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What's the biggest trap for users in an Oracle licensing agreement?

The biggest Oracle licensing trap isn't in how you use the vendor's software, but in the license agreement itself and how easy Oracle makes it for customers to start out noncompliant.

There are so many compliance traps with Oracle software licensing that it can be a challenge to pick a winner....

From issues with virtualization to unknowingly turning on extra cost options to improper licensing of nonproduction environments -- to name just a few -- an Oracle licensing agreement is rife with situations that can drive multimillion-dollar noncompliance findings. Even the smallest misstep on Oracle licensing can lead to big problems.

But if you really want to know what the biggest trap is, the actual usage and deployment of the software isn't where you need to be looking. Instead, look at the software contract itself. Let me be clear: The biggest trap companies fall into on Oracle licensing is the licensing agreement itself.  

When you buy software from Oracle, your Oracle sales representative isn't checking to make sure you're compliant. All the sales rep cares about is getting the deal signed, collecting the revenue and getting paid. You can place an order with Oracle that puts you out of compliance on day one. Did you buy enough user licenses to meet Oracle's processor minimum? Did you buy all the prerequisite products for your implementation? Did you buy the right products? We've seen compliance problems stem from all of these questions.

What's most worrisome here is that if you start out noncompliant, Oracle takes no responsibility, even though its people are the ones who drafted the contract. According to Oracle, it's always the customer's responsibility to make sure it is in compliance.

A bad licensing position to be in

Let's assume you've made it past the signing of your contract while staying in compliance. Now you're faced with a never-ending series of contractual terms that can lead you into a noncompliant position. Can your organization use the software outside its home country? Can external clients use the software? What happens if your company is acquired? All of these questions are real issues faced by businesses every day. If you don't anticipate such issues when negotiating an Oracle licensing agreement, it's very easy to find yourself accidentally out of compliance.

If you try to fix your license problems by starting with the technology and counting processors, you're just digging yourself into a deeper hole.

As if that wasn't bad enough, there's more. There are also some contractual licensing traps that aren't actually in your Oracle contract. An Oracle licensing agreement contains a lot of links to further resources on Oracle's licensing policies. Why do you think Oracle doesn't include links to those documents in the final contract? If it really wanted you to read them, it would have left them in the contract itself.

In addition, there are various policies that Oracle doesn't even mention in its contracts. For instance, there's nothing about virtualization -- the Oracle policy document says it's not part of the contract. As you may already know from past experience, this lack of clarity causes major problems.

What can you do to escape the trap?

The first and best thing a company can do to get out of the trap is to really understand their Oracle contracts. I'm not just referring to the products and pricing, but also the terms and conditions and the policies. Many companies have five or 10 or 20 or more contracts with Oracle. If you try to fix your license problems by starting with the technology and counting processors, you're just digging yourself into a deeper hole. Start with the contract and answer the following question: What do I own?

Once you have that answer, you can look at your corporate needs and Oracle usage to see if they're in alignment. For example, if your licenses are for use in the U.S., and you have a data center offshore, then you know you have a problem -- no measurements or tools required.

The goal here is to give yourself options when dealing with Oracle. Ultimately, the trap created by the Oracle licensing agreement is that it leaves customers with no choices, trapped into doing what Oracle wants them to. The more you know about your contracts, the more options you'll have.

About the author:

Craig Guarente is president and founder of Palisade Compliance, a company that specializes in helping Oracle users through the complexities of software licensing.

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This was last published in July 2016

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