Hey, Oracle! Untangle your licensing knots, once and for all

If Oracle's licensing agreements have left you holding your head and ripping out your hair, you're in good and growing company.

The Campaign for Clear Licensing (CCL),  a not-for-profit organization that's previously singled out Oracle for the lack of transparency and communication in its licensing procedures, this week published an open letter to Larry Ellison and the board of directors at Oracle. In it the CCL urges Oracle to fix customers' documented issues with licensing Oracle products, lest Oracle lose those customers to competing cloud services.

"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," the letter states. The CCL urges Oracle to "[overcome] 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."

Most of the complaints the CCL has documented about Oracle's licensing fell into three categories:

1. Customers "[do] not feel autonomous," meaning they have trouble measuring their own compliance with Oracle's licensing without being dependent on Oracle, since methods to measure compliance aren't typically outlined in Oracle's contracts. Worries arise that merely asking Oracle about licensing issues will trigger an audit, as CCL founder Martin Thompson noted earlier.
2. Oracle sends inconsistent messages about its licensing, due in part to the way sales teams are pressured not to inform customers about the full range of licensing choices, or offer outdated information. Also, license reviews are sometimes positioned as legal audits, meaning a voluntary process gets presented as a mandatory one.
3. Oracle moves its goal posts to favor revenue generation over customer requirements.

The report produced by the CCL makes seven recommendations for addressing the complaints, with "audit clarity" (making licensing audits unambiguous) and "one voice please" (not bouncing customers with licensing questions between departments) as two of the biggest suggestions.

Ambiguities in Oracle's wording about certain product features have also sparked consternation. A patch for Oracle Database 12 was believed to have automatically enabled an in-memory processing feature that could have racked up $23,000 per processor in licensing fees. It turned out (according to Kevin Closson, who first researched the issue) that Oracle wouldn't charge unless the feature was used in production, but Oracle's ambiguous and inconsistent wording added to the confusion.

The CCI's open letter doesn't wholly bash Oracle since it applauds "the levels of engagement we have already received from Oracle and in particular members of LMS [Oracle Global License Management Services] who wish to address these already well-known issues."

In addition, other Oracle user groups -- the Oracle Application Users Group (OAUG) and the Independent Oracle Users Group (IOUG) -- have leveraged what they feel are positive results in getting Oracle to engage more directly with customers, and solicit and act upon user feedback. The IOUG noted that many issues with licensing actually stem from Oracle acquiring third-party products, where the transition from the previous licensing model poses problems.

Oracle's revenue has climbed steadily over the past decade, but it derives more from existing customers than from new software licenses. In turn, many of those customers are locked into multiyear contracts that block them from migrating to less costly solutions. Oracle must do a lot more than loosen its licensing knot to build a strong future customer base, whether in the cloud or elsewhere.