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to get paid for their software, vendors are commonly abusing their copyright protection powers, along with vague and out of date license metrics, to exploit revenue-making opportunities.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

Files

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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

 

 

Upcoming Campaign for Clear Licensing (CCL) Events

Join us for the following upcoming events (in partnership with The ITAM Review) and connect with like-minded individuals around key licensing topics:

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All research collated at these events will aid our continued dialogue with software publishers.
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Event Listing: Campaign for Clear Licensing Roundtable, London, 2nd February

Confidential Roundtable

To kick off our research into IBM and SAP licensing and audit practices the Campaign for Clear Licensing is holding a confidential roundtable in London on the 2nd February.

The goal of the meeting is to identify the key issues and talking points around IBM and SAP. We will also delve into the early responses to our research [below].

REGISTER HERE: https://itamreview.wufoo.com/confirm/ibm-sap-ccl-roundtable-registration-2nd-feb/

IBM & SAP Licensing Survey

Please provide your feedback on IBM and SAP Licensing and audit practices. Submissions can be completely anonymous if required. All contributions will be published and shared openly and will help us drive the agenda with IBM and SAP.

IBM: https://itamreview.wufoo.com/forms/ibm-licensing-feedback/

SAP: https://itamreview.wufoo.com/forms/sap-licensing-feedback/

2nd February Roundtable Agenda

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  • Introductions
  • CCL Progress Report & Oracle next steps
  • IBM & SAP Research Summary
  • Key issues with IBM and SAP – Research requirements and priorities
  • AOB / Networking

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REGISTER HERE: https://itamreview.wufoo.com/confirm/ibm-sap-ccl-roundtable-registration-2nd-feb/

Event Summary

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  • Who: Campaign for Clear Licensing
  • What: Confidential Roundtable
  • When: Monday 2nd February 2015 2pm – 4pm
  • Where: Central London (Short walk from Euston station, address disclosed on registration)
  • How: Please register using this link
  • Who should attend: End user organisations and hands-on practictioners
  • Cost: Free

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REGISTER HERE: https://itamreview.wufoo.com/confirm/ibm-sap-ccl-roundtable-registration-2nd-feb/

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.

Event Listing: Oracle Licensing Seminar, New York, USA

The Campaign for Clear Licensing is working in partnership with the ITAM Review to host an Oracle Licensing seminar.

  • What: Oracle Licensing Seminar
  • When: Thursday 29th January 2014
  • Who: The ITAM Review in partnership with the Campaign for Clear Licensing
  • Where: Baruch College, New York
  • How: Register and learn more here:

http://www.itassetmanagement.net/2014/12/02/event-listing-oracle-seminar-29th-january-2015-york/

Agenda

Confidentiality

This event is for end user organizations only. Chatham House rules apply.

Key issues and talking points will be captured anonymously and presented to Oracle for further discussions.

Register and learn more here:

http://www.itassetmanagement.net/2014/12/02/event-listing-oracle-seminar-29th-january-2015-york/