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Audit Fears Cloud Oracle Customers’ IT Evolution

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Apps Associates survey finds customers fear triggering software audit if workloads not moved to Oracle cloud

A majority of Oracle software customers are looking to move their remaining on-premises applications and workloads to cloud service providers. Holding them back, though, is a fear that choosing Amazon Web Services or Microsoft Azure could trigger a costly software audit by Oracle, a new survey by Apps Associates finds.

The Lowdown:  A survey of 300 IT executives conducted by Apps Associates, an Oracle and Amazon Web Services partner, finds 55 percent fear that moving their remaining Oracle on-premises software to a non-Oracle cloud provider will provoke Oracle to launch a software audit. The concern of facing a costly software licence compliance audit comes as 59 percent of enterprises are planning to move legacy software to a cloud provider in 2019 and another 32 percent believe they’re already behind in their cloud migration efforts.

The Details:  Technically, Oracle software is certified to work on the Microsoft and Amazon clouds. Through the Bring Your Own License program, Oracle helps customers move their existing licenses to the Amazon and Microsoft clouds. However, 58 percent of the IT executives surveyed by Apps Associates said they that they are very or somewhat concerned that their Oracle licenses would be invalidated by adopting a rival cloud platform.

Oracle is pushing hard for customers to adopt its cloud platform, which entered the market late and is substantially behind rivals in terms of revenue generation and market share. Oracle recently launched a program that promises to help customers cut their cloud spending by as much as half if they switch from AWS to the Oracle Cloud. Some licensing experts say the Oracle offer is a trap, as it opens an opportunity for a license compliance audit.

The Impact:  The fear of an Oracle software license audit is not unfounded. Oracle and other software vendors, including Microsoft and IBM, use complicated contractual terms to bind customers through restrictions and penalties for how they use applications. Violation of terms and conditions sometimes comes with hefty fees and fines. Oracle has a history of using software audits as a means of compelling customers to buy more licenses or drop plans of switching to competing alternatives.

Background:  Oracle is pushing hard to gain market share and revenue in an already crowded market dominated by AWS and a fast-growing Microsoft Azure cloud business. Despite making claims that its cloud business is generating $11 billion in revenue, industry analysts are dubious. Many analysts suspect that much of Oracle’s cloud revenue is reclassified license sales. Bolstering that theory is Oracle buying back billions of dollars in shares to prop up its stock price and a series of layoffs in its cloud division.