Oracle And the Cloud’s Lead Lining

Clouded Judgment

Oracle is a good example of why ESL licensing models are coming under scrutiny and why software providers in all such situations have to take a really close look at how they manage their licensing processes and relationships from ESL to cloud to take full advantage of what the cloud dream model can offer.

For Oracle, migrating licensing models to a regime of utility-enabling subscription will not be an easy task as it faces pressure to protect its annuity fees, satisfy shareholders and remain competitive. However, unless licence and support fees are reduced with lowered consumption, a fundamental benefit of cloud computing will evaporate.

The Cloud’s Silver Lining

Licensing reform is not something that gets taken lightly at Oracle. But the longer term impact of cloud friendly licensing models able to adapt to the quick-moving standard of the cloud would give Oracle an early advantage in the fast growing market.

The real tension for Oracle is between corporate logic and market fences, its quarter on quarter recent history shows persistent growth of new licence revenues, annual fees and earnings per share, all based on traditional licensing. Until demand for utility orientated ESLs to support cloud becomes competitively divisive with Oracle, it will hang on to what works.

Oracle knows, in the land of the blind, the one eyed man is king, and having a deep insight into Oracle licensing, deployment and consumptions trends will provide enterprise clients with the grounding for effective renegotiations and lobbying.

The best advice for enterprises and cloud vendors at present is to get smart – understand licence grants and how to measure actual usage. Only with this more mature knowledge of enterprise software asset management, will companies get everything from the cloud that it promises to offer.

Martin Mutch is CEO of Oracle license optimisation company Rocela.