.



Sincerely yours,

Andrey


*the image for the article is generated by DALL-E

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