Audits, acquisitions, and lawsuits
There is always something happening somewhere and keeping track of it all can be, to say the least, difficult! Our ITAM industry news round ups aim to cover some of the important and interesting developments you may have missed, to help keep you informed and up-to-date. This ITAM industry news roundup for May 2021 features the latest vendor acquisitions, new and updated info on more than one software licensing audit, cloud developments, and more.
- Oracle Cloud freebies
- Oracle audit dispute
- ValueLicensing v Microsoft
- Oracle v Envisage audit
- Quest v Fairview audit
- Cloud energy insights
- Microsoft acquisition
- LeanIX acquisition
- IBM acquisition
Oracle Cloud freebies
In an effort to reduce one of the “biggest pain points” of cloud adoption, Oracle have announced free post-sales migration services for all Oracle cloud customers. Known as “Oracle Cloud Lift”, the program includes dedicated engineering resources, support with planning, design, and go-live, and support for both Oracle & non-Oracle applications.
- E-Business Suite
- JD Edwards
- Oracle Data Warehouse
- Exadata & Oracle DB custom solutions
- Oracle Analytics
- Kubernetes & containers
- Serverless apps
- Kafka apps
- VMware (to Oracle Cloud VMware)
- HPC apps
The Cloud Lift service is designed for customers using UCM “Monthly Flex” credits although PAYG customers can “evaluate their eligibility” with Oracle.
This seems like a concerted effort to make Oracle Cloud more attractive to organisations, particularly those who don’t have the internal skills/bandwidth to fully manage a cloud migration project. Will it help Oracle snatch the #3 IaaS provider spot from Google? Quite possibly – certainly among organisations already invested in Oracle…it could even swing business from AWS and Azure too. If you’ve got a bunch of Oracle that you want to move to the cloud and Oracle are offering free migration and support to do so – I can see that being pretty attractive to a lot of people.
1/3 of a billion Oracle audit bill
In a long-running situation between the vendor and their customer, Oracle have recently withdrawn support from South African energy company Eskom in a dispute over a software licensing audit bill.
Following an audit in 2019, Oracle presented the customer with a bill for £370 million which, after some discussion and push back, was revised to £31 million – a 92% decrease! Eskom, currently £23 billion in debt, maintain that the actual shortfall is “only” £8.4 million (just 2.3% of the original total) but Oracle refuse to accept this amount.
In an effort to compel the customer to pay up, Oracle threatened to pull support for their products and when that didn’t work, they followed through. It seems Eskom use Oracle software for both processing online orders and monitoring the load of their power stations – both fairly integral to the daily operations of a power company. Eskom supplies 95% of the country’s power so now, as local newspaper Sunday World put it – “the whole of South Africa is now at the mercy of Oracle”. In the meantime, Eskom are urgently looking to procure 3rd-party support for their Oracle estate.
A software company withdrawing support from any customer is rarely great but when it’s an organisation that supplies critical infrastructure, it really looks bad…particularly in South Africa where power “brown outs” and load shedding are not uncommon anyway. In fact, on May 16th, Eskom announced a series of scheduled power cuts from the 16th to the 18th after 7 power plants suffered breakdowns.
Oracle already have a reputation for predatory, aggressive audits and this case only adds to that –quite significantly too. Bear in mind that Eskom is government funded so these totals will all come from public funds. The energy company have said that they “will pursue all legal avenues and will not be bullied into paying any monies outside of the legal processes” so expect this to continue on for some time.
Value Licensing case v Microsoft
Second-hand software supplier, ValueLicensing, has filed a £269 million lawsuit against Microsoft for “stifling” the pre-owned market for Microsoft software – particularly Windows and Office.
The case is brought under EU Articles 101/102 TFEU (Treaty on the Functioning of the European Union) which are the “anti-competition” regulations. It claims that Microsoft have been “effectively paying customers” not to re-sell perpetual software and this, plus other efforts to move customers to subscription models, breaches the EU regulations. They are therefore claiming £269 million for “loss and damage suffered”.
I believe the “effectively paying” refers to Microsoft’s “From SA” (Software Assurance) offering which enables certain customers to get reduced price licenses when moving from on-premises + SA to Online Services – but requires them to retain their on-premises licenses.
It will be interesting to see how this case progresses as, whatever the outcome, it could have significant impact on software vendors and/or pre-owned software resellers.
Oracle v Envisage
Oracle have started legal proceedings against another of their customers – this time it’s Envisage Technologies LLC and the case centres around alleged under-licensing in their Amazon RDS environment. While cases like this following a software licensing audit are not uncommon, the fascinating/worrying thing here is that no audit took place – although there were aborted conversations in March 2021.
Instead, Oracle used public documents from the Envisage website plus documents posted by government agencies and/or obtained via Freedom of Information (FOI) requests to paint a picture of non-compliance. A picture that they say will cost $3 million. Oracle have stated that the customer purchased a license of Database SE1 but, based on what Oracle can see of the hosting services Envisage supply, it would require at least SE2 and “more likely” Enterprise Edition.
Tactical Law suggest that Oracle may be investing “significant resources” to specifically target companies using their products in Amazon RDS environments. This is another example of “cloud audits” – a practice that will grow considerably across most software vendors over the coming years.
Quest v Fairview
Back in August 2020 we reported on a case between Quest and their customer Fairview software, focusing on a software licensing audit that came about after they chose not to renew support. Thanks to Pam Fulmer over at Tactical Law, we’ve got an update on the case and some interesting points have been raised by the court already.
One of Quest’s claims in this case, and others, is that signing a new agreement applies those – typically more restrictive – terms across the board, replacing previous agreements. However, the court stated:
“The Court finds that the 2015 quotations unambiguously bound Fairview to the 2013 STA with respect to the 2,700 licenses purchased in 2015, but did not supersede the 2004 SLA with respect to previously purchased licenses”
Hopefully, as the case progresses, we’ll get a definitive ruling on this as that would be hugely useful in future audit conversations.
On the flip side, Fairview’s attempts to have the court dismiss Quest’s claims for breach of contract and copyright infringement were denied by the court. The former because Fairview refused to pay Quest (as they’re contesting the amount) and the latter due to a difference in contractual wording between this and the case they pointed to – Quest Software, Inc. v. DirecTV Operations, LLC.
Google & Microsoft share cloud energy details
One of the early benefits of moving workloads to the public cloud was a perception that it would reduce energy costs and impact on the environment. In theory, economies of scale should accrue from not running all the ancillary services (heat, power, cooling, etc.) necessary to manage an on-premises datacentre. But what’s the real impact of public cloud on the environment? Both Google & Microsoft have begun to answer this question by publishing details of energy usage by their operations, specifically referencing how carbon neutral regions are. Google are leading the way here by allowing customers to set organisational policies to ensure that workloads run only in the “greenest” regions. Microsoft are following suit and we would expect this to be key competitive differentiator as focus on sustainable business practices grows this decade.
Microsoft acquire Nuance
Furthering their advances into the healthcare market, Microsoft have acquired Nuance for a total of $19.7 billion. Although you may know them best for Dragon Naturally Speaking and Power PDF, they are also – according to Microsoft – a “pioneer and a leading provider of conversational AI and cloud-based ambient clinical intelligence for healthcare providers”, with their products being used within 77% of US hospitals.
This is another step on the journey of Microsoft moving from point solutions (SQL, Office, Exchange etc.) through SaaS suites (Office 365, Microsoft 365, Dynamics 365 etc.) to industry specific cloud solutions (Healthcare, Retail, Manufacturing etc.).
Leanix acquire Cleanshelf
Following on from Sailpoint’s acquisition of SaaS Management provider Intello, Enterprise Architecture tool provider LeanIX have acquired Cleanshelf. Cleanshelf’s SaaS Management tooling will continue to deliver against SaaS Management use cases – cost management, risk management, and so on – but will now also be available to architects and other stakeholders using LeanIX’s Enterprise Architecture suite. As we explore in further detail in June’s Market Guide, inventory & discovery are key requirements for architects tasked with defining the transition from the “as-is” technology estate to the “to-be”. LeanIX recognised SaaS was a growing blind spot in their offering and they’ve solved that with this acquisition. For the wider SaaS Management market, it’s further confirmation that SaaS Management is needed by a range of stakeholders across IT and beyond. What’s next? We have yet to see an acquisition from a pure-play cyber security company, and there is an increasing focus in that domain of the need to manage SaaS risk. A SaaS Management platform addresses those concerns very well, and would also benefit from the different approaches to discovery and control in security-focused tools such as CASB & MDM.
IBM acquire Turbonomic
Continuing their stated plan to become a cloud and AI (Artificial Intelligence) company, IBM have acquired Turbonomic – a leading provider of AI-backed application resource and network performance management. It helps organisations manage and optimise assets including containers, virtual machines, and databases – helping increase performance and reduce costs.
IBM clearly have a plan for their regeneration – including spinning off their Managed Infrastructure Business aka Kyndryl – and acquisitions are a large part of it…starting back in 2019 with Red Hat. The big question is whether they can package and sell these new offerings in a way that resonates with customers in today’s markets.
About Rich Gibbons
A Northerner renowned for his shirts, Rich is a big Hip-Hop head, and loves travel, football in general (specifically MUFC), baseball, Marvel, and reading as many books as possible. Finding ways to combine all of these with ITAM & software licensing is always fun!
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