SAP, Oracle price hikes open door for license optimization

SAP, Oracle price hikes open door for license optimization

Recent support and license price hikes could lead to more interest in license optimization services and software.

Oracle and SAP's recent announcements around higher license and support costs may have made one group happy: Third-party companies and consultants who sell wares and services that, in theory, help customers ease the pain of increased software prices.

Acresso Software, one of a number of companies that sell software for cataloging licenses and analyzing usage patterns, recently announced a product tuned for SAP Business Suite.

It can help customers figure out whether they have too many licenses or if their workers are properly classified, said Roger Bottum, senior vice president of marketing at the company, which competes with the likes of Sassafras Software. "That has ultimately a very big impact on the cost of licenses and then the cost of maintenance."

But this capability requires a significant investment. Pricing for Acresso's software is generally US$200,000 and up, according to Bottum.

Ray Wang, an analyst with Forrester Research, said there are definitely a few benefits to tracking software assets in an organized way. There are the obvious benefits of eliminating shelfware and ensuring compliance with the terms of licensing deals. But companies can also gain a stronger hand at the negotiating table with vendors if they know what they've got and where, he said.

"In a large company with federated decision-making, one division may have bought 100 copies of [Microsoft] SQL Server and another bought 200 without the knowledge of the other one," he said.

Since vendors often set discounts based on the total value of a contract, it's better for a company to strike deals as a unit, rather than one division making its own purchases, Wang noted.

The six-figure cost of software like Acresso's should be viewed in a certain context, according to Wang. For example, companies could track their licenses on an Excel spreadsheet, although that might effectively require a couple of full-time workers, he said.

But a license management consultant whose company focuses on Oracle said software alone can't get the job done.

"We have yet to find any single product that can add a significant amount of value," said Eliot Colon, president of Miro Consulting in Fords, New Jersey. "We have seen some that add marginal amounts of value. But the issue is that the Oracle licensing rules are highly complex, with hundreds of unique products that have their own rules. There are very few tools that are flexible and adaptable enough."

Companies interested in buying a license management tool should first conduct an initial audit, either by a third party or internally, to discover what they have, Colon said.

Colon's client base is grappling with Oracle's new price list, which pushed through significant increases for many key products, including its database.

Meanwhile, SAP said recently that all customers will be moved to its enterprise-level support, a change that will provide more service but also higher costs down the road. The increases will be rolled out over time until 2012.

The move has not gone over well with some users. The SAP UK & Ireland User Group recently released a statement asking SAP to reconsider its decision, arguing that not all customers require that level of support.

The company is paying attention to what user groups are saying, but most of its customers aren't angry, said SAP spokesman Bill Wohl.

The additional complexity of today's IT environments necessitate a higher level of support, which in turn can create cost-saving efficiencies around matters such as integration, he claimed: "While it may cost a little more, the operational returns provide customers with an ability to keep those increases pretty modest."

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