The Top 5 Triggers for an Oracle Audit
You do not want to be audited – not by the IRS and also not by Oracle.
Everybody knows about IRS audits. Much less well understood are Oracle audits where the software behemoth comes into a company and – much as the IRS wields the proverbial fine-toothed comb to hunt for irregularities – Oracle uses its version of a fine-toothed comb to sift through a company’s software library and its licenses. Every piece of software is inspected, and so are the appropriate Oracle licenses and contracts.
Oracle does this for two reasons. As a software company, its lifeblood is intellectual property and it has a responsibility to its shareholders to ensure that it is properly compensated for its software. The second reason stems from the first. Audits make money for Oracle. Companies found out of compliance are forced to buy appropriate licenses and often are slapped with so-called “Back Support Fees.” That money adds up.
It’s not random
Ask Oracle why you have been selected for an audit and you will be told it is random.
Sometimes that is in fact true. More often in our experience is that there has been a trigger event that led directly to an audit.
Read that again. Most audits happen because the audited company did something that led to the audit. Knowing those triggers may just help you avoid an audit. And that is an outcome you should very much want.
Trigger 1: Being a big Oracle customer
Most companies believe that if they are a big Oracle user, with many products under license, they will be cut significant slack.
The opposite is more often true: the more Oracle products, the higher the likelihood of an audit.
Oracle fishes where the fish are. It believes that if you have dozens of Oracle products, that is, dozens of different challenges to maintain compliance, the opportunities for missteps rise – and Oracle is willing to bet you cannot be fully compliant.
Nobody is saying, use less Oracle. Just do not believe that having licenses for many products provides immunity. It does not.
Trigger 2: Your sales rep not meeting quota
You may think, but I have a great relationship with my sales rep. But reps make money when audits uncover software that is not properly licensed and the charges usually are backdated. That can produce a big chunk of commission.
Have good relations with your Oracle reps but, again, do not suppose this carries immunity from audit, especially if the rep is having trouble meeting their quota.
Trigger 3: Asking Oracle to help reduce costs
Don’t go there.
It’s the frog and the scorpion. The scorpion in the story asks to be ferried across the river and of course then stings the frog.
The same type of thing happens when a company asks Oracle for help in reducing costs, whether licensing or support costs. The Oracle group that provides that help is the group that audits. Scorpions sting because that is what they do. Auditors audit because that is what they do.
There may come a time when in fact it is wise to ask Oracle for help but wait until you have a lot of knowledge about your Oracle usage, the contracts in force, and Oracle itself. That will let you approach Oracle from a position of strength, not weakness.
Trigger 4: Not knowing how much Oracle you are really running
An Oracle software application by any other name is still an Oracle software application. And frankly, it takes a lot of effort to keep up with Oracle merger and acquisition activity. That license for BEA? PeopleSoft? Siebel? That’s still Oracle software. And what about Sun?
Larger organizations may be unaware that certain departments or divisions are using Taleo or Eloqua and hence are part of the Oracle software portfolio. Like most things related to Oracle licensing, it takes a great deal of due diligence or specialized knowledge to keep up with whether the software or cloud offering from that hot startup is now in fact part of your Oracle software inventory, with the result that support and licenses must be managed accordingly.
Trigger 5: Doing a hardware refresh
This is a big, predictable problem. Companies refresh hardware, usually to gain processing efficiencies, cut energy costs, and raise productivity. In most organizations it will happen every five to ten years.
Look at your Oracle contracts. Oracle licensing is usually based on stacks. Increase processing power and that will usually means more stacks – and bigger fees for Oracle. Oracle knows that hardware refreshes generally mean a payday, so don’t be surprised if they come calling right after a refresh.
Will you sidestep Oracle audits just by knowing the five triggers? If only it were that easy. But knowing the triggers will keep you from in effect inviting Oracle to do an audit that may wind up costing you a lot of money.