How we helped a South African retail company save costs and avoid significant risks

oracle audit services

Audit support services can save huge costs

Company: Retail Company in South Africa

Case: Oracle Audit Support Services

Cost avoidance:

Initial Financial Exposure        Final Commercial Resolution

License: 9.847.500 USD          License: 53.888 USD

Support: 2.166.450 USD         Support: 11.854 USD

A South African retail company received a formal notification letter from Oracle’s compliance department – Oracle License Management Services, that the organization was selected for an Oracle audit. The retailer was making use of Oracle Database, Middleware, Java, Oracle E-Business Suite, Hyperion and Business Intelligence software programs. Since this organization was recently audited by IBM as well (which ended in a commercial settlement of 1.2M USD) they realized that they actually require external support to get through the current Oracle audit.

Our solution

Due to our deep knowledge and experience as former Oracle, SAP and IBM auditors we were selected to support this company. The first step in the engagement was that we took over the communication towards the LMS auditors to delay the audit. This started by discussing and agreeing a separate Non-Disclosure Agreement between both parties, an Audit Agreement plan specifying the different steps that were required to be followed during the course of the audit and the validation of the different scripts and measurement methodologies proposed from a security and performance perspective.

The audit was delayed so that we had sufficient time to perform an internal Oracle audit first. During this internal audit, the same methodologies and scripts were used as Oracle would do during the course of their official audit. All contractual documents (ordering documents, license agreements, support renewals) were analysed and all the deployment and usage data of the different Oracle programs was gathered. After reconciling the contractual terms and conditions with the actual deployment and use of the different Oracle programs, a financial exposure was identified. This financial exposure summed up to a total of 9.847.500 USD (List License) and 2.166.450 USD (List Support).

These license compliance issues were caused by:

  • a lack of understanding the contractual terms and conditions
  • the deployment of Oracle programs on IBM Logical Partions (whereas the customer was not aware that these are required to be configured in a specific manner to reduce the number of licenses required)
  • the (historical) use of Oracle Database Enterprise Edition Options and Oracle Database Management Packs which were not licensed
  • the deployment of Oracle Coherence and Oracle WebLogic on the same server (without having the appropriate WebLogic Suite licenses for such deployment)
  • not taking into account the minimum number of Named User Plus licenses per Processor and the deployment of Oracle programs on VMware.

Business impact and results

Upon the completion of the internal audit, we supported the customer in removing the use traces of specific unlicensed software programs, the reconfiguration of their hardware infrastructure and the consolidation of their software deployments on a limited amount of physical servers. By doing so, the financial exposure got reduced with 85-90%.

Upon the completion of these remediation and optimization actions, we supported the customer in sharing only that specific deployment and usage information that was absolutely required to be shared by the customer to satisfy Oracle’s requirements during the course of the audit.

The organization was not able to completely resolve their initial financial exposure and as such additional licenses were required. We supported the customer with our negotiation support services, through which we negotiated  the required number of licenses to be bought against a maximum discount of 72%. As a result of this negotiation, the customer obtained a non-audit clause in their agreement for a period of 2 years, non-standard terms to avoid support indexation on the new purchased licenses for the next 20 years, a total closure of the audit and a non-standard customer definition. The final costs paid by the customer resulted in a fee of 53.888 USD (Net License) and 11.854 USD (Net Support).

Ongoing Control

As a result of the complexity of this audit, the customer realised that the knowledge and experience to continuously manage the Oracle software licenses in a proper manner is not available internally organization. Therefore, the customer entered into an Oracle Managed Service to continuously control the financial risk, to get educated on licensing matters and to continuously avoid and save costs.

We’re happy we decided to hire B-lay to support us through the Oracle audit. Their level of knowledge and experience helped us avoid large costs and now they are our SAM partner for the coming years

This article was published on 01-10-2020