Featured Article from Software Licensing

Software licensing non-compliance is hardly an uncommon issue, but sometimes the culprits can be surprising. The City of Denver, Colorado has turned out to be one of Oracle’s (News - Alert) most recent scofflaws after an audit by the software giant revealed underpayment by the city, which has admitted that it violated its licensing agreement. Though the city pays an average of $1 million each year to Oracle, over-deployment of Oracle’s solutions led the company to send an email late last year concluding that “the current over-deployment would require in excess of $10m (million) to license.”

According to Brian Maass writing for local CBS affiliate CBS4, Denver taxpayers would have been on the hook for this overage if Denver didn’t strike an agreement with Oracle.

“We are going to look at existing processes and make sure they get better and better,” said Scott Cardenas, Chief Information Officer for Denver Technology Services, who would not comment about how the city became non-compliant with its Oracle licenses.

Denver Technology Services has now reportedly hammered out a new five-year contract which will increase Oracle’s software licensing compensation for 2017 to nearly $4 million, or four times the previous year’s figure. The city’s technology administration is emphasizing, however, that the increased contract amount is simply an adjustment and not a fine or penalty for overuse of Oracle’s solutions.

Cardenas has had to appear before city finance committees, where he told councilmembers the hefty increase in payments to Oracle represent a “true-up of our licensing going forward.”

Jenny Schiavone, a spokesperson for the city, told CBS4, “The old one was an outdated licensing model for the city and the new one right-sized our agreement and modernized the service structure for our current and future needs … this was all part of a normal business model true-up for a technology department.”

CBS4 spoke with Craig Guarente, a former Oracle vice president of contracts and business practices, who now runs a consulting firm for government agencies and companies that run afoul of Oracle licensing requirements. Guarente told the affiliate that Oracle makes it difficult for their customers to remain compliant with their licenses. He says the company then audits software usage, usually finding massive violations, leading to fat new contracts.

“If they (City of Denver) were on top of this and more proactive they might not have needed to do another deal with Oracle,” Guarente told Maass. “If you are out of compliance and they find that they use that to pressure you to do things like give them millions of dollars.”