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to get paid for their software, vendors are commonly abusing their copyright protection powers, along with vague and out of date license metrics, to exploit revenue-making opportunities.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

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:
[list type=check_list]

  • 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

[/list]

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

www.itassetmanagement.net/events

Audits are getting out of hand

 

 

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

 

 

Oracle, the first software publisher to meet Campaign for Clear Licensing

Oracle is the first software publisher to meet with the Campaign for Clear Licensing (CCL).

The aim is to build a mutually beneficial feedback mechanism with constructive dialogue over the longer term.

Process as follows:

  1. We will solicit feedback on Oracle licensing and audit programs via a survey over the coming weeks.
  2. We will meet to discuss key priorities regarding Oracle and discuss broader survey feedback (CCL members only) Wed 26th March 11:30 – 13:30, Central London, UK.
  3. A small delegation of CCL members will meet Oracle on Thurs 24th April 13:00 – 16:00, again Central London, UK.

Survey details and event registration to follow.

In the meantime if you have any question please contact me. Similarly if you are able to host a CCL meeting (outside the UK) please let me know.

UPDATED: 6th MARCH 2014 

Please provide your feedback and confirm dates using this form, thank you:

http://itamreview.wufoo.com/forms/oracle-licensing-feedback/