Oracle license audits are conducted by Oracle’s License Management Services (LMS). It is important to note that only LMS can conduct an official Oracle license audit. Customers are contractually required to comply “reasonably” with an LMS audit – there is really no option to ignore it, though “reasonable” cooperation is also not defined – and that’s another topic for another blog post. Whether described as an “audit” or “license review”, the bottom line is that Oracle will be leveraging its audit rights to perform a license audit.
Any similar request for a “review” or “audit” or “license assessment” that does not come from LMS does not constitute an audit and customers are NOT obligated to cooperate. For example, if your Oracle sales rep talks to you about some sort of a license  assessment, you are not obligated to cooperate. In fact, providing background information about your environment and use of Oracle software could be good fodder to trigger a formal audit.
The audit begins with a formal notification letter from Oracle LMS. This letter will clearly state that Oracle LMS is initiating an audit and will stipulate next steps. Typically, this involves a formal “kick-off” call between LMS and the customer. Following that, the audit follows the outline below (though the sequence and details involved can vary from audit to audit, and from customer to customer depending on other ambient factors):
  • Assessment of the customer’s use of Oracle software. This includes a combination of manual data collection and automated data collection using SAM tools and/or scripts. Oracle LMS will then analyze the technical data to assess the quantities of licenses in use.
  • Assessment of the customer’s entitlement of Oracle licenses. In this process, LMS reviews Oracle records to tally up their entitlement of Oracle licenses. Customers should always cross-check this entitlement assessment done by LMS against their own records to make sure they agree and nothing has been missed by LMS.
  • Reconciliation of the entitlement against usage to identify any deficits. This is presented as a formal audit report. If there are any compliance gaps, the quantities are clearly tabulated. LMS does not present the financial details or the cost of resolution; LMS only presents the licensing gap and instructs the customer to work with Oracle Sales to make the necessary license purchases. Customers are contractually required to resolve compliance gaps within 30 days of notice of the compliance issues. Furthermore, as long as the compliance gap is not resolved, daily back-support begins to accrue as well.
  • Negotiation and resolution. At this stage, Oracle Sales will work with the customer on negotiating the quantities and pricing details, and executing the necessary purchases.
  • Conclusion. Once the necessary purchases are completed and all compliance gaps are issued, LMS will issue a formal close letter that concludes the audit.
The audit process is designed to keep Oracle LMS in control of the entire process. Customers that are not prepared to handle an Oracle audit and are not knowledgable of Oracle licensing and contracts can find themselves in an uncomfortable situation surrounded by uncertainty.
Redwood Compliance’s team of ex-Oracle LMS auditors can provide crucial, game changing support to customers at any stage of the audit – from the initial notification through the final negotiation, and even down to the details in the audit close letter – with the twin goals of achieving compliance and minimizing the cost of resolution of the audit. We have seen time and again that customers that retain expert third party support like Redwood Compliance’s reduce their cost of resolving the audit in over 90% of the cases. 
Just because you are being audited does not mean you should be taken for a ride. If you have received an audit letter from Oracle or are in the middle of an Oracle audit, contact Redwood Compliance for a consultation.