W H I T E PA P E R                     Inevitable Events                     How to Avoid Costly Fire Drills and Substanti...
How to Avoid Costly Fire Drills and SubstantiallyImprove Software ROI by Proactively ManagingYour Oracle LicensesExecutive...
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Inevitable Events-How to Avoid Costly Fire Drills and Substantially Improve Software ROI by Proactively Managing Your Oracle Licenses


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Inevitable Events-How to Avoid Costly Fire Drills and Substantially Improve Software ROI by Proactively Managing Your Oracle Licenses

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Inevitable Events-How to Avoid Costly Fire Drills and Substantially Improve Software ROI by Proactively Managing Your Oracle Licenses

  1. 1. W H I T E PA P E R Inevitable Events How to Avoid Costly Fire Drills and Substantially Improve Software ROI by Proactively Managing Your Oracle Licenses
  2. 2. How to Avoid Costly Fire Drills and SubstantiallyImprove Software ROI by Proactively ManagingYour Oracle LicensesExecutive summary 4. nsufficiently informed contract negotiation, poor alignment of IOracle® products, including its popular database technology software spending with business needs, and imprecise budgetand E-Business Suite, are widely deployed in many companies. planningBecause Oracle does not automatically lock out unlicensed useof its products – and because those products have such broad To avoid these consequences, IT organizations should pro-business applicability – Oracle deployments can readily sprawl actively implement proven software license management bestfar beyond their original scope. By the same token, for a variety practices – including the ongoing, automated monitoring ofof reasons, IT organizations often wind up buying more Oracle their Oracle deployments in relation to their current licensinglicenses than they need. agreements.Either way, these IT organizations inevitably experience multiple These best practices enable IT organizations to handle theevents that result in Oracle license management “fire drills.” inevitable events associated with Oracle software ownershipThese inevitable events include usage audits by Oracle, contract without the disruption and cost associated with rushed manualrenewal negotiations, license restructurings driven by business inventories. A proactive approach also enables IT decision-change such as MA or corporate reorganizations, and license makers to avoid audit problems, better manage and negotiaterestructurings driven by infrastructure change such as server software license contracts and plan budgets proactively basedconsolidations or platform migrations. on actual and documented software usage.License management fire drills occur because IT organizations The cumulative result of these benefits is that IT can optimize thelack accurate, up-to-date information about how Oracle products total return on its Oracle investments by both minimizing costsare actually being used, accessed, and authorized across the and maximizing the value delivered to the business.enterprise – and how their Oracle deployment compares to theiractual contracts. Inevitable events IT organizations are constantly under pressure to deliverSo, when these inevitable events loom, IT staffs must scramble critical services to business users, to maintain the security ofto manually gather the necessary information as quickly as the enterprise computing environment, and to fix whateverpossible and then perform the appropriate reporting and problems happen to arise with infrastructure and applications.analytics. Given the constant daily pressure of these immediately urgent circumstances, it is not surprising that IT decision-makers mayIT organizations that rely exclusively on manual, event-driven fire not put much effort into preparing for events that they believedrills to “true up” their Oracle licenses face several problems, are still quite a bit in the future – or that they believe might notincluding: happen this year at all.1. isruption of normal IT operations and diversion of resources D This can be particularly true when it comes to Oracle license from other essential tasks management. Once an IT organization acquires and deploys2. onsistently incomplete and inaccurate information about C Oracle software, it has a lot of work to do configuring their Oracle deployments and customizing it, integrating it with the rest of the3. xposure to substantial unplanned or unnecessary E environment, training and supporting users, handling changes, expenditures as a result of license violations or license over- troubleshooting problems, scaling up capacity, and keeping it subscription (“shelfware”) secure. Software licensing is almost never something that anyone2 Flexera Software: Flexnet Manager Suite White Paper Series
  3. 3. How to Avoid Cost ly Fire Drills and Substant ially Improve Software ROI by Proact ively Managing Your Oracle Licenses thinks about on a day-to-day basis. After all, how likely is it that the total number of software licenses required to remain in any kind of licensing-related issue will arise tomorrow? compliance. Software licensing needs can also be affected by hardware platform migration, OS migration, server Actually, it may not be very likely that a software licensing- consolidation, and the implementation of additional features related issue will arise tomorrow. Nor may it be likely that such or interfaces. an issue will arise next week or next month. It is, however, quite certain that a software licensing-related issue or issues will occur Again, it is essential for IT managers and negotiators to have a eventually. In fact, such events are inevitable. And they can be clear picture of how their Oracle deployments align with their quite significant in their impact. current licensing agreement and/or the one for which they are negotiating. Any failure to “right size” a new agreement will These inevitable events include: result in either over-spending or exposure to the risk of Oracle audits non-compliance. Oracle can, at any time, audit its customers to determine if there are any disparities between their customers’ software licensing Installations and upgrades agreements and the actual implementation of the company’s In some sense, every Oracle installation or upgrade represents a software products. An annual “true-up” is typically written into significant license management event. Standard downloads and every Oracle contract. Plus, according to Forrester: media for Oracle’s database, for example, include the full range of available options – regardless of whether or not the customer Forrester clients report increasing audit threats from Oracle pays for authorization to use those options. IT staff who are sales teams. Customers often experience an increase in audit not aware of the specific terms of their company’s contract threats when the economy worsens. Savvy sales reps often with Oracle can therefore easily operate under the mistaken use audit threats to begin a conversation about potential assumption that they are authorized to use all the components overutilization to drive new license sales.1 provided in the download or media. This is yet another way that companies make themselves vulnerable to violations of their Contract renewals Oracle licensing agreements. Contracts expire. When they do, new ones have to be re- negotiated. Even Oracle’s Unlimited License Agreements (ULAs) It is important to emphasize the fact that every company will – which, because of their name, may lead some IT staff to experience at least one of these events every couple of years. mistakenly use Oracle software without restriction -- have to be Some will experience more than one of these events during “trued up” after a set period of time. In either case, it obviously some years. They are simply intrinsic to the ownership of benefits IT organizations to enter into negotiations with a clear Oracle software. idea of how closely their existing contract aligns with their current and planned Oracle software deployment – so that those It is also important to note that IT decision-makers can’t always doing the negotiation know whether they need to add licenses, know when such events are about to occur. Oracle typically reduce the scope of the agreement, and/or try to get additional only notifies customers approximately one to two months in entitlements bundled into the new deal. advance of a software audit. And business change often occurs with relatively little notice as well. In fact, sometimes regulatory Restructurings driven by business change constraints actually prevent business executives from providing IT Oracle contracts are subject to change whenever changes take with as much warning about such changes as they would like. place in the business. These changes can include MA activity, divestitures, re-organizations, expansions, facility closings, and/ IT organizations that do not proactively attend to core software or layoffs. Of course, if a company has already licensed more license management tasks on an ongoing basis are thus very software than it needs, there’s no reason for it to increase its likely to enter into multiple events related to their ownership of Oracle budget following an acquisition. And, conversely, if a Oracle software with little or no time to prepare. company is already under-subscribed, then it’s not in a position to talk to Oracle about a price break in consideration of its The downside of fire drills downsizing. So license management plays a role in the ability of So what exactly is the downside of not being fully prepared in IT to appropriately respond to business change. advance for any of the various events associated with Oracle software ownership? With so many other priorities competing Restructurings driven by infrastructure change for the attention of IT staff, is there really anything so bad about Oracle contracts are also subject to change whenever IT waiting for such events to arise before performing the license makes certain types of changes to the enterprise computing management tasks necessary to address them? environment. Virtualization, for example, can significantly impact enterprise software licensing needs – since the often- Disruption of IT operations and diversion of IT resources rapid proliferation of virtual machines can significantly increase When an IT organization is suddenly presented with an event1 Base Your Oracle “Red Stack”Negotiations Strategy On Your Oracle Adoption Strategy by Ray Wang, John R. Rymer, and Noel Yuhanna, Forrester, March 13, 2009. Flexera Software: FlexNet Manager Suite White Paper Series 3
  4. 4. How to Avoid Cost ly Fire Drills and Substant ially Improve Software ROI by Proact ively Managing Your Oracle Licenses such as an Oracle audit or some re-structuring of the business, of dollars – or even millions – in software over-spending across a license management fire drill typically ensues. IT staff have several years. Such massive over-spending is certainly not to manually pore over multiple server audit logs to determine something that any IT executive wants to have to explain to exactly how many users are accessing Oracle resources, which a CFO. processors are utilizing Oracle, which features and options are actually being used, and at what rate the Oracle deployment is Less effective negotiation, spending, and planning trending upwards or downwards. Negotiators are always at an extreme disadvantage when they don’t have the information they need. They don’t know exactly The number of people who have to participate in the fire drill where to push for concessions from Oracle or whether such and the percentage of their workdays they have to dedicate concessions will yield little in the way of real financial benefits. to it depend on several factors – including the scope of the They may be unable to make volume commitments in situations Oracle deployment, the size and complexity of the enterprise IT where such commitments are to their advantage – or they may environment, and the amount of time between the start of the be drawn into making commitments that are inappropriate, fire drill and the event deadline. Often, the disruption to normal given their actual use of Oracle’s various products. Plus, their operations and the diversion of resources from other critical uncertainty about their needs ultimately weakens their overall tasks is pretty severe. negotiating position. Such weakness at the negotiating table can be very costly to companies over the long term. So, ironically, by allowing the daily demands of the business to Of course, the disadvantages of inadequate insight into the use prevent them from preparing in advance for inevitable events, IT of Oracle products extend well beyond any specific negotiation organizations virtually guarantee that their ability to fulfill those with Oracle. Without accurate, up-to-date information about daily demands will eventually be compromised by such an event. how Oracle is actually being used across the enterprise, IT decision-makers can’t determine how to best prioritize the Incomplete and insufficiently accurate information allocation of budget dollars – or accurately project what their Manual processes are inherently unreliable, so the information budget requirements for Oracle licenses may be in the near that large Oracle sites collect is likely to include all kinds of future. As a result, over- or under-spending can start to become errors and omissions. Also, DBAs typically differ in the detail entrenched. This can wind up having implications well beyond with which they account for the various options, entitlements, a company’s Oracle implementation, since any mistakes in the and utilities being used in their individual management allocation of finite budget dollars to Oracle licenses affect the domains. Many don’t even fully understand exactly how Oracle availability of those dollars for other critical IT projects. licenses are structured – and therefore don’t know exactly what to check for. And if this accounting work has to be done on Simply put, IT organizations expose themselves to a variety of a rush basis, it is unlikely that there will be sufficient time to problems and unacceptable risks if they only worry about license double-check the results. management when some triggering event pops up. The issue is not whether or not there is an event on the horizon today. The The problem of accounting accuracy tends to be compounded by issue is that such events are inevitable – and, without the right the fact that, once an event has passed, whatever reporting was preparation, those events can be costly and disruptive in ways generated for that event tends to remain the de facto benchmark that few IT organizations can afford. for the IT organization from then on. An out-of-date accounting (that probably wasn’t very accurate to begin with) may then Oracle license management best practices compromise the organization’s ability to deal with the next Although the range of inevitable events that Oracle users face inevitable event – and will distort trend analysis whenever the is somewhat diverse, there is actually a common set of Oracle next assessment of the Oracle implementation is performed. license management best practices that can be applied to all of them. These best practices ensure that IT organizations are well Unplanned or unnecessary spending as a result of license prepared for such events when they occur – and that they can violations or over-subscriptions consistently optimize the outcomes of these events. One of the biggest problems with event-driven fire drills is that they only reveal discrepancies between licensing and actual Key aspects of these best practices include: deployment after the fact. In the event of an Oracle audit, this Proactive, consistent monitoring of Oracle deployment may simply alert IT decision-makers that the company is in fact Rather than waiting until an event deadline approaches, IT going to be found to be in violation of their agreement with organizations are better off monitoring their Oracle deployment Oracle. Obviously, in such cases, Oracle will be in a position to proactively and continuously. This eliminates the frenzied require full compensation for any differential – which is typically disruptions that occur when they are forced to react under tight quite a bit more expensive than the payment that would have time constraints. By regularly keeping tabs on their Oracle been arrived at in a normal contract negotiation. deployments, IT organizations can also pinpoint emerging trends before they spiral out of control. On the other hand, if the business’s contracted licensing turns out to have exceeded its actual needs, then an event-driven Collecting complete, granular information approach will only discover the over-spending after it has Oracle deployments and Oracle licensing can be quite complex, occurred. This can potentially result in hundreds of thousands encompassing many instances on multiple platforms and4 How to Avoid Cost ly Fire Drills and Substantially Improve Software ROI by Proact ively Managing Your Oracle Licenses5 Flexera Software: FlexNet Manager Suite White Paper Series 4 Flexera Software: FlexNet Manager Suite White Paper Series
  5. 5. How to Avoid Cost ly Fire Drills and Substant ially Improve Software ROI by Proact ively Managing Your Oracle Licensesincluding a wide range of options, entitlements, and utilities. Oracle license management best practices are worth prioritizingIT organizations must therefore be sure that their visibility into precisely because they provide advantages to IT as a whole – intheir Oracle deployments is both sufficiently complete and addition to optimizing returns on Oracle software investments insufficiently granular – including discovery of all processors and particular. These benefits include:all named users. Minimal disruption of day-to-day operations byUse of automation inevitable eventsIT organizations can obviously reduce the strain on their IT organizations that have to respond to inevitable events withIT staffs and improve the accuracy of their information by fire drills consistently experience significant disruption of theirusing automation appropriately. Automation also ensures the day-to-day operations. During these disruptions, other tasks arescalability of monitoring processes. Automated monitoring left undone or are not performed as well as they need to be.processes should be properly scheduled to avoid any impact Proactive software license management therefore safeguardson the performance of critical business services. Most IT IT’s ability to maintain service levels across the enterprise – evenorganizations will want to implement agentless automation in when a software license audit or contract re-negotiation is aboutorder to avoid additional management complexity. to take place.Clear reporting against actual license structure Avoidance of costly license violationsArmed with a complete, accurate, and sufficiently granular If and when Oracle discovers license violations at the conclusioninventory of their Oracle deployments, IT organizations then of an audit, they are entitled to full compensation for theneed to clearly understand how those deployments compare excess use of their software. By preventing such violationsto their actual current license entitlements. This understanding from occurring – whether at the time of installation or duringis typically provided through reports that highlight where the ongoing course of software ownership – software licensethe deployment exceeds existing licenses and where there is management best practices protect companies from such“shelfware” – i.e. licenses for entitlements that aren’t currently charges, allowing them to procure whatever additional softwarebeing used. licenses they may need over time through normal contract negotiations. This allows budget dollars to be preserved forFull leveraging of deployment insights across all IT and other important IT priorities.business functionsIT organizations that have developed the ability to maintain Reducing costs with insight into shelfwareproactive ongoing insight into their Oracle deployments must Companies often spend tens or even hundreds of thousandsalso be diligent about delivering that insight wherever it is of dollars on software licenses they don’t need. Some spendapplicable across the organization – and about empowering millions. This wasteful excess of software licensing is oftenappropriate individuals to use that insight as effectively as concealed in the form of value-added options and performancepossible. In addition to just developing the technical ability to utilities for core Oracle products. Left unchecked, such excessmonitor their deployments, they may therefore also want to spending can continue for years. Effective software licensetap into available sources of expertise in disciplines such as management can identify this excess spending so that it can benegotiation, budget allocation, and budget planning. eliminated and/or leveraged at the negotiating table to obtain discounts on future license purchases, services, training, supportThe above is obviously a fairly simplified overview of Oracle and maintenance. In addition, IT organizations that knowlicense management best practices. The effective use of exactly how much shelfware they have can use those existingdeployment insight in business negotiations, for example, licenses to meet their needs as they grow, without spendingcould easily fill an entire document by itself. These five aspects, more money unnecessarily. All of these tactics free up IT budgethowever, serve to highlight the disparity between the manual, dollars for other critical business needs.event-driven approach most IT organizations currently take tomanage their Oracle deployments and the best practices being Smarter, more effective contract negotiationespoused by leading industry consultancies such as Gartner An accurate understanding of current and projected businessand Forrester. And without these best practices in place, needs is always a substantive advantage in negotiationsIT organizations will continue to be subject to the adverse with any vendor – since it empowers the negotiator to pressconsequences that occur when inevitable Oracle ownership for advantages that are important, while making concessionsevents result in inevitable license management fire drills. that won’t adversely affect either costs or business value. By providing this understanding, software license management bestThe benefits of proactive Oracle license management practices deliver significant long-term cost savings while alsoIT resources are limited. And there are many business priorities easing the negotiation process itself.competing for those limited resources. So why should an ITorganization commit any of its resources to the implementation Also, like any other software vendor, Oracle at times modifies itsof automated, proactive Oracle license management at a time licensing models. Without an accurate understanding of currentlike this? What real benefits can they expect to gain from such an and projected business needs, IT organizations are typicallyeffort – and how quickly can they expect to gain those benefits? unsure how to proceed when such modifications are announced.Actually, as the following list of proven benefits demonstrates, With accessible and reliable usage information, on the otherFlexera Software: FlexNet Manager Suite White Paper Series 5
  6. 6. How to Avoid Cost ly Fire Drills and Substant ially Improve Software ROI by Proact ively Managing Your Oracle Licenseshand, they can quickly assess the impact of any new software About Flexera Softwarelicensing options and negotiate accordingly. Flexera Software is the leading provider of strategic solutions for Application Usage Management; solutions delivering continuousMore accurate budget allocation and planning compliance, optimized usage and maximized value to applicationWhen resources are tight and demands are escalating, it is producers and their customers. Flexera Software is trusted bymore important than ever to align spending with real business more than 80,000 customers that depend on our comprehensiveneeds and to accurately project future budget requirements. solutions- from installation and licensing, entitlement andIT organizations that maintain full visibility into their Oracle compliance management to application readiness and enterprisedeployments can find ways to save money, redistribute licenses, license optimization - to strategically manage application usageinstitute chargeback’s, and/or institute any other measures to and achieve breakthrough results realized only through theensure that their Oracle budgets are allocated where they will systems-level approach we provide. For more information, pleasedeliver the most value to the business. go to: www.flexerasoftware.comSupport broader corporate governance, risk, and complianceinitiativesThe violation of Oracle software licensing agreements is notan isolated issue. It is actually part of the broader challengecompanies face in maintaining compliance with their contractualobligations and mitigate the risks associated with failures tocomply. Improved Oracle software license management istherefore material to the integrity of corporate governance as awhole – as well as a way to get maximum business value fromsoftware spending.It should also be noted that proactive, automated managementof software license compliance benefits Oracle as well. It isfairly expensive for Oracle to mount a manual audit of a largecorporate customer. IT organizations that are able to provideOracle with reliable software audit documents can thus save bothparties a substantial amount of time, money, and aggravation.The bottom line is that companies can realize a wide variety ofhard and soft benefits by implementing proactive managementof their Oracle entitlements. Such management will significantlyimprove ROI for Oracle deployments by reducing costs andensuring that budget dollars are allocated where they will deliverthe most value. Best practices management will also benefit ITand the company even more broadly by freeing resources andmitigating risk. And these benefits will accrue in both the shortand long term as inevitable event after inevitable event occursover the course of Oracle ownership.That’s why IT organizations should take action now to implementbest practices – or, at the very least, better practices – for Oraclesoftware license management. It is simply impractical to wait forthe next inevitable event to arise. The smarter course of actionis to initiate both 1) internal advocacy for a proactive approachand 2) an investigation of the technology solutions available forautomating such an approach immediately.IT decision-makers must be intentional about overcomingorganizational inertia by acting decisively even in the absenceof a known impending event. By doing so, they will ensure thattheir company will begin realizing the concrete benefits of bestpractices at the very next inevitable event. Failure to do so willsimply guarantee another costly, disruptive fire drill – and will setthe stage for post-event inertia to set in once again.6 Flexera Software: FlexNet Manager Suite White Paper Series
  7. 7. Flexera Software LLC Schaumburg United Kingdom (Europe, Japan (Asia, For more office locations visit:1000 East Woodfield Road, (Global Headquarters): Middle East Headquarters): Pacific Headquarters): www.flexerasoftware.comSuite 400 +1 800-809-5659 +44 870-871-1111 +81 3-4360-8291Schaumburg, IL 60173 USA +44 870-873-6300Copyright © 2011 Flexera Software LLC. All other brand and product names mentioned herein may be the trademarks and registered trademarks of their respective owners. FNM_WP_Oracle_Oct11