A Manufacturing Company with a Small Oracle Investment Had Big Compliance Issues

A small manufacturing company, founded in the mid-1800s, faced a significant Oracle audit due to mismanaged database licenses. The senior systems analyst, recognizing the company's limited IT expertise and the potential risk of over $1 million in compliance costs, engaged LicenseFortress. With an annual Oracle spend of under $15,000, the company needed expert guidance. LicenseFortress conducted a Compliance & Optimization Review for $20,000, re-architected their VMware environment, and resolved the audit with no additional payments required. The total benefit to the manufacturer was nearly $1.1 million in savings, including $1 million in avoided compliance costs, $70,000 in new licenses, and $3,500 in reduced annual support costs.

Hidden Licensing Risks in a VMware Environment

While strong on the manufacturing side, this organization had little in-house IT expertise. Therefore, they engaged a third-party IT service to support their systems. Unfortunately, a miscommunication between the manufacturer and third-party IT service left an operational gap: no one was watching how the Oracle database licenses were being deployed. This problem came home to roost when the manufacturer received an Oracle audit.

From the start, the manufacturer realized it could not manage an Oracle audit without the right expertise and engaged LicenseFortress for assistance. At the time of the audit, the manufacturer was running their databases in a VMware environment and spending under $15,000 a year in Oracle licenses. The LicenseFortress team initially performed a Compliance & Optimization Review to measure the organization's risk. For this engagement, LicenseFortress reviewed the company's Oracle license contract and inventoried the VMware environment to validate its use of Oracle licenses. There was good news and bad news:

Good News

The customer was in the middle of a hardware upgrade. Unbeknownst to them, this would have invalidated their Standard Edition licensing. Resulting in the need to buy new Enterprise Edition licenses at a cost of over $1 million. LicenseFortress recognized this issue and provided alternative hardware options to avoid the compliance issue.

Bad News

The manufacturer did not realize that their development and test environments counted for licensing purposes. Thus was not properly controlling them. Conservatively, this would have cost them $70,000 in new Oracle licenses.

But with LicenseFortress, even the bad news turned into good news. Once the assessment was completed, LicenseFortress formulated a remediation plan, which included re-architecting the VMware environment and reconfiguring how the testing and development environments were handled. The LicenseFortress team stepped in to handle the Oracle audit, allowing the in-house team to stay focused on their day-to-day jobs. They provided evidence of compliance negotiated directly with Oracle GLAS (formerly Oracle License Management Services or LMS) on the customer's behalf.

Zero Audit Penalties and $1.1M in Savings

In the end, the LicenseFortress team was able to complete the audit with no adverse findings and no additional payments required. LicenseFortress also identified support costs that the manufacturer no longer needed to pay Oracle. This amounted to a 25 percent savings.

The manufacturer invested $20,000 in the Compliance & Optimization Review (COR) conducted by LicenseFortress, which was completed in just two weeks. This investment resulted in nearly $1.1 million in total savings, including $1 million in avoided compliance costs, $70,000 saved on new licenses, and an additional $3,500 in annual support cost reductions. Beyond the financial savings, the manufacturer avoided potential operational disruptions and gained a comprehensive understanding of Oracle licensing, ensuring future compliance.