Third-Party MSP Triggered $3M in Oracle Compliance Fees for this Enterprise Software Solution Provider

The CFO of an enterprise software solution provider (ESSP) faced a significant challenge when accidental activation of unlicensed Oracle database features resulted in a $200k compliance bill. Later, a hardware upgrade mismanaged by their third-party Managed Service Provider (MSP) escalated the issue, leading to over $3 million in potential compliance fees. The ESSP sought help from LicenseFortress, who quickly addressed the violations by applying the correct Oracle license keys, implementing custom templates to prevent future errors, and setting up continuous monitoring. As a result, the ESSP avoided the $3 million in fees and ensured long-term compliance and cost savings.

To start, this Enterprise Software Solution Provider (ESSP) has been an Oracle customer for over a decade. The ESSP was audited by Oracle and found in violation of their license agreement. Unfortunately, some database features, Diagnostics and Tuning Pack, that ESSP did not use—and was not paying for—were accidentally turned on, violating their Oracle licensing compliance. ESSP owed Oracle $200k for unpaid license fees, 300 percent more than their existing Oracle annual spend.

Going forward, to eliminate future compliance problems, the ESSP purchased an Oracle Database Appliance (ODA), which is an engineered system that includes hardware, networking, storage, and software preconfigured in an appliance. With the ODA, ESSP believed their organization was protected from future license agreement violations. However, ESPP changed its IT infrastructure. Due to hardware end-of-life, ESSP retired and replaced all their servers.

Then the ESSP engaged LicenseFortress to perform a Compliance and Optimization Review to ensure it was employing database best practices and not out of compliance. On the first day of the review, LicenseFortress discovered that the ESSP was again in violation of their Oracle license agreement, but this time by over $3 million!

The ESSP outsources the management of its software environment to a managed service provider (MSP). When the hardware was replaced, the MSP did not apply the Oracle license key on the new hardware. As a result, 144 cores had access to Oracle software, but ESSP had licenses for only 12.

Initially, the ESSP performed a default Oracle installation, which includes all the licensable Oracle database features, options, and management packs. As is often the case, human error violated the license agreement, and the ESSP paid handsomely for it. However, while the ESSP disabled these packs, there was nothing to prevent someone from inadvertently turning on other unlicensed features and violating the Oracle license agreement again. To minimize this risk, LicenseFortress has created custom templates that only include licensed features. Now the ESSP uses these templates instead of the default Oracle templates, preventing another costly human error in the future.

$3M in Compliance Fees Avoided

In conclusion, the ESSP's experience with Oracle licenses clearly demonstrates how important it is to check your compliance status continuously. You can be in compliance one day and out of compliance the next and not even know it.

During the Oracle audit, the ESSP discovered it had been out of compliance for some time. While the problem was rectified and the Oracle bill paid, LicenseFortress discovered that the ESSP has been out of compliance for nearly two years! Initially, non-compliance resulted from accidentally turning on unlicensed features, while the second violation was caused by an oversight when replacing retired hardware.