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IT COST OPTIMIZATION

By Craig Guarente

I was negotiating an SOW with a new client and we were going through the typical back and forth redlines that accompany most engagements.  At the very end of this process, the procurement lead for the client asked me if I could lower my price to help the client meet their cost-cutting goals.  If you are in procurement, you’re not doing your job if you don’t ask for a lower price!  My response to her was, “You will meet those cost cutting goals because I’m going to help you spend millions of dollars less with Oracle.” At the end of that engagement, we can all look back and see the savings.

I wasn’t just hopeful we would save the money.  I knew they would save the money because I know that companies who optimize their IT infrastructure and take ownership and control of their Oracle licensing and contracts will spend less with Oracle.  There is a direct correlation from taking control to lowering costs.  More control, less costs.  Less control, more costs.  But how do companies optimize by taking control?  What can you do to help your organization optimize your environment and hold on to your budget?

When it comes to Oracle, we see costs skyrocket when companies do not have a handle on their license compliance position.  Whether you are actually out of compliance, or you are simply unsure of what you are using, that’s when the fees go up and up and up.  I’ll list just two examples of how this happens every day and what you can do to avoid it.

Unlimited License Agreements

Many Oracle customers have an Unlimited License Agreement (ULA) with Oracle.  These ULAs are sold as “all you can eat” or “no need to count.”  The reality, however, is quite different.  If you don’t keep track of what you are using then you will be forced to do another ULA, whether you need it or not.  Fear of the unknown will drive you to sign the new deal and waste millions of dollars.  If, however, you do measure/count/plan your Oracle utilization during the ULA, then you will be in a position to exit that Oracle contract, avoid the penalty of a ULA renewal, and retain enough Oracle licensing to hold you over for years to come.

One challenge with optimizing your Oracle licenses during the ULA is the perception that you don’t have to do it. Why keep track of what you’re eating at the buffet because you’re going to pay the same price at the end of the day?  That logic simply does not apply here because unlike the buffet, when you are done with your Oracle ULA, the vendor wants you to step up and have another ULA meal right then and there.  Step one for ULA management is understanding you have to do it.

Moving Away From Oracle?

Many companies love the Oracle technology but can be frustrated by the unexpected, and unbudgeted costs, that go along with Oracle in terms of audits, compliance, and ever increasing maintenance fees.  These unknown future costs are driving many Oracle customers to alternative vendors that offer more transparency and certainty in their business practices and pricing. The problem here can be once you make the decision to move away from Oracle, Oracle will try to move you back towards their products.  We can’t blame Oracle here; it’s what all of us would try to do if a client were to go to a competitor.  The risk with Oracle, however, is how they try to push you back, with LMS audits and threats of non-compliance.

If you are moving away from Oracle you need to pay even closer attention to your Oracle contracts and usage.  Many companies make the mistake of ignoring their Oracle licensing because they are in the process of replacing it with more current non-Oracle technology.  Once Oracle learns that they are losing you as a client, they will be tempted to audit you.  What’s the downside for them? You are already leaving.  The worst possible thing to happen as you transition away from Oracle is to begin that move only to be hit with a huge Oracle LMS audit non-compliance finding.  These audits can have the effect of forcing you to reverse your decision, and stay with Oracle, because if you don’t, then the cost of the audit will be more than the cost of the switch.

Conclusion

Regardless of your desired direction with Oracle, moving towards or moving away, every company who uses Oracle must understand their Oracle license entitlements and software usage.  The more information you have, the more you can optimize your environment to fit your usage into your current license grant.  The difference between compliance and non-compliance is often how you apply your contracts and licenses to your architecture.   Companies that take control of their Oracle software asset management will avoid the traps outline above and spend significantly less than companies who choose to give up control to Oracle.

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