Software vendor audits block software market competition and hinder customer innovation

Research conducted by the Campaign for Clear Licensing has found that audits conducted by software vendors such as Microsoft, Oracle, SAP, Microfocus and IBM are blocking competition and hindering innovation in the IT department.

The findings are based on a survey of 170 worldwide ITAM, SAM and Software Licensing professionals.

Wasting time defending audits

Software audits have become a business as usual feature in the IT department with the average audit taking an average 194.15 working hours to resolve with a duration of 7.13 months. IT departments are wasting time trying to interpret licensing terms and defending audits rather than exploring competitive solutions or reviewing their true requirements.

The underlying issue is two-fold:

  • Vendors are routinely using audits to generate revenue. Whilst copyright theft is a real issue in some countries and vendors have a right to get paid for their software, vendors are commonly abusing their copyright protection powers, along with vague and out of date license metrics, to exploit revenue-making opportunities.
  • IT departments are mostly reactive to software audits and have not allocated enough resource for managing software as an asset, despite the massive amount spent annually on software, maintenance and subscriptions.

Oracle maintains atrocious audit reputation

The Campaign for Clear Licensing Survey asked which vendor was least helpful during audits, such as using aggressive behavior and focused only on short-term revenue.

Oracle was voted worst vendor during the audit process, followed by IBM and Attachmate (now Microfocus). This is perhaps not a surprise for experienced IT professionals. A similar study back in 2010 also found Oracle, IBM and Attachmate the most aggressive (Note: HPE Software customers should be wary of aggressive Microfocus audits in the light of their agreed merger in 2016).

Using audits for cloud sales

The Campaign for Clear Licensing survey also asked participants which vendor is the most helpful vendor in terms of audits (constructive, takes the long term view and offers help and guidance). Microsoft came out on top, followed by IBM and Autodesk.

A friendlier but equally time-consuming approach is the ‘review’ process adopted by vendors such as Microsoft, whereby previous compliance misdemeanors might be overlooked as long as the customer adopts the software publisher’s strategic products, in the case of Microsoft in 2016: Office 365 and Azure.

In an interview in July, Microsoft stated that they “didn’t want to punish customers for honest mistakes”. This is of course to Microsoft’s advantage because by leaving previous compliance issues unresolved, the customer maintains a low maturity in terms of asset management and is numb to their real usage, leaving them open to lucrative reviews by Microsoft in the future.

Whilst less aggressive, this approach is still anti-competitive and it assumes the vendors cloud solution is the most viable option.

Thwart audits before they begin

The Campaign for Clear Licensing urges organizations to adopt proactive Software Asset Management practices to thwart audit requests as they arise and prevent the huge waste of time and energy spent on defending audits.

Through trustworthy data and transparent licensing terms, organizations can put themselves in the driving seat in software contract negotiations and strategic direction rather than leaving themselves exposed to the whims of the software vendor’s commercial goals.

Stamping out anti-competitive behavior

The Campaign for Clear Licensing also calls upon worldwide governments and lawmakers to review the activities of large software publishers to ensure they are not abusing their dominant position to stifle competition.

By regularly inflicting time consuming audits and opaque license programs, customers vendors are prevented from making free market choices to more innovative alternatives. Licensing complexity is limiting innovation both in terms of customer development and freedom of choice.

About The Campaign for Clear Licensing (CCL)

‘Campaign for Clear Licensing’ is an independent, not-for-profit organization campaigning for clear licensing, manageable license programs and the rights of business software buyers.

CCL Audit Census

Please participate in our Audit Census

The purpose of this survey is to investigate current software audit activity.

We also look at the role of the big four audit firms (Deloitte, EY, KPMG and PwC). Are they adding much needed independent scrutiny to the process or are they getting in the way, hindering the progress of software publishers?

COMPLETE OUR AUDIT CENSUS

Please provide your feedback regarding audit activity and the practices of the big four audit firms. All information shared will be in strictest confidence and will be published as a report throughout summer 2016.

Your privacy is important to us – see our privacy and confidentiality policy here.

COMPLETE OUR AUDIT CENSUS

Thank you,

Martin Thompson,

Campaign for Clear Licensing (CCL)

White Paper: Microsoft stunts its own growth through licensing complexity

The purpose of this paper is to highlight key discussion points for further dialogue with Microsoft on behalf of the Campaign for Clear Licensing.

This paper collates the feedback from over 100 worldwide Microsoft customers on their concerns and challenges with software licensing.

Executive Summary

This paper collates the feedback from over 100 worldwide Microsoft customers on their concerns and challenges with software licensing and recommends five recommendations for positive change.

Key issues with Microsoft Licensing are tracking, licensing complexity, bundling and transitioning to new license models. The five recommendations to Microsoft include clear measurement metrics, audit clarity, a knowledgebase and communications plan.

Download: Microsoft stunts its own growth through licensing complexity

If you have any questions regarding the report or feedback on Microsoft please contact me.

Martin Thompson, December 2014.

@itammartin

http://uk.linkedin.com/in/martinthompson/

martin at clearlicensing dot org

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TmaxSoft – The first software publisher to adhere to the CCL Code of Conduct

TmaxSoft’s Tibero RDBMS licensing model is the first software publisher to be verified by the Campaign for Clear Licensing (CCL).

TmaxSoft’s licensing program is clear and easy to understand and TmaxSoft have amended their terms and conditions to adhere to the Campaign for Clear Licensing (CCL) audit code of conduct.

TmaxSoft – and specifically its Oracle-compatible database Tibero – is the first software publisher to sign up to our Audit Code of Conduct and gain license verification.

We’re delighted to announce this world first and proud to shine a light on software publishers who recognize the competitive edge delivered by clear license programs.

To read the complete assessment of Tibero’s license model see the link below:

http://www.itassetmanagement.net/wp-content/uploads/2015/12/TmaxSoft-Licensing-Model-.pdf

 

CCL Dialogue with European Parliament and Partnership with Free ICT Europe

Two quick updates from The Campaign for Clear Licensing:

  1. We’ve begun a dialogue with the European Parliament regarding software market modernisation
  2. CCL has joined forces with Free ICT Europe

I’ve published further details and a news update on The ITAM Review here:

http://www.itassetmanagement.net/2015/10/02/a-voice-in-europe/

Audits are getting out of hand

In this video: What I learnt at the IBM & SAP Seminar in London this week, The state of audits in the software industry, An update on Campaign for Clear Licensing activity.

In this video:
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  • What I learnt at the IBM & SAP Seminar in London this week
  • The state of audits in the software industry
  • An update on Campaign for Clear Licensing activity

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Support the Campaign by joining our events in New York in May:

www.itassetmanagement.net/events

Audits are getting out of hand

 

 

Oracle User Group responds to CCL Open Letter

UK Oracle User Group applauds best practice

Debra Lilley of the UK Oracle User Group has responded publicly to the Open Letter written to Larry Ellison via her blog:

http://debrasoracle.blogspot.co.uk/2015/01/response-to-campaign-for-clear.html

Debra responded to each of the 7 points outlined in our recommendations but steered clear of directly upsetting the mothership:

“I, on behalf of UKOUG have read the Open Letter to Oracle from The Campaign for Clear Licensing (CCL) and actually applaud the 7 steps as best practice, although do not necessarily see them as direct indictments against Oracle.” – Debra Lilley, UK Oracle User Group

Ostrich Syndrome

Meanwhile John Matelski of the IOUG has also responded, and appears to be dumbfounded that anyone could be upset with Oracle:

“As an Oracle customer and a member of the Independent Oracle Users Group (IOUG), I was extremely surprised and dismayed to learn that there are still those in the customer community that would suggest that their relationship with Oracle is predominantly hostile and filled with deep-rooted mistrust, particularly when it comes to licensing and audits.”

In contrast Sooraj Shah, writing in Computing, stated:

“In November, Computing spoke to some high-profile customers who claimed that the report did chime with their firms’ experiences.”

See: “UK Oracle User Group backs CCL’s open letter to Larry Ellison

“I am not holding my breath”

No formal response from Oracle as yet.

“I am not holding my breath,”

wrote Christopher Barnett, who does not expect any substantive changes from Oracle. “Oracle faces withering criticism of its licensing practices”.

Similarly, Duncan Jones, Forrester Analyst quoted in Computer Weekly said:

“I don’t believe Oracle can change its culture in the way that it needs to. I do not think it really believes it has to change and I don’t think its salesforce can possibly change.”

See:

User groups defend licensing, but should Oracle rethink remuneration?

“The erosion of Oracle database lead in the enterprise market will start accelerating”

The comments on Debra’s blog also make interesting reading:

JAYT” writes:

“IMHO Oracle in order to regain trust they need to go further than I have so far heard a plan for.

In a recent release it was established it was possible to enable In-Memory database without intending to, costing US$23,000 per core at list price. A bug was acknowledged and scheduled for fix.

I’ve seen a similar issue on Windows only in 11g. Because Oracle on Windows services offers no granularity on startup between open and shutdown, it is possible in a Data Guard configuration to flag Active Data Guard as in use when it was only enabled because the Windows service started the standby database. US$11,500 per CPU.

Oracle have spent a little time providing the Software Investment Guide. That’s nowhere near enough. IMHO they need to invest in mandatory license control software allowing customers to specify which licenses they want to use in any given installation. I know turkeys do not vote for Christmas, but if this is not done, and if the licence audit people continue to generate such fear, uncertainty and frankly waste of time bureaucratic admin for busy people who have real jobs to do; if some features/bugs continue to entrap customers who had not intended to use them and present them with large retrospective bills they have no budget for; if that continues, sooner now rather than later, the erosion of Oracle databases lead in the enterprise market will start accelerating.”

Negotiating in the Oracle Grey Zone

Craig Guarente, speaking on a recent ITAM Review Podcast, suggested things are likely to get worse before they get better.

He suggests that Oracle contracts and licensing are vague and ambiguous, but that well prepared and knowledgeable customers can negotiate in this grey zone to their advantage.

“The vagueness of Oracle contracts is a double-edged sword for Oracle – it’s a great opportunity for customers to take the upper hand”.

Knowledge is Power

The dialogue and information sharing continues at a free CCL and ITAM Review Oracle Seminar on the 29th January at Baruch College in New York.

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Stay tuned via the CCL newsletter for further updates.

Open letter: To Larry Ellison and the board of directors at Oracle

To Larry Ellison and the board of directors at Oracle,

We at the Campaign for Clear Licensing, a not-for-profit organisation campaigning for the rights of business software buyers, urge you to take steps to improve the trust of your customers and address concerns over vendor lock-in if you wish to succeed in migrating them to your cloud computing services.

You must be commended for growing your cloud business by 45% in the last quarter, and clearly Wall Street is impressed with this progress. However, with just 5% of your revenue deriving from cloud services you have a long way to go before cloud becomes a major part of your business, and we believe there are significant challenges to overcome along the way. Not least of all is overcoming the deep-rooted mistrust of your core customer base as a result of your auditing and licensing practices. We fear that if Oracle does not address these concerns then the company’s ability to meet its stated $1 billion cloud sales target next year, together with the longer term outlook for its cloud computing business, will remain in doubt.

In November 2014 we published a report which examined the experiences of over 100 of your customers around the world. Among the key issues we found were:

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  • Oracle’s audit requests are often unclear and difficult to respond to
  • Oracle’s own LMS is largely unhelpful to customers during an audit
  • Oracle’s licensing changes are often poorly communicated (to the extent that in some instances Oracle’s own sales teams and LMS are often found to be working with out-of-date licensing information)
  • Oracle routinely moves the licensing goals posts to favour revenue streams over customer requirements

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Together these issues have resulted in customer relationships that are predominantly hostile and filled with deep-rooted mistrust, particularly when it comes to licensing and audits. We strongly believe that failing to address these concerns will hamper Oracle’s ability to persuade its customers to adopt its cloud computing services, as most are concerned that cloud computing services will lock them into Oracle even more than they already are.

But there is time to change, and we applaud the levels of engagement we have already received from Oracle and in particular members of LMS who wish to address these already well-known issues. We are writing this letter to further increase this engagement so that real change can be achieved to everyone’s benefit.

We have already asked your customers for positive and constructive ways for how Oracle can improve its audit processes and communications around software license changes in order to improve customer trust. Here are the seven changes that your customers would like to see, as prioritised by them:

  1. Strategic Focus – Customer satisfaction, relationship strength and strategic value should replace audit revenue as a key performance indicator.
  2. Audit Clarity – Oracle needs to be crystal clear with audit activity and adopt the Campaign for Clear Licensing code of conduct
  3. One voice please – Organisations want clarity over Oracle license management from one voice. They don’t want to be passed around between departments who don’t communicate with each other.
  4. Knowledgebase – Oracle needs to invest in a well-organized knowledgebase to educate its customers
  5. Re-engineer risk – As more organisations mature in their governance processes, more will shy away from Oracle as an unnecessary burden to manage. Oracle needs to engineer its products and license programs to reduce unnecessary risk. The focus of control needs to be placed in the hands of the business not developers.
  6. Software Asset Management Evangelism – Oracle needs to help educate its customers to assign appropriate resource for managing software and proactively assist with licensing training and management practices around Oracle software.
  7. Communicate – Oracle is not being invited to participate in key business conversations because of mistrust. Oracle needs to step up conversations and provide clarity to regain trust.

We understand that these changes will not happen overnight but we hope that they will guide meaningful change. The Campaign for Clear Licensing is a pro-software organisation. We love software and the way it enriches people’s lives, and Oracle can be proud of its contribution to the modern world. But for the sake of the company’s long-term future and the success of its cloud computing services, we urge you to review these recommendations that have been validated by your customers.

The Campaign for Clear Licensing

www.clearlicensing.org

 

 

CCL White Paper: Key Risks in Managing Oracle Licensing

This report is the result of discussions and research with CCL members, The ITAM Review community and the Oracle License Management Services (LMS) team. Thank you to everyone that took the time to participate.

The aim of this report is to highlight the key issues and risks in managing Oracle licensing and share information and knowledge to help CCL members. The report will also form the basis of further discussions with Oracle – with a view to generating positive change.

The report consists of two sections:

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  • Part one shows how organizations view working with Oracle LMS
  • Part two explores specific issues as prioritized by CCL members

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Executive Summary

This report highlights the key issues and risks in managing Oracle Licensing. This information is being shared with CCL members and is also being used as the basis of a constructive dialogue with Oracle so that positive change benefitting both the customer base and Oracle itself will result.

Key issues identified by the respondents with Oracle can be broadly grouped into three themes;

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  • The customer does not feel autonomous
  • They receive inconsistent messages from Oracle
  • They feel that Oracle realigns the goal posts to favour revenue streams over customer requirements.

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This report provides feedback from customers experienced with working with Oracle LMS, explores their key issues in detail and provides seven recommendations for positive change:

  1. One voice from Oracle
  2. A licensing knowledgebase
  3. Greatly improved communications
  4. Re-engineering risk
  5. SAM Evangelism
  6. Audit Clarity
  7. Strategic focus

Download: Key Risks in Managing Oracle

Oracle Seminar 21st November, London

The Campaign for Clear Licensing, in partnership with The ITAM Review, is hosting a free one day seminar on Oracle Licensing on Friday 21st November in central London. This is a great opportunity to discuss some of the issues highlighted in the report and meet your peers. Further info here: http://www.itassetmanagement.net/2014/09/22/oracle-seminar/.

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If you have any questions regarding the report or feedback on Oracle please contact me.

Martin Thompson, October 2014. 

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  • @itammartin
  • http://uk.linkedin.com/in/martinthompson/
  • martin at clearlicensing dot org

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Meeting Notes from 23rd September Roundtable and Next Actions

The first roundtable for the Campaign for Clear Licensing was held in Canary Wharf in London last month.

The roundtable included:

  • Twenty SAM professionals
  • Mostly large corporates including 6 FTSE 100 companies
  • Four government departments
  • Representatives from UK, Germany and the Netherlands

(The Campaign has also received considerable interest from the USA, I apologize to our US friends – we’re not ignoring you – please bear with us whilst we get things off the ground).

I have embedded the discussion document from our meeting below:

The document also includes a summary of the results of our industry consultation. We have distilled all the feedback into several key strategic objectives to drive the campaign forward.

Key Talking Points from the Roundtable:

  • A key deliverable of the Campaign is to provide a vehicle for organizations to discuss issues in private without repercussion. There are several obstacles to overcome here in terms of privacy, security and liability. A key part of our value proposition is to provide that sanctuary.
  • A key talking point was the requirement for sufficient authority within organizations to facilitate change. I.e. Software Publishers are unlikely to change their practices because of Software Asset Managers – but they are much more likely to if CIO’s talk to Software Publishers together with independent substantiated evidence.
  • A knowledgebase was discussed as a useful mechanism for the Campaign to share collective intelligence and experiences. Again, issues around privacy, security and liability need to be discussed.
  • It was generally agreed that whilst a key requirement is for end user customers to collaborate on their own – it was also recognized that all industry stakeholders have a role to play (Software buyers, software managers, resellers, consultants, publishers, auditors, SAM tool manufacturers, Service providers and so on).
  • The Campaign can provide a collective voice for Software Buyers to raise concerns over license programs and auditing without jeopardizing their broader relationship with suppliers – an opportunity to provide evidence based, balanced feedback to suppliers to improve working relationships.

Our Value Proposition in Summary

  • To provide a secure, independent forum for software buyers to discuss issues with software licensing, software audits and vendor management (in person and online).
  • To govern forums to ensure privacy and independence
  • To curate and generate useful content to help members with their daily work
  • To build evidence based arguments for positive change with proactive, constructive dialogue with software publishers.
  • To escalate and highlight bad practice for software publishers who don’t wish to engage in positive and constructive relationships.

Next Steps

  • To develop a 3-Year business plan
  • To continue to solicit industry feedback and build industry partnerships
  • To develop a membership offering (Which will initially include a calendar of workshops and knowledgebase).
  • To recruit a Board to govern our strategic direction and volunteers to help support the initiative.

Volunteers Required

The first piece of collaborative work will be the Software Audit Code of conduct – a high level outline of which is included in the presentation. If you would like to contribute towards this publication please get in touch (we welcome contributions from all stakeholders in the industry).

If you have any questions please contact me. Contact details.

My thanks to Rory Canavan, Glenn Thompson, Kylie Fowler and Martin Chalkley for helping pull all this together.

Thanks, Martin