Demystify Oracle Licensing and Optimize Spend Overspending with

Demystify Oracle Licensing and Optimize Spend Overspending with Oracle is easier than you think, thanks to the open access framework coupled with complexity of licensing. Info-Tech Research Group, Inc. is a global leader in providing IT research and advice. Info-Tech’s products and services combine actionable insight and relevant advice with ready-to-use tools and templates that cover the full spectrum of IT concerns. © 1997 -2016 Info-Tech Research Group Inc. Info-Tech Research Group 1

ANALYST PERSPECTIVE Act now before Oracle is knocking at your door. Oracle products are highly complex, and with this complexity comes high price tags. The high risk of non-compliance coupled with an aggressive Oracle LMS team can be an overwhelming experience for many clients, resulting in a large invoice for license noncompliance. Multiple account reps for each product and frequent changes within the account team add to the frustration when dealing with Oracle as it is difficult to build a business partnership. When you factor in Oracle’s multiple contract types, informal policies regarding acceptable license usage, and rigid, complex support policies, it becomes easy to see why Oracle licensing is difficult to understand. Many organizations find themselves noncompliant so take a proactive approach to mitigate risk. Scott Bickley, Sr. Director, Vendor Advisory Practice Info-Tech Research Group 2

Our understanding of the problem This Research is Is Designed For: This Research Will Help You: ü IT managers scoping their Oracle licensing ü Understand simplify licensing per product to help requirements and compliance position. ü CIOs, CTOs, CPOs, and IT directors negotiating licensing agreements in search of cost savings. ü ITAM/Software asset managers looking for a better way to track and manage Oracle licensing. ü IT and business leaders seeking to better understand Oracle licensing and evaluate cloud options. ü Vendor management office in the process of a contract renewal. optimize spend. ü Ensure agreement type is aligned to needs. ü Navigate the purchase process to negotiate from a position of strength. ü Manage licenses more effectively to avoid audits and unnecessary purchases. ü Execute and renew contracts with ease while identifying the products that need to be purchased so scope and spend creep are proactively managed. This Research Will Also Assist: This Research Will Help You: Them: ü CFOs and the finance department ü Enterprise architects ü Organizations examining a move to the cloud ü ITAM/SAM team ü Network and IT architects ü Legal ü Procurement and sourcing ü Understand licensing methods in order to make educated and informed decisions. ü Understand the future of the cloud in your Oracle licensing roadmap. ü Design the infrastructure environment that Oracle databases will run on. ü Understand Oracle’s on-premises licensing and whether moving to the cloud is a viable option. Info-Tech Research Group 3

Executive summary Situation Info-Tech Insight • Organizations struggle to understand which licensing model will best suit 1. Focus on needs first. Conduct a thorough requirements assessment and document the results. Well-documented license needs will be your core asset in navigating Oracle licensing and negotiating your agreement. 2. Communicate effectively. Be aware that Oracle will reach out to members at your organization at various levels. Having your executives on the same page will help send a strong message. 3. Manage the relationship. If Oracle is managing you, there is a high probability you are over paying or providing information that may result in an audit. • • the organization based on price, flexibility, and license use rights. Complexity of licensing and high price tags can make the renewal process an overwhelming experience for many organizations. Different account reps for each product and frequent changes within the account team lead to a transactional relationship where only documented entitlements matter. Complication • Contract types, informal policies, transactional purchases vs. unlimited • agreements, and complex support polices make it difficult to understand which licensing model will be the best fit. The friendly account reps are also the primary source of nominations for organizations to be audited by Oracle License Management Services (LMS). Resolution • Conducting business with Oracle is not typical compared to other vendors. To emerge successfully from a commercial • • transaction with Oracle, customers must learn the “Oracle way” of conducting business, which includes a best-in-class sales structure, highly unique contracts and license use policies coupled with a hyper-aggressive compliance function. Map out the process of how to negotiate from a position of strength, examining terms and conditions, discount percentages, and agreement pitfalls. Develop a strategy that leverages and utilizes an experienced Oracle DBA to gather accurate information, then optimizes it to mitigate and meet the top challenges. Info-Tech Research Group 4

Oracle is often one of the top three in dollars spent on an IT vendor, so be aware of challenges with this vendor Oracle LMS has been helpful during the audit, contract renewal, and negotiation process 37. 00% 41. 00% 22. 00% 0. 00% Strongly Disagree Agree Strongly Agree The Campaign for Clear Licensing survey findings on Oracle LMS Source: Information. Week 92% Campaign for Clear Licensing has reported that “ 92% of customers say that Oracle does not clearly communicate licensing changes. ” 50% Of sources state that Oracle derives 50% of Oracle database revenue in the UK from audit activity. Source: Snow Software Info-Tech Research Group 5

The aim of this blueprint is to provide a foundational understanding of Oracle licensing, support, and management Why Oracle • Oracle is used by many businesses for their critical enterprise apps while being a relatively expensive database platform. • Determining Oracle’s fit within your organization is critical. Use an inventory to document app dependencies and other factors that limit changes to the database ecosystem. • Cautiously consider virtualization due to Oracle’s portioning policies. What to know • Certain database practices are more successful than others; know which activities provide the greatest benefit to Oracle customers. • Know the top database challenges identified by Info-Tech clients. • Develop a strategy that simplifies database collection and license management, then optimizes it to mitigate and meet the top challenges. The cloud • Oracle believes it has the most complete set of cloud services in the industry with 11, 000 customers on cloud. • However Oracle’s internal operational transformation is ongoing to enable cloud functionality to be on par with on premises. • The vast majority of Oracle’s revenue still comes from onpremises licensing and services. Info-Tech Insight AWS and Microsoft have a head start of a few years on Oracle in the cloud market with highly evolved Iaa. S/Paa. S ecosystems and low pricing, leaving Oracle with some catching up to do. Oracle is aiming to be the easiest company to do business with positive changes forthcoming. Info-Tech Research Group 6

This research focuses on Oracle Technology licensing (database/middleware) and cloud impact to on-premises options Source: Data to Decisions Source: Arrow Info-Tech Research Group 7

Learn the “Oracle way, ” whether you are reviewing existing spend or considering the purchase of new products Oracle offers many products across its various business units. Understanding its current state in its cloud transformation is critical to picking the right option. • The vast majority of Info-Tech clients are using on-premises Oracle solutions and will be • • for the foreseeable future. Oracle cloud should be viewed primarily as a commercial vehicle to realize legacy license model discount levels. Oracle sales is emphasizing the test/dev use case and in some cases for new database (DB) applications. Functionality gaps exist between cloud Fusion ERP and legacy Oracle EBS products. Current Oracle customers feel “locked in” to Oracle DB technology; however, there are new alternatives to consider over the medium term. Oracle is trying to make it easy for existing Oracle customers to move to the Oracle cloud by aiming for the same product functionality in the database products (on premises vs. cloud) to enable an easy transition. Oracle will focus on existing “Red Stack” customers to defend its leading position in the DB market. Info-Tech Research Group 8

Apply licensing best practices and examine the potential for cost savings through an unbiased third-party perspective Establish Licensing Requirements • • • Understand Oracle’s competitive landscape Conduct an internal SAM assessment Build an effective licensing position Examine and be aware of red flags Reduce the risk of adverse findings Evaluate Licensing Options • • • Value of Oracle support Virtualization rules Optimal licensing models, whether processer or named user based Cloud licensing options Disaster recovery licensing Evaluate Agreement Options Purchase and Manage Licenses Preventative practices can help find measured value ($) • Term licenses vs. perpetual • Agreement options open to your size of organization and products you’d like to license • Business situation or goals that may affect your choice of agreement • Cloud agreement options • Negotiating tactics to enhance your current strategy • Terms and conditions to include that may not be standardized • Audit clause Info-Tech Research Group 9

The State of Oregon sues Oracle for $240 million CASE STUDY Industry Source Government Portland Business Journal State of Oregon In June 2011, the State of Oregon entered into a contract with Oracle worth hundreds of millions to help build a state-run health insurance exchange that would comply with the ACA (Affordable Care Act) and modernize legacy systems that were in desperate need of a refresh. Litigation In August 2014, the State of Oregon filed a complaint alleging fraud to the amount of $240 million. The State claims Oracle breached the contract “by failing to deliver on its obligations, overcharging for poorly trained Oracle personnel to provide incompetent work, hiding from the state the true extent of Oracle’s deficient performance, continuing to promise what it could not deliver and willfully refusing to honor its warranty to fix errors without charge. ” Oracle claimed it was the state’s failure for not hiring a systems integrator, but the state responded that Oracle shot down that idea, recommending Oracle Consulting services could do the job. Oracle had promised the website would be up and running Oct. 1, 2013, which was missed, and the software had bugs but payment was still demanded in full. Results Currently litigation, negotiation, and settlement are ongoing, but this demonstrates the importance of understanding the full technical scope and scale of the project, and incorporating sufficient project oversight, requirements, and acceptance testing. Furthermore, terms and conditions must be very carefully negotiated into the contract to provide long-term flexibility. Being in the driver’s seat when it comes to multi-million dollar decisions and managing the relationship with the vendor can save you from a similar headache. Info-Tech Research Group 10

Use these icons to help direct you as you navigate this research Use these icons to help guide you through each step of the blueprint and direct you to content related to the recommended activities. This icon denotes a slide where a supporting Info-Tech tool or template will help you perform the activity or step associated with the slide. Refer to the supporting tool or template to get the best results and proceed to the next step of the project. This icon denotes a slide with an associated activity. The activity can be performed either as part of your project or with the support of Info-Tech team members, who will come onsite to facilitate a workshop for your organization. Info-Tech Research Group 11

Info-Tech offers various levels of support to best suit your needs DIY Toolkit “Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful. ” Guided Implementation Workshop Consulting “Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track. ” “We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place. ” “Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project. ” Diagnostics and consistent frameworks used throughout all four options Info-Tech Research Group 12

Demystify Oracle Licensing and Optimize Spend – project overview Establish Licensing Requirements • Assess current state and align goals; review business feedback Best-Practice Toolkit Evaluate Licensing Options • Review licensing options • Review licensing rules Evaluate Agreement Options • Determine the ideal contract type • Review final contract • Discuss negotiation points • License management • Interview key stakeholders to define business objectives and drivers • Future licensing strategy Engage in a scoping call Review product options Assess the current state Review licensing rules Determine licensing position Review contract option types Determine negotiation points Review vendors Finalize the contract Discuss license management Evaluate and develop a roadmap for future licensing Guided Implementations Onsite Workshop Purchase and Manage Licenses Module 1: Establish Licensing Requirements Module 2: Evaluate Licensing Options Module 3: Evaluate Agreement Options Module 4: Purchase and Manage Licenses Phase 1 Results: • Have a baseline for requirements Phase 2 Results: • Product mix • Support Phase 3 Results: • Best agreement types Phase 4 Results: • Optimized purchasing • Management plan • Future roadmap Info-Tech Research Group 13

Workshop overview Activities Contact your account representative or email Workshops@Info. Tech. com for more information. Workshop Day 1 Workshop Day 2 Workshop Day 3 Workshop Day 4 Workshop Day 5 Preparation Workshop Day Workshop Debrief 1. 1 Send workshop agenda to all participants. 2. 1 Introduction to frameworks and workshop. 1. 2 Review licensing documents and any proposals provided by Oracle. 2. 2 Assess current state and align goals to workshop; review business feedback. 1. 3 Review Oracle deployment information. 2. 3 Meet with stakeholders to determine IT strategy as it relates to Oracle licensing. 1. 4 Assess current state; perform gap analysis. 3. 1 Meet with server product owners to determine product strategies. 3. 2 Discuss licensing rules and application to current environment. 3. 3 Understand the importance of documenting changes. Deliverables 2. 4 Meet with “asset manager” to discuss compliance concerns. 1. Oracle Licensing Purchase Reference Guide 2. Oracle Database Inventory Tool 3. Effective License Position 4. RASCI Chart 4. 1 Discuss recommendations and overall contract strategy. 4. 2 Discuss negotiation strategies. 4. 3 Licensing management. 5. 1 Preparation of final deliverables. 5. 2 Create a schedule and role/responsibility matrix for future monitoring activities. 4. 4 Introduction of Software Asset Management (SAM). 4. 5 Leverage the work done on Oracle licensing to get started on SAM. 1. Oracle TCO Calculator 2. Oracle Licensing Purchase Reference Guide 1. Oracle Licensing Purchase Reference Guide 2. Oracle Terms & Conditions Evaluation Tool 3. Controlled Vendor Communications Letter 4. Vendor Communication Management Plan Info-Tech Research Group 14