The Oracle Audit Playbook: Health Exchange Found Out of Compliance by More Than $14M

Learn how to navigate the Oracle audit playbook and avoid settling for more than what your oganization owes.

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A page out of the Oracle audit playbook

Oracle performed a compliance audit and discovered that the Exchange usage was well beyond the licensing agreement. They billed the Exchange for more than $14 million. An amount that would have bankrupted the Exchange. So Oracle agreed to settle if the Exchange signed an Unlimited License Agreement (ULA) for $5 million. This cycle is a common tactic out of the Oracle audit playbook.

The Affordable Care Act (ACA) provided a pool of money so states could build Health Exchanges. These are state-wide resources for individuals, families, and small businesses looking to purchase health insurance and obtain financial assistance. In the case of one such exchange (the Exchange), the timeline to be up and running was a matter of months. So the Exchange contracted with a global information technology and system integrator (SI) to build out the Exchange’s infrastructure.

To meet the tight deadline, the SI licensed Oracle® components exclusively and established multiple teams to work on different parts of the project. The SI then built a virtualized cluster to support the Exchange but, in doing so, inadvertently violated the Oracle license agreement.


Audit, Bargain, Close

Oracle contracts are full of complexities, often generating compliance issues from the moment the software is installed. They audit their customers, often citing exuberant Oracle compliance fees. Oracle then offers customers out of compliance a “deal.” This is often to push services or products (i.e. cloud credits) that the customer may not want/need. Consequently, customers often settle or renegotiate their terms with Oracle. Ultimately giving an already unfair contractual advantage even more leverage.


The Oracle audit playbook was foiled by LicenseFortress

The Exchange engaged LicenseFortress to help it find ways to decrease its $1.7M annual support costs. LicenseFortress performed a Compliance and Optimization Review of the Exchange’s Oracle licensing. After reviewing the Exchange’s contract, LicenseFortress cataloged and inventoried the Oracle products and workloads used across all environments: production, staging, user acceptance testing (UAT), and disaster recovery.

The analysis uncovered Oracle compliance issues. The Exchange had licensed 18 products but was only using ten. In fact, had the Exchange just bought its licensing on a per-product basis, it would have paid significantly less than $5 million and faced lower support costs.

At about the same time that LicenseFortress was evaluating the Exchange’s Oracle license use. The SI had just completed a technical upgrade to its infrastructure This resulted in a reduced processor count supporting the SI’s virtual cluster. Previously, the Exchange was sharing eight servers on the SI’s joint infrastructure; but with the upgrade, the SI moved the Exchange to its own servers – two servers with 32 cores. This change provided LicenseFortress the opportunity to reduce the Exchange’s Oracle licenses.

Working with the SI, LicenseFortress determined that it could restrict the Exchange’s Oracle workloads at the host level. This would reduce the number of licenses needed. Also, It would allow the Exchange to terminate the Oracle ULA and buy new licenses at a discount. Of the ten Oracle products, five were put on one server and five on the other server.

The net result? The Exchange’s support costs dropped from $1.7 million to $400,000 annually — a savings of $3.9 million over three years and effectively defended against the Oracle audit playbook.

Cost Savings

Saved over $1.3 million annually in support costs

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