Oracle License Audit Secrets to Know for 2025

What is an Oracle License Audit?

Oracle license audits are conducted to ensure compliance with software licensing agreements.
Oracle audits are either conducted directly by Oracle or through resellers.
The primary goal is identifying unlicensed usage, which can result in significant penalties.
Oracle may audit every 3-4 years, often targeting high-revenue products or past non-compliance issues.

Table of Contents

What is an Oracle License Audit?

An Oracle license audit is a formal process where Oracle verifies that your organization is using its software in compliance with the terms of your licensing agreements.

While audits are often viewed as a compliance check, they are also a significant revenue generator for Oracle—60 % of its revenue comes from audits. Oracle uses audits primarily as a commercial tool to uncover unlicensed usage and encourage additional license purchases.

Read our Oracle Database License Audit FAQ.

How Oracle Conducts Audits

Oracle has a well-defined process for conducting audits, typically done in one of two ways:

Direct Audits by Oracle’s Internal Audit Teams
Oracle’s internal audit teams carry out these audits directly. The process usually starts with a formal notice from Oracle informing your organization of its intention to audit. The goal is to verify that your usage of Oracle software matches your license agreements. Although these audits are often routine, they can carry significant financial risks. The internal teams will scrutinize your software installations, usage metrics, and licensing arrangements to identify gaps or violations.
Audits Conducted by Oracle Partners via the Joint Partner Engagement (JPE) Program
Alternatively, Oracle may use external resellers or partners to conduct audits under their Joint Partner Engagement (JPE) program. Oracle authorizes these partners to assess your software compliance on their behalf. However, these partners are not neutral, independent auditors. Their main financial incentive comes from selling additional Oracle licenses to cover any deficiencies identified during the audit. This creates a significant conflict of interest, as their profitability depends largely on finding compliance gaps that require extra licenses. Thus, if you’re undergoing an audit conducted by a partner, it’s important to remain cautious and well-prepared. The motivations of these partners are often aligned more with sales opportunities rather than ensuring a fair audit outcome for your organization.

Key Differences to Note

Partner-Led Audit: Conducted by a third-party Oracle reseller whose financial motives may skew toward finding licensing gaps.
Direct Internal Audit: Conducted by Oracle’s audit professionals, their goal is compliance verification.

Who Does Not Conduct Oracle Audits?

Unlike many other industries that rely on third-party accounting firms like KPMG, Deloitte, or PwC for independent audits, Oracle does not use such firms for its software license audits. Instead, Oracle depends entirely on its internal audit teams or approved partners under the JPE program.

This approach gives Oracle greater control over the audit process and any resulting financial repercussions.

The absence of third-party, impartial auditors means that Oracle directly influences the audit process and its financial outcomes.

The Potential Costs of an Oracle Audit

Oracle license audits can be extremely costly. Even minor issues in compliance can lead to substantial financial liabilities. Here are some scenarios that can significantly escalate costs:

Using Unlicensed Features: Many Oracle products have features that may be installed by default but require separate licenses. IT teams who might not realize they need additional licenses can often activate these inadvertently. For example, using advanced security options in an Oracle database without a specific license could have serious financial implications.
Deploying Oracle in Virtualized Environments: Oracle has very restrictive virtualization policies. If you run Oracle software in a virtualized environment, such as VMware, you may be inadvertently exposed to complex licensing rules. Oracle may require you to license the server running Oracle and all servers across the virtualized environment, which can lead to skyrocketing costs.
- Example: Imagine your organization has a cluster of 10 servers running VMware, and Oracle software is installed on just one of these servers. Depending on the configuration, Oracle might require you to license all ten servers, which could result in millions of dollars in unexpected costs.
Legacy Deployments and Poor Documentation: If your organization has used Oracle software for many years, keeping track of which licenses apply to which deployments can be challenging. Changes in infrastructure, employee turnover, and legacy systems can all lead to a situation where your documentation does not accurately reflect your usage. This lack of clarity can lead to unforeseen compliance failures during an audit.
- Example: An old server running an Oracle product not properly decommissioned or documented can become a liability if discovered during an audit.

Oracle License Audit Process: Step-by-Step

Oracle’s formal audit process follows a structured checklist of steps – from the initial notice to data collection and resolution.

While each audit may vary, a typical Oracle license audit (especially a formal LMS/GLAS audit) will proceed through several key stages:

Audit Notification and Initial Inquiry: The process begins with an official audit notice letter from Oracle. This notification will cite the audit clause in your contract and often gives you about 45 days’ notice before the audit starts. Oracle will usually request a kickoff call or send an initial questionnaire. They want basic information about your Oracle environment, such as which Oracle products you use, the entities (subsidiaries, business units) using them, and deployment locations (on-premises vs. cloud). This scoping helps Oracle define the breadth of the audit.
Information Gathering (Oracle Server Worksheet & Data Request): Early in the audit, Oracle may ask you to complete an Oracle Server Worksheet (OSW) – a spreadsheet detailing all your Oracle deployments (servers, products, versions). This is essentially a self-reported inventory. Proceed with caution when filling out Oracle’s worksheets; inaccuracies can expose you to greater risk. It’s wise to consult license experts or counsel before submitting such forms to ensure you don’t over-disclose or misrepresent your usage. Oracle might also inquire about specific usage, such as how many users or processors are allocated to each product. At this stage, soft audit inquiries can occur – an Oracle rep might informally ask for environment details or suggest running a “free” license assessment. Remember that any data you provide can be used in a later compliance claim.
Running Oracle LMS Compliance Scripts: Next, Oracle will require you to run their official Oracle LMS Collection Tool scripts on your systems. These scripts are critical audit tools designed to gather detailed information about your use of Oracle software. Oracle provides different scripts for different products (Database, WebLogic, Java, E-Business Suite, etc.), and you are expected to run them everywhere those products are installed . The scripts collect data such as installed options, feature usage, number of users, and configuration details. Important: Oracle’s scripts are not auto-discovery tools – Oracle depends on you to run them on all relevant servers. They will trust the output you return, so you must ensure no system is overlooked. The script outputs are typically text or Excel files with extensive technical data (e.g., lists of Oracle database options in use, user counts, hardware specs). If you have legacy Oracle products, Oracle may also request running older audit queries or manual data collection.
Using the Oracle Audit Portal: Oracle now often uses a secure Audit Portal for the exchange of data. You download the LMS scripts through this portal and later upload the results for Oracle’s review. You may also be asked to upload supporting documents – for example, your Oracle contracts, license certificates, ordering documents, and any existing usage records. The portal helps track deliverables and communications. Always keep copies of everything you upload and all communications for your audit trail.
Oracle’s Analysis and Preliminary Findings: Once Oracle’s team (GLAS) receives your script outputs and data, their central technical team analyzes it. They will compare your deployment data against your entitlements (what licenses you’ve purchased). Common issues they look for include deploying more instances or users than licensed, using database options or features without licenses, running software on unlicensed processors (common in virtualization scenarios), or using products beyond their permitted scope. A key and often surprising aspect is that Oracle will flag any unlicensed past usage, not just current usage. For example, suppose their scripts detect that an Oracle Database option (like Partitioning or Advanced Security) was enabled at any point on a server without a license. In that case, Oracle will consider that a compliance gap – even if it’s now disabled. The output from LMS scripts is quite technical; it can reveal historical usage footprints you might not realize exist. Oracle compiles the findings into a report, often called an audit report or compliance report, listing each compliance gap and the claimed liability (e.g., “X number of processors unlicensed, Y number of Database options used without license”).
Review of Findings and Liability for Past Use: Oracle presents you with the preliminary audit findings, sometimes in a meeting or via a report. This is where you’ll see a detailed breakdown of any compliance issues. It’s not uncommon for the initial report to be overwhelming, claiming significant license shortfalls. Remember that Oracle’s policy holds you accountable for past unlicensed use retroactively. This means they might calculate back-support fees or license costs for the period you were out of compliance historically. For instance, if you unknowingly used an extra database option for two years, Oracle could price out the license plus two years of support. These findings are not final – you will have a chance to review and rebut them, which leads to the next phase.
Negotiation and Resolution: After findings are delivered, the audit moves into a negotiation phase. Oracle will typically propose a resolution, which usually involves you purchasing the necessary licenses to cover any shortfall and possibly paying some backdated support or penalties. However, this is not a take-it-or-leave-it scenario – many audit findings are negotiable. It’s essential to scrutinize Oracle’s claims. Audit mistakes are common, as Oracle’s auditors (often junior staff) can misinterpret data. You should challenge any discrepancies or questionable interpretations. For example, suppose Oracle claims you need to license all VMware hosts in a cluster for a database. Still, you have technical controls (like hard partitioning or vSphere configurations) to limit Oracle to certain hosts. In that case, you can push back with evidence. In the negotiation stage, knowledge is power: understanding your contracts and Oracle’s policies lets you dispute findings that are not clear violations. It’s also common to negotiate financial terms here – Oracle might agree to discount some licenses, waive certain back fees if you agree to a new purchase, or even convert your compliance issue into an Unlimited License Agreement (ULA) or cloud subscription deal. The goal is to reach a settlement that closes the compliance gaps. A later section discusses key negotiation strategies (see Defending Against Audit Findings).
Audit Closure: Once an agreement is reached and you fulfill any required purchases or adjustments, Oracle will close the audit. It’s critical to get a written certification or closure letter from Oracle confirming that the audit is resolved and your deployments are compliant (at least as of that date). This ensures that if questions arise later, you have proof that Oracle accepted the resolution. Keep all audit documentation (from the initial notice to closure) in your records. The audit results might often lead to internal changes on your side – for example, tighter controls on deploying Oracle software or new tools to monitor usage (we cover these later).

Throughout this process, maintain a professional and cautious approach. An Oracle audit can feel invasive, but by understanding each step, you can navigate it without unnecessary panic. Next, we’ll explore what triggers these audits in the first place.

Read Oracle audit trends.

Common Oracle License Compliance Issues

Oracle’s complex licensing models and frequently changing policies can make it difficult for organizations to stay compliant. Accurately misused or misunderstood can lead to significant financial penalties or legal consequences.

Below are some of the most common compliance issues organizations face with Oracle licensing:

Over-deployment of Oracle databases: Companies often deploy more instances than they have licenses for due to poor tracking or misunderstandings of licensing terms. This can lead to significant fines during an audit.
Misuse of database options and management packs: Oracle provides various add-on features requiring separate licenses. Organizations may unknowingly use these features without the necessary licenses, creating compliance problems.
Incorrect licensing in virtualized environments: Licensing Oracle software can be complex. Misinterpreting these policies, like not licensing all physical cores on a server, is a common compliance issue.
Inaccurate user counts for Named User Plus (NUP) licenses: NUP licenses require a license for every user or device accessing the Oracle software. Many organizations fail to properly count all users, including indirect users, leading to licensing shortfalls.
Non-compliance with contractual terms: Violating contractual obligations, such as deployment restrictions or usage limitations, can result in compliance issues. This is particularly relevant during mergers, acquisitions, or divestitures, where license terms may change.
Inadvertent use of unlicensed features: Oracle software may have features enabled by default that require additional licenses. Accidentally using these features without proper licensing is a frequent compliance risk.

To avoid these compliance risks, organizations should:

Conduct regular internal audits of their Oracle software deployments.
Maintain detailed documentation of their usage and entitlements.
Engage experienced Oracle licensing experts to help interpret licensing rules and avoid compliance mistakes.

10 Most Common Reasons for Oracle License Audit Triggers

Hardware Environment Refresh
Changes in the IT infrastructure, such as server upgrades or migrations, often trigger Oracle audits as Oracle checks for proper licensing in the new environment.
Virtualization and Cloud Deployments
Moving Oracle software to virtualized environments or the cloud can prompt an audit, as Oracle’s licensing rules differ.
Mergers and Acquisitions
When companies merge or acquire other businesses, Oracle often initiates audits to verify compliance across the combined entities.
Failure to Renew Unlimited Licensing Agreements (ULA)
Expiring ULAs are a major trigger. Oracle may audit to confirm whether the customer has accurately reported their usage or needs additional licenses.
Increased Usage or Deployment
Sudden spikes in Oracle software usage or the deployment of new products can lead Oracle to initiate an audit to verify that all additional usage is properly licensed.
Use of Outdated License Metrics
Licensing on outdated metrics or failing to update license agreements when introducing new products can raise red flags for Oracle.
Significant Changes in Software Spend
Decreases or significant fluctuations in Oracle license spending can trigger audits, as Oracle may suspect under-licensing or mismanagement.
Non-Compliance History
If a company has previously been found non-compliant, Oracle may conduct follow-up audits to ensure compliance has been restored and maintained.
Choosing a Non-Oracle Cloud Strategy
Moving to a cloud provider other than Oracle can trigger an audit, as Oracle may scrutinize how its software is being used and whether it aligns with licensing agreements.
Downloading Java SE Products Without Proper Licensing
Downloading Java SE products requiring a license without an employee licensing model is a common trigger for audits, as Java SE licensing rules are often misunderstood.

These triggers often arise when Oracle identifies potential changes or risks in compliance and initiates audits to enforce proper licensing.

How to Prepare for an Oracle License Audit

Preparing for an Oracle license audit minimizes risks and avoids costly non-compliance penalties.

One of the most effective ways to prepare is by contacting an independent Oracle licensing expert firm, such as Redress Compliance, which is staffed by ex-Oracle auditors.

These experts can conduct a comprehensive internal audit of your environments before the official audit begins, allowing you to proactively identify and address compliance issues.

Steps to Prepare:

Internal Audit Using Oracle’s Tools
Redress Compliance can perform a thorough internal audit using the same tools and methods that Oracle will use in the pending official audit. This ensures that your environment is assessed under the same criteria Oracle would use, giving you a realistic view of your licensing position.
Remediate Up to 100% of Non-Compliance Issues.
Most compliance issues stem from unintentional mistakes, such as incorrect software deployment or misuse of database options. By identifying these issues early, Redress Compliance can help you remediate up to 100% of non-compliance problems before Oracle’s audit starts. This proactive approach significantly reduces your risk of fines or penalties.
Audit Defense Strategy
Beyond remediation, Redress Compliance helps you craft a comprehensive Oracle audit defense strategy. This includes gathering the necessary documentation, aligning your software deployments with your license entitlements, and ensuring your systems meet Oracle’s requirements.
Negotiating a Delay in the Audit
If you need more time to prepare, Redress Compliance can help negotiate a delay in the audit process. They can communicate with Oracle on your behalf, providing valid business reasons for requesting an extension. This gives you additional time to prepare without being rushed into the audit.
Narrowing the Scope of the Audit
Additionally, Redress Compliance can help you negotiate the scope of the audit. This can involve limiting the review to specific products or environments, thus reducing the overall complexity and potential risks involved in the audit.

Engaging a firm like Redress Compliance before the Oracle audit begins can help you gain insight into your licensing position, develop a clear strategy to ensure compliance, and protect your organization from unnecessary costs.

Read our Oracle Audit Defense Guide for IT Executives.

What to Expect During an Oracle Audit

what to expect during an Oracle License audit

An Oracle license audit is a structured process designed to assess whether your organization is using Oracle software in compliance with its licensing terms.

Preparing for this process can help you mitigate risks and avoid unnecessary costs.

Here’s what to expect during an Oracle audit:

1. Initial Inquiry and Information Request

The audit begins with a formal notification from Oracle. They will ask your organization several key questions about how you use Oracle software, including:

Legal entities involved with Oracle products.
Which applications are using Oracle software?
Territory deployments, covering on-premises or cloud installations. These initial questions help Oracle understand the breadth of your software use and set the scope for the audit.

2. Running Oracle License Compliance Scripts

After gathering basic information, Oracle will require you to run license compliance scripts across your systems. These scripts will:

Detect current usage of Oracle software.
Identify past unlicensed use, even if non-compliant usage occurred years ago. Oracle holds you liable for any unlicensed software usage it uncovers, regardless of when it happened. The compliance scripts provide Oracle with detailed data about your deployments, user access, and database features or add-on usage.

3. Using the Oracle Audit Portal

Your organization will use Oracle’s Audit Portal throughout the audit. This online tool allows you to:

Download compliance scripts and run them in your environment.
Upload gathered data back to Oracle for their analysis.
As Oracle requires, share additional documents, such as contracts, invoices, and deployment records.

4. Review and Findings

Oracle will review the data collected through the compliance scripts and any other information you provide. They will then prepare a preliminary audit report that outlines any potential licensing gaps, such as:

Over-deployment of software beyond your licensed limits.
Use unlicensed features or add-ons, like database options requiring additional licensing.
Any past unlicensed usage, which may result in liabilities for historical non-compliance.

5. Liability for Past Non-Compliance

One critical aspect of an Oracle audit is that you are responsible for past unlicensed use, not just your current compliance. If Oracle finds that you previously used products without appropriate licenses, it can demand penalties or retroactive licensing fees. Thus, it is crucial to thoroughly understand your software usage over time, not just the present.

6. Negotiation and Resolution

After Oracle presents its findings, the resolution phase becomes a negotiation, where it’s essential to understand which non-compliance findings are valid and which may be subject to interpretation. Many issues in Oracle audits are not black-and-white, and some findings can be challenged based on how the licensing terms are applied. With the right knowledge, you can:

Avoid paying for non-compliance issues that are not clear violations of your agreements.
Challenge Oracle’s interpretation of licensing terms where ambiguity or misinterpretation may exist.

In addition to challenging the findings, the negotiation phase often involves:

Negotiating backdated support fees for past unlicensed use.
Securing discounts on new licenses to cover any shortfall.
Adjusting terms and conditions to better suit your business needs going forward.

Understanding Oracle’s licensing agreements and negotiating effectively can significantly reduce the financial impact of an audit. A well-prepared negotiation will ensure you only pay for actual, proven non-compliance and avoid unnecessary costs from unclear or misapplied findings.

Oracle Global Licensing and Advisory Services (GLAS)

Oracle Global Licensing and Advisory Services (GLAS) is Oracle’s audit organization responsible for conducting license audits to ensure customers comply with their software agreements.

GLAS operates with a mix of local customer-facing auditors and a central technical team based in Romania.

Customer-Facing Auditors: Oracle often assigns a customer-facing auditor to a location in your country or region. This person coordinates the entire audit process, including the kick-off meeting, setting the scope of the audit, and ultimately presenting the findings to you as the end customer. They liaise directly with your organization and ensure smooth communication between your team and Oracle.
Technical Audit Team in Romania: While the local auditor handles coordination and communication, much of the technical analysis and audit review occurs at Oracle’s office in Romania. The team here conducts a detailed analysis of the data gathered during the audit, including running the Oracle license compliance scripts and interpreting the results.
Romanian Team Leading the Audit: In some cases, if no local auditor is assigned to your specific country, the audit may be led entirely by the team in Romania. In such cases, all communications and presentations are handled remotely.

Challenges with GLAS Audits

Our experience suggests that Oracle often hires junior auditors to conduct these audits. As a result, mistakes in the findings are not uncommon.

Given the complexity of Oracle’s licensing models and the potential for interpretation errors, it’s critical not to take the GLAS audit report at face value.

This is why a second-hand review of the audit findings with an expert is always recommended. Licensing experts can help you identify errors, challenge findings, and ensure compliance issues are correctly addressed, preventing you from overpaying or facing penalties for mistakes made in the audit process.

Trusting the GLAS report without an independent review could result in paying for non-compliance that may not even be accurate.

How to Respond to an Oracle Audit Letter

Getting an Oracle audit notification – whether a formal letter or an informal email – can be anxiety-inducing. However, how you respond in the initial stages can set the tone for the entire audit. Here are specific steps and best practices once an audit begins:

1. Pause and Review Your Contracts: When you receive an audit notice, resist the urge to respond immediately. Locate and read your Oracle license agreements’ audit clause carefully. This clause (found in your Oracle Master Agreement or ordering document terms) will outline your rights and obligations. Usually, it provides a timeframe (often 45 days) to respond and states that the audit should not unreasonably interfere with your operations. Note your timeline; in many cases, you are not required to acknowledge the audit or start providing data on the same day or within the same week. Oracle typically expects a written acknowledgment of the audit. Still, as per most contracts, you have a grace period (e.g., you must allow the audit within 45 days, not necessarily on day 1).

2. Assemble an Internal Audit Response Team: An Oracle audit is multidisciplinary. Right away, an internal team will be formed to manage the audit. Include IT staff who know where Oracle software is deployed, a procurement or asset manager who knows what licenses you have, and involve your legal counsel (especially for reviewing communications). Assign an Audit Coordinator internally – this person will be the point of contact with Oracle and manage the information flow. Also, consider immediately engaging an external Oracle licensing expert or consultant (more on this below). Having experts who have been through audits can greatly improve your responses.

3. Use the 45-Day Window to Prepare: If your contract gives a 45-day lead time, use every bit of it to get ready. There is usually no advantage to responding too early. Oracle isn’t going to forget about the audit if you respond fast; if anything, a hurried response could lead to mistakes or oversharing. It is often recommended to wait until near the end of the notice period before formally acknowledging the audit. During this window, internally perform your mini-audit:

Gather deployment data: Identify all installations of Oracle products in your environment (servers, VMs, cloud instances, developer machines, etc.). This could involve running the same LMS scripts for your review or using inventory tools.
Compile your license entitlements: Pull together all Oracle Ordering Documents, contracts, support renewal letters, and anything that proves what licenses you own and the terms attached. This documentation is your defense foundation.
Spot-check compliance: Look for obvious gaps – e.g., did you deploy an extra Oracle database last year without buying a license? Does a department outside of IT do any “rogue” Oracle installations? The goal is to find any major problems yourself.
Remediate if possible: If you find something straightforward to fix (like an unused installation that can be shut down or an option turned on accidentally, which you can disable), do it now before Oracle’s audit starts in earnest. Internal clean-up can significantly reduce what Oracle discovers.

Essentially, treat this as an internal audit before the auditors arrive. Many companies even hire a third-party Oracle licensing firm at this stage to run a confidential compliance assessment mimicking an Oracle audit. This can be invaluable in spotting issues early.

4. Control Communications with Oracle: When you are ready to acknowledge the audit, do so professionally and on your terms. It’s wise to respond in writing (email) to the Oracle auditor or contact listed, simply confirming receipt of the notice and that you intend to cooperate within the contractually allotted timeline. You can propose a date for an initial meeting or call after you’ve done some prep. In that initial call (which Oracle will likely request), be courteous and gather more information than you give. Some tips:

Negotiate the schedule if needed: If the timing is bad (year-end, key staff on vacation, etc.), don’t hesitate to ask for a reasonable extension or a later start. Oracle is often willing to adjust the audit start by a few weeks if justified. Pushing out the start gives you more prep time.
Understand the scope clearly: Confirm which products and legal entities are in the scope of the audit. Oracle’s notice should specify this, but if it’s vague, ask for clarification. If Oracle says, “We want to review all use of Oracle Database and Middleware in your organization,” try to pin down whether it includes all subsidiaries, all geographic locations, etc. This will help focus your data gathering.
Keep communication channels formal: It is best to funnel all communications through one or two people (your coordinator and perhaps one backup). Avoid letting random employees talk to Oracle auditors informally, as they might say something incorrect. You can also request that Oracle send formal information requests in writing (through the portal or email) so you can track and ensure accurate responses.

5. Do Not Disclose More Than Necessary: A critical rule in audit response is to only answer what is asked, nothing more. When Oracle asks for data, provide exactly that data – not additional commentary or unrelated information. For example, if Oracle asks for “a list of all servers where Oracle Database is installed,” don’t also volunteer how many cores each server has (unless your licenses are core-based and they specifically need it). Unprompted details can raise new questions. It’s not about being uncooperative; it’s about being precise and minimizing misinterpretation. If you’re unsure about a question, it’s okay to ask Oracle for clarification or even push back if a request seems outside the audit’s scope. Remember, you have rights – Oracle can audit what the contract allows, but you don’t have to, say, provide data on products not in scope or allow access to systems directly.

6. Protect Sensitive Information: You might be worried about sensitive data in the information you hand to Oracle. For the most part, audit data is about software usage, not business specifics. Still, if you have concerns (for instance, your system names or usage patterns might reveal confidential projects), consider signing a Non-Disclosure Agreement (NDA) with Oracle for the audit. Oracle audits are generally covered by confidentiality by default, but an NDA adds explicit legal protection. Also, do so over secure channels (the Oracle Audit Portal or encrypted email) when sharing data.

7. Leverage Expert Help: As soon as you get an audit notice, bringing in outside experts can be very beneficial. Independent Oracle license consultants (often ex-Oracle auditors) can guide your response strategy. They can double-check everything before it goes to Oracle and advise on tricky compliance questions. Their experience with Oracle’s tactics can help you avoid common pitfalls (such as running scripts incorrectly or misinterpreting Oracle’s questions). Yes, it’s an added cost, but if the audit could potentially expose millions in fees, expert help is a worthwhile insurance policy. Even Oracle’s guidance suggests that customers engage knowledgeable advisors early in the process.

By responding deliberately and knowledgeably, you keep control of the audit narrative. Companies that rush to comply without preparation often end up in a weaker position, scrambling reactively. In contrast, those who prepare and manage communications can significantly mitigate the audit impact. Now that we’ve covered the initial response, let’s discuss how to defend against Oracle’s findings and minimize your exposure if the audit uncovers compliance gaps and risks.

Oracle Audit Tools and Techniques (LMS Scripts, Worksheets, etc.)

Oracle Audit Tools and Techniques (LMS Scripts, Worksheets, etc.)

During an audit, Oracle leverages various tools and methods to gather data about your software usage. Knowing what these are will help you prepare and respond effectively:

Oracle LMS Collection Scripts: The primary tool is the LMS compliance script package (also called Oracle LMS Collection Tool). Oracle supplies these scripts to you (often via the audit portal or email) and requests you run them on all relevant systems.

There are different scripts for different product families: For Oracle Database, the scripts will query the database instance and OS to list things like the edition (Standard/Enterprise), options and management packs used (e.g., Partitioning, Diagnostics Pack usage), number of users, processor core info, etc. For Middleware (WebLogic, etc.), scripts check JVM settings, the number of managed servers, and options like Java Mission Control usage

Crucial Tip: Run the scripts in a controlled manner and review the output internally first. You are not obligated to send raw data to Oracle without understanding it. It’s highly recommended to have an Oracle licensing specialist or consultant analyze the script results before submitting them. This way, if the data shows a compliance issue (say, a feature was activated on a database), you can investigate and potentially remediate it (turn it off or prepare a rationale) before Oracle sees it. Once you send the data to Oracle, you’ve effectively given them the needed evidence, so make sure you know what’s in it.
Oracle Server Worksheet (OSW): As mentioned, Oracle often uses the OSW as a data collection form. It’s essentially an Excel spreadsheet with tabs asking for details on each Oracle product deployment: server names, processor counts, products installed, versions, user counts, etc. This is a manual reporting tool, and Oracle may use it in both formal audits and informal reviews. Filling it out requires care – double-check all entries with your IT teams. Incomplete or inaccurate info in an OSW can lead Oracle to dig deeper. For instance, if you omit a known server and Oracle finds out later (say, through Support records or other means), it will damage your credibility in the audit.
Questionnaires and Review Forms: Oracle might send additional questionnaires for some products. For example, for Oracle E-Business Suite, they might ask how many “Application Users” you have for certain modules, or for Oracle Database, they might ask if you use features like Data Guard or RAC (Real Application Clusters). Oracle Java audits might come with a worksheet asking how many employees and contractors your company has (because Java’s license is often per employee count). Always answer these forms truthfully but precisely – avoid volunteering more information than asked. It’s okay to say “not applicable” or seek clarification if a question is ambiguous.
Audit Scripts Security and NDA: Some organizations worry about running Oracle’s scripts for security reasons. You can request Oracle to provide details on what the scripts do and even run them in a test environment first. Many audit defense experts also suggest asking Oracle to sign an NDA (Non-Disclosure Agreement) to ensure the data collected will be kept confidential – especially if Oracle uses third-party contractors in the audit. While Oracle’s audit clause usually implies confidentiality, having an explicit NDA can protect your data.
Oracle’s Audit Portal: The Audit Portal is a web portal Oracle uses to streamline audit communications. As the customer, you get credentials to log in and see the tasks (e.g., “Run script X on all DB servers and upload output”). The portal will list due dates and have upload links. It often breaks down the engagement into stages. This tool is convenient, but be mindful that Oracle’s audit team sees everything you upload.
Data Oracle Might Use Internally: Oracle’s auditors don’t have magical visibility into your systems beyond what you provide. However, they do use internal data sources to cross-check. For example, they know what licenses and support subscriptions you’ve purchased (from their sales systems), and may compare that against what the scripts report. They also can see your Oracle Support tickets – sometimes an auditor will reference a Support case if, for instance, you asked Oracle Support for help on a feature you weren’t licensed for. Additionally, if you use Oracle Cloud, Oracle has records of your cloud usage, which could interplay with on-prem licenses. And as noted earlier, Oracle tracks downloads (like Java installers), which can hint at usage. So assume Oracle has a pretty good idea of your Oracle “footprint” even before the audit begins – the audit is to confirm and quantify it.

In summary, during an audio, Oracle gathers data via scripts and forms you execute or fill out. You control the execution of those tools in your environment. Use that to your advantage by preparing the data carefully and never handing over information blindly. Next, let’s look at how you should respond once that audit notice arrives and the audit is underway.

Case Study 1: European Organization Faces Oracle Audit for Database, Middleware, EBS, and Java

Background

Oracle informed a large European financial services company of an upcoming audit covering its use of Oracle Database, Middleware, E-Business Suite (EBS), and Java.

With a complex Oracle deployment spread across multiple business units and countries, the organization found it difficult to assess its compliance status internally.

Audit Defense Strategy

The company engaged Redress Compliance, an independent Oracle licensing consultancy, to develop a comprehensive audit defense strategy.

Key elements of this strategy included:

Delaying the Audit: Redress Compliance communicated with Oracle to negotiate an extension to the audit timeline, giving the organization more time to gather data, assess compliance, and properly prepare for the audit.
Conducting an Internal Assessment: Before the formal audit, Redress Compliance performed a thorough internal assessment of the company’s Oracle deployments and licensing entitlements. This involved collecting and analyzing data across the organization to identify potential non-compliance areas. A remediation plan was developed to address these issues.
Remediating Compliance Issues: The internal assessment revealed several areas of non-compliance. Redress Compliance worked with the company to remediate 97% of the compliance issues before the formal audit began, significantly reducing the company’s financial exposure.
Guiding the Audit Process: During the formal Oracle audit, Redress Compliance provided guidance and support, assisting with data collection, validating Oracle’s findings, and developing responses to any identified compliance issues.
Negotiating the Settlement: At the end of the audit, Oracle initially presented a compliance gap of €12 million. Redress Compliance worked with the company to challenge these findings. Using a combination of technical and contractual arguments, the consultancy successfully negotiated the final settlement down to €35,000 in additional license purchases.

Outcome

By leveraging Redress Compliance’s expertise, the organization significantly reduced its financial exposure during the Oracle audit. The settlement, reduced from an initial €12 million to just €35,000, illustrates the value of engaging independent experts to navigate complex Oracle audits.

Case Study 2: American Fortune 500 Company Undergoes Oracle Audit for Database, WebLogic, Java, and Siebel

Background

A large American Fortune 500 technology company received notice from Oracle about a license audit covering its use of Oracle Database, WebLogic, Java, and Siebel CRM.

With hundreds of servers and thousands of users spread across multiple divisions, the company had a significant Oracle footprint that required careful management.

Audit Defense Strategy

The company partnered with Redress Compliance to manage the audit and minimize its financial exposure.

The key elements of the audit defense strategy included:

Delaying the Audit: Redress Compliance negotiated a 90-day delay with Oracle, giving the company time to assess its compliance status thoroughly and address any issues before the audit began.
Conducting an Internal Assessment: Redress Compliance performed a comprehensive internal review of the company’s Oracle deployments. The assessment revealed a potential compliance gap of $200 million, prompting the development of a detailed remediation plan.
Optimizing and Remediating: During the 90-day delay, Redress Compliance helped the company optimize Oracle deployments and address compliance gaps. This involved decommissioning unused servers, re-architecting certain systems, and re-harvesting unused licenses. As a result, the compliance gap was reduced from $200 million to $700,000.
Proceeding with the Audit: With the compliance gap reduced, the company proceeded with the formal Oracle audit. Redress Compliance provided support throughout the audit, validating Oracle’s findings and assisting in developing responses to any remaining compliance issues.
Negotiating the Settlement: At the audit’s conclusion, Oracle presented a compliance gap of $700,000. Redress Compliance worked closely with the company to negotiate a favorable settlement. By leveraging the company’s long-term relationship with Oracle and its significant investments in other Oracle products, Redress Compliance secured a 60% discount on the audit findings, resulting in a final settlement of just $270,000.

Outcome

This case demonstrates the significant impact of engaging independent experts like Redress Compliance.

The company reduced a potential $200 million compliance gap to a $270,000 settlement, highlighting the value of a well-executed audit defense strategy that includes internal assessments, optimization, remediation, and expert-led negotiations.

Oracle Audit Negotiation Tactics

Defending Against Oracle Audit Findings and Negotiating Resolution

After you’ve provided data to Oracle’s auditors, there comes a moment of truth: Oracle presents its audit findings. This report may claim you owe additional licenses or fees.

How you handle this stage can save (or cost) your organization millions of dollars.

Here’s how to mount a strong defense against audit findings and negotiate a favorable outcome:

1. Review Oracle’s Findings in Detail: When Oracle shares the audit report, scrutinize every line item. Do not assume Oracle is infallible – auditors can and do make mistakes in interpreting data. For each non-compliance claim, cross-reference with your records:

Verify the counts (users, processors, installations) against what you know.
Check the product editions and options involved—is it possible the script produced a false positive? (For example, some database options show as “used” if they were once tested, even if they are not actively in use.)
Ensure Oracle applied your contract terms correctly. Maybe you have an unusual licensing metric or an amendment that the auditor overlooked.
Don’t hesitate to ask Oracle for the raw evidence behind a finding if something is unclear. They have the data from the scripts – you’re entitled to understand how they concluded a violation.

It’s often helpful to involve a third-party expert or your Oracle licensing consultant at this stage; they’ve likely seen similar reports and know where to find errors or overreach. Getting a second opinion is critical – trusting the GLAS report without independent review could lead you to pay for compliance issues that are not even real.

2. Challenge Ambiguous or Incorrect Items:

Not all Oracle license rules are black-and-white. There is room for interpretation, and Oracle’s view may not always be the only valid one. If you believe Oracle interprets a contract term too strictly or incorrectly, respectfully challenge them. For instance:

Virtualization disputes: Oracle might claim you must license a whole VMware cluster. You can argue the point if you have documents or technical configurations that limit Oracle to certain hosts (and your contract doesn’t explicitly forbid that). Many customers have successfully pushed back on VMware-related findings with proper evidence.
Multiplexing or Indirect Access: Oracle might count users in a way you disagree with (a common issue with metrics like Named User Plus in complex environments). Be prepared to explain your understanding and possibly negotiate a resolution.
Historical usage liability: If Oracle says you owe licenses for past usage, you might negotiate that down by arguing, for example, that the usage was temporary or that you weren’t deriving value from it. Oracle might not fully waive it, but they sometimes agree to reduce back-dated support or only charge going forward if you purchase now.

The key is to back your challenges with facts—configuration screenshots, logs, license document excerpts, etc. If you simply say, “We disagree,” Oracle will hold firm. But if you prove an error or a gray area, they often will adjust the finding.

3. Negotiate the Settlement: The endgame is a commercial negotiation in nearly all audits. Oracle’s audit team will hand off to a sales team or your account manager to negotiate what you need to buy or pay to resolve the issues.

Here’s how to approach negotiations:

Prioritize Must-Haves: Determine what licenses you must purchase to be compliant. Perhaps some findings are valid – you’re short 2 Database licenses, for example. Those are your must-haves. Other items might be arguable – treat those as negotiation chips.
Bundle and Bargain: Oracle may propose you buy a big package of licenses (or cloud credits) to settle. You don’t have to accept the first offer. You can propose alternatives, like fewer licenses or a different combination of products that still covers compliance. Oracle often prefers to solve audits by selling you something – you have the leverage to discuss what that something is. For instance, if you were considering moving to Oracle Cloud or a ULA, you could negotiate one of those as part of the settlement, potentially on better terms because Oracle wants to close the audit.
Discounts and Back Support: Negotiating discounts on list license fees is common as part of an audit resolution. Oracle might initially calculate everything at full price + back support penalties. Push back on this. Frequently, Oracle can offer to forgive some portion of the back support fees (especially if you agree to reinstate support in the future) or give a hefty discount on new licenses since these were unplanned. Don’t be afraid to ask: “What flexibility do we have on these fees? This unexpected cost is challenging our budget.” Oracle would rather get something than have you escalate the dispute, so they will often come back with a better financial offer.
Consider Timing: If the audit closes near Oracle’s quarter-end or year-end, Oracle sales may be extra motivated to book a deal. This can work to your advantage in getting concessions, as they want to count the revenue. However, be cautious about being rushed into a purchase just for their timeline – use it as leverage, but ensure the deal is right for you.
Get a Clear Agreement: Once you understand, ensure the settlement is documented in writing. Typically, this will be in the form of a purchase order for the new licenses and maybe a letter stating that Oracle considers the audit resolved upon that purchase. Have your legal team review any settlement documents for hidden clauses (e.g., some settlement agreements might try to restrict your rights or slip in new terms—make sure it’s purely about closing the audit).
Future Protection: If possible, negotiate terms that help you in the future. For example, if you’re buying licenses now, maybe get extra ones to cover growth (at the same discount) or negotiate a cap on certain usage. In some cases, clients have negotiated an amendment that clarifies a disputed contract point to avoid future misunderstandings.

4. Learn from the Experience: Once you have defended and settled the audit, conduct an internal post-mortem. Identify why the compliance issues occurred and fix the root causes. Maybe it was a lack of monitoring or a misunderstanding of Oracle’s policies. Update your processes to ensure they don’t recur—for instance, implement stricter change controls for Oracle software deployment or maintain an active license position report that’s periodically reviewed.

Real-World Example – Minimizing Exposure:

To illustrate the impact of a strong defense, consider a real-world scenario: A large European financial firm was audited by Oracle for its use of Database, Middleware, E-Business Suite, and Java. The company engaged an independent Oracle licensing advisor early in a sprawling environment. Together, they negotiated a delay to the audit’s start, giving them time to perform an internal audit and remediation.

By the time Oracle’s formal audit proceeded, the company had already fixed 97% of the compliance issues internally (e.g., trimming unused installations, purchasing a few needed licenses quietly, and ensuring all usage was accounted for). When Oracle ran its audit, the findings were minimal, and the company’s audit defense team was able to contest a few minor points. The result: the firm owed virtually nothing in the audit settlement, turning a potentially large exposure into a non-event. This example shows that preparation and expert strategy can drastically reduce audit pain.

Audit defense is about validating Oracle’s claims and negotiating smartly. Oracle’s audit team is not your adversary per se, but their job is to report compliance gaps – your job is to ensure they are accurate and decide the most cost-effective way to resolve them.

Always remember: You have the right to push back on mistakes and to find a resolution that works for your business, not just Oracle’s. In the next section, we compile actionable tips and best practices so you can stay ahead of Oracle audits and reduce the chance of being audited in the first place.

Read Oracle License Audit Defense and Preparedness – Building an Audit-Ready Posture to Handle Oracle’s Aggressive License Audits.

Oracle Licensing in Virtualized Environment Audits

Oracle has two ways to handle licensing in virtualized environments: soft and hard partitioning.

1. Soft Partitioning

In soft partitioning, Oracle does not recognize sub-capacity licensing. This means you must license the entire server, cluster, or even more, regardless of how much Oracle software runs.
Major risk: One of the biggest risks is using Oracle on VMware, where soft partitioning rules require you to license all physical hosts, even if only one is running Oracle.

2. Hard Partitioning

With hard partitioning, Oracle recognizes sub-capacity licensing, meaning you only need to license the capacity used by Oracle software.
However, your virtualization must be configured according to Oracle’s rules. You may have to license the entire server or cluster if not properly set up properly, leading to unexpected costs.

3. Review Oracle’s Partitioning Policy Document

Studying Oracle’s partitioning policy document is essential to avoid compliance issues. This will help you understand the risks involved and assess your licensing correctly, whether you’re using soft or hard partitioning.

Oracle Software Investment Advisory (SIA) Services

Oracle’s Software Investment Advisory (SIA) services are presented to help customers optimize their Oracle investments, but it’s important to understand that SIA is not independent or neutral.

While Oracle promotes SIA as a resource for licensing guidance, SIA operates within Oracle’s commercial interests, aiming to maximize revenue.

Why You Should Avoid Cooperating with Oracle SIA

SIA is not impartial. SIA is part of Oracle, meaning its advice may align with Oracle’s goal of selling more licenses rather than offering neutral guidance.
Compliance issues often arise from mistaken use. Most compliance issues with Oracle software result from accidental deployments or mistaken usage. If you cooperate with SIA, you risk exposing these issues to Oracle, which could potentially lead to large licensing fees or penalties.
Better to work with an independent advisor: Rather than sharing your compliance gaps or mistakes with Oracle, engaging an independent Oracle licensing expert is far better. An independent advisor can help you identify and fix compliance issues without paying for accidental deployments or the unintentional use of Oracle software.

Stay in Control of Your Licensing

By working with someone truly independent, you can ensure that you become compliant in a way that aligns with your actual needs without being pushed into unnecessary purchases or penalties by Oracle.

Avoiding cooperation with SIA allows you to protect your organization from overpaying for Oracle software due to misunderstandings or misconfiguration.

Oracle License Management Services (LMS)

Oracle License Management Services (LMS), now rebranded as Oracle Global License Advisory Services (GLAS), is Oracle’s official audit team.

The rebranding is likely an attempt to distance itself from LMS’s reputation as an aggressive auditor, but the core function remains the same—ensuring compliance through audits.

Key Roles of Oracle LMS (GLAS)

Conducting official audits: Oracle LMS is responsible for conducting formal license audits for customers worldwide. These audits verify that customers use Oracle software through their licensing agreements.
Global presence with local staff: Oracle LMS has a mix of local auditors stationed in various countries. These local auditors handle coordination, initial communications, and presenting findings to customers.
Technical analysis based in Romania: While local staff manage the client-facing aspects of the audit, Oracle’s central team in Romania performs the actual technical analysis of your software environment. This team analyzes the data collected from your systems to determine compliance with Oracle’s licensing rules.

Understanding Oracle LMS’s role and operation is crucial if you are facing an audit. The team’s rebranding to GLAS doesn’t change its core purpose: ensuring compliance and generating revenue through audits.

Always approach Oracle audits carefully and consider working with independent experts to review your compliance before engaging directly with LMS.

Cost of Non-Compliance with Oracle Licensing

Failing an Oracle license audit can result in significant financial penalties, as Oracle’s software licensing costs are high, especially for products like Oracle Database Enterprise Edition.

To illustrate the potential impact, let’s walk through a real-world scenario:

Example Scenario: Missing Licenses for 1 Server

Server Configuration: Each server has 32 cores, which equals 16 Oracle processors (due to Oracle’s core factor calculations for most processors).
License Cost: Oracle Database Enterprise Edition costs $47,500 per processor.

Let’s assume the customer runs 20 servers with this configuration but is missing licenses for 1 server.

Cost Breakdown

For one server with 16 processors:

16 processors x $47,500 per processor = $760,000 in licensing costs.

Additional Costs

Oracle typically requires the purchase of backdated support fees for the period during which the unlicensed usage occurred. Support costs are generally 22% of the license cost per year. So for 1 year of backdated support:

22% of $760,000 = $167,200.

Total Cost of Non-Compliance

$760,000 (license cost) + $167,200 (support cost) = $927,200 for failing to license just one server correctly.

If this missing license is discovered during an Oracle audit, the total financial impact could approach $1 million for just one server.

Non-compliance can quickly escalate when multiple servers or other Oracle products are involved, making audits potentially costly for organizations. This example highlights the importance of ensuring compliance before an Oracle audit occurs.

Oracle License Audit Remediation Strategies

When preparing for an Oracle audit, taking proactive steps to remediate potential compliance issues before Oracle identifies them is crucial.

Between 90% and 100% of non-compliance findings stem from mistaken or accidental use of Oracle software within your organization.

Issues often arise with Oracle applications when users who have left your company are not end-dated or are mistakenly given access to applications for which you do not have licenses.

Here are some key actions you can take to clean up and optimize your Oracle licensing position before an audit:

1. Clean Up Your Oracle Database

Remove usage/evidence: Before the audit begins, it’s important to thoroughly review your Oracle databases and remove any unauthorized or unnecessary use of software features. This could mean disabling unused options or ensuring unlicensed features are inactive. Cleaning up your environment will reduce the risk of non-compliance findings during the audit.

2. Optimize Your Oracle Licensing

Reallocate deployments: If you have Oracle software deployed on a server requiring 16 processor licenses and another server that requires only eight processor licenses, consider migrating your deployments to the smaller server. Optimizing where Oracle software is deployed can drastically reduce your license requirements and costs.

3. End Date Users and Adjust Access

End-date inactive users: One of the most common issues in Oracle application audits is the failure of end-date users who have left the company or no longer require access to certain applications. Before the audit begins, review your user lists and end-date inactive users to avoid being charged for unnecessary licenses.
Review user access: Ensure users aren’t mistakenly given access to applications or features your organization is not licensed for. Adjust user access to ensure compliance with your current licenses.

4. Run Oracle LMS Scripts and Analyze Results

It’s critical to run Oracle LMS scripts to gather data on your environment before the audit and have an expert analyze the findings. Most non-compliance issues identified will likely be caused by accidental or mistaken use. An independent Oracle licensing expert can help you understand the results and take corrective actions before the audit proceeds.

These steps can significantly reduce compliance risk and avoid hefty penalties during an Oracle audit.

Oracle Audit Settlement Best Practices

Actionable Tips and Best Practices for Oracle Audit Defense

Staying in compliance with Oracle and being audit-ready is an ongoing effort. Here is a checklist of actionable best practices to help you defend against audits and minimize risks:

Maintain a Detailed License Inventory: Keep an up-to-date record of all Oracle software installations (including version, edition, and options used) and map them to your purchased licenses. Regularly reconcile your entitlements vs. deployments to catch overuse early.
Conduct Regular Internal Audits: Don’t wait for Oracle – perform your own periodic license compliance audits (for example, every 6 or 12 months). This can include running Oracle’s LMS scripts internally or using software asset management tools to identify the usage of Oracle features. Internal audits help you fix issues on your timeline.
Establish Governance and Controls: Implement strong internal controls around Oracle software. For instance, internal approval is required before any Oracle product is installed or activated in any environment. This ensures unauthorized or rogue installations are prevented. Likewise, have policies on virtualization and cloud use of Oracle software so that IT staff know the licensing implications before they deploy.
Stay Educated on Oracle Licensing Policies: Oracle’s licensing rules (especially for technologies like virtualization, cloud, and Java) can change or get updated interpretations. Ensure your asset management and technical teams are aware of the latest policies – for example, Oracle’s partitioning policy, VMware licensing stance, and Java SE subscription requirements. This knowledge will help you avoid inadvertent non-compliance.
Document Everything: Keep a central repository of all Oracle contracts, ordering documents, support renewals, and any amendments. In an audit, having quick access to your exact contract language (e.g., definition of a “processor” or “user”) is invaluable. Also, document any communications with Oracle reps where they gave you specific licensing guidance, which could be useful if disputes arise (“Oracle told us we could do X…”).
Be Cautious with Oracle Sales “Reviews”: If an Oracle sales rep or consultant offers a “free license review” or asks questions about your usage out of the blue, tread carefully. This could be a soft audit fishing for information. You can involve your procurement or license team in such discussions and provide high-level data, but avoid sharing detailed deployment information until a formal audit is initiated (unless you’re confident in your compliance).
Optimize and Clean Up Environments: Unused or underused Oracle software is a ticking time bomb. Proactively uninstall or decommission unnecessary Oracle software. If you have options or packs enabled that you’re not actively using, disable them to avoid accidental usage being recorded. Also, if old servers still have Oracle installed (even if not used), remove it—Oracle audits have a habit of finding those forgotten installations.
Train Your IT Staff: Ensure your DBAs, system admins, and developers understand that Oracle software must be treated carefully. A well-intentioned DBA might enable a feature (like a Database tuning pack) to try it out, not realizing it requires a license—and that footprint will show up in an audit. Training and awareness can prevent such costly mistakes. Also, instruct teams to involve the license manager when planning any new Oracle deployment.
Have an Audit Response Plan: Just as companies have disaster recovery plans, have an audit response plan. Identify who would do what if an Oracle audit notice comes. This should cover assembling the team, steps to gather data, and whom to call (consultants, etc.). A prepared team will handle the audit more calmly and effectively than a team scrambling from scratch.
Use SAM Tools Wisely: Consider using Software Asset Management tools specializing in Oracle license tracking (e.g., Flexera, Snow License Manager, ServiceNow SAM, etc.). These tools can automate the detection and usage of Oracle installations. However, do not rely on them as the gospel truth. Many SAM tools struggle with the nuances of Oracle’s licensing and may not capture everything or could even misreport usage. They are helpful for continuous monitoring, but always have a human expert validate their findings. Oracle typically does not accept third-party tool reports as final in an audit anyway, so think of them as an aid for your internal management, not a replacement for Oracle’s audit scripts.
Engage Independent Advisors: If you are a large Oracle customer or lack in-house Oracle licensing expertise, build a relationship with an independent Oracle licensing advisor or firm. They can perform periodic “health checks” and will be on standby if an audit happens. Their guidance can often pay for itself by reducing audit exposure. It’s worth noting that while there are Oracle “approved” auditors from partner firms, those partners often have a conflict of interest (they might also resell Oracle licenses). Truly independent experts (those not financially tied to Oracle) will focus solely on your best interests.

Following these best practices creates a robust defense-in-depth against Oracle audits. The goal is to minimize the chances of an audit and ensure there are no nasty surprises if one occurs.

Now, let’s touch on tools and services that can further assist in managing Oracle licenses and audits. Include language protecting your organization from future audits on the same issues.

This can prevent Oracle from revisiting resolved matters in future audits and helps secure your organization’s compliance status.

Oracle Third-Party Auditors: Who They Are and What to Expect

Oracle refers to its third-party audit program as Joint Partner Engagement (JPE). In this model, resellers act as auditors, conducting license audits on behalf of Oracle.

However, Oracle does not pay these resellers in service fees; their compensation comes from reselling licenses to cover any shortfall found during the audit.

This structure creates a potential conflict of interest that can be risky for organizations.

Why Third-Party Auditors Can Be Risky

Resellers are motivated by sales. Since they are only paid through the resale of shortfall licenses, their incentive is to find non-compliance, which can result in larger licensing purchases.
Different interpretations of Oracle licensing: Oracle’s complex licensing rules can be interpreted differently, depending on the desired outcome. Resellers may interpret the rules more aggressively to generate higher license shortfalls.

The Importance of an Independent Expert

Given the financial incentives behind JPE audits, having an independent Oracle licensing expert on your side is essential.

These experts can:

Challenge aggressive interpretations: An independent expert will ensure that the Oracle licensing rules are applied fairly and that the reseller’s findings are not skewed to inflate your compliance gap.
Offer guidance during the audit: Having an expert who understands Oracle’s licensing complexities can help minimize your exposure and negotiate a better settlement if any non-compliance is found.

In JPE audits, resellers are motivated to find compliance issues to drive sales, making engaging with an independent expert who can protect their interests and ensure a fair audit process even more critical.

Post-Audit Oracle License Management

If your organization was found non-compliant during an Oracle audit, it will likely be audited again.

Oracle often audits companies every 3 to 4 years, especially if they’ve previously identified compliance issues.

One of Oracle’s common audit triggers is to revisit customers who have shown a lack of effective license management. Additionally, Oracle may audit your organization for other products not included in the initial audit.

Steps for Post-Audit License Management

Expect Future Audits
- After a non-compliance finding, Oracle will likely audit your organization again, potentially within the next three years.
- Oracle could also focus on other products you use, expanding the scope of future audits.
Implement an Annual License Review
- An annual Oracle license review is recommended to mitigate non-compliance risk in future audits.
- Regular reviews ensure you proactively manage your licenses and address potential compliance gaps before Oracle finds them.
Avoid Future Penalty Fees
- By conducting annual internal audits and working with independent Oracle licensing experts, you can stay compliant and avoid hefty penalty fees in future audits.
- These reviews help you maintain accurate licensing for new deployments, employee changes, and system updates, significantly reducing risk during future Oracle audits.

Proactive license management is key to staying compliant with Oracle’s complex licensing rules and avoiding repeated audits and penalties.

Regularly reviewing and adjusting your Oracle licenses will ensure you are prepared if Oracle audits your organization again.

Avoiding Future Oracle License Audits

Here are proactive steps to help minimize the chances of facing future Oracle audits:

Be compliant when Oracle audits you
- Oracle reviews past audit history. Ensuring you are compliant during an audit reduces the likelihood of future audits.
Demonstrate licensing knowledge
- When communicating with Oracle, show that you understand licensing and contracts. Organizations knowledgeable about licensing are less likely to be audited again.
Maintain good vendor relationships.
- Keep a positive relationship with your Oracle account manager. A strong vendor relationship can sometimes prevent Oracle from initiating an audit.

Following these steps can reduce the chances of Oracle targeting your organization for future audits.

FAQ on Oracle License Audits

How can we delay the Oracle audit?
You can negotiate with Oracle to delay the audit or request more preparation time, citing reasons such as needing time to gather the required data or engaging with an Oracle licensing expert.

What are the benefits of delaying the Oracle audit?
Delaying the Oracle audit gives you more time to prepare and understand your licensing position. This can help you identify and remediate potential compliance issues before the audit begins, reducing the risk of non-compliance findings.

What steps should we take internally while delaying the Oracle audit?
While delaying the Oracle audit, you should take the time to review your Oracle contracts and understand your licensing position. This includes identifying any potential compliance issues and taking steps to remediate them. You should also consider engaging with an Oracle licensing expert to help you navigate the audit process.

What should we do if we identify a license shortage while preparing for the audit?
If you identify a license shortage while preparing for the audit, you should consider purchasing the required licenses before the audit begins. Oracle will almost always take your order now instead of waiting for the audit to be completed, which can take many months.

What is an Oracle license audit?
An Oracle license audit is a process by which Oracle checks whether a customer is compliant with their Oracle software license agreements. This process is typically conducted every 3 to 4 years, but the timeframe can vary.

What triggers an Oracle audit?
Several factors can trigger an Oracle audit, including a hardware environment refresh, use of old or outdated license metrics, recent mergers and acquisitions, failure to renew Unlimited Licensing Agreements (ULAs), sudden changes in software spend, and refusal to purchase Oracle software licenses and cloud services.

Who at Oracle decides which customers are selected for audits?
If the Oracle account team didn’t select you, the Oracle audit team at least sought your approval before issuing an audit letter.

What is Oracle LMS / Oracle GLAS?
Oracle LMS (License Management Services) is Oracle’s official audit organization. In 2020, Oracle LMS was renamed Oracle Global License Advisory Services (GLAS). This organization operates independently from the Oracle sales team and is responsible for conducting all licensing analyses of Oracle LMS script outputs.

What role does the auditor play in the audit?
Oracle LMS has local members in most countries/regions worldwide. These individuals act as project managers and the face of the Oracle license audit. Their responsibilities include hosting all Oracle license audit meetings, creating the audit project plan, and presenting and writing the audit report.

What is Oracle JPE?
Oracle JPE (Joint Partner Engagement) is an initiative that uses Oracle resellers to conduct and manage Oracle license audits. Oracle does not pay the JPE partners consulting fees and rewards them only if they can resell licenses to cover any shortfall in the Oracle license audit report.

What is Oracle SIA?
Oracle SIA (Software Investment Advisory) is an initiative started by Oracle to help more customers transition to Oracle cloud and educate and train its customers about Oracle licensing topics.

What is Oracle LMSCollection Tool?
Oracle LMS Collection Tool is an in-house-developed set of scripts for measuring customers’ Oracle software environments.

How do you manage the Oracle audit?
When you receive Oracle’s audit notification letter, consult an Oracle licensing expert to review your licensing.

What are the common Oracle license compliance risks?
The common risks include Oracle Database Compliance Risks, License Metric Mistakes, and Virtualization and Cloud Policy Risks.

What should be the first step after receiving the audit letter?
The first step should be reviewing your contracts and understanding the audit clause.

Can we postpone the audit?
Yes, it is possible to postpone the audit. The duration of the delay depends on how well you negotiate with Oracle.

What actions should we take internally while we fend off Oracle with NDAs and negotiations?
You must figure out your compliance gap and how to fix it before the audit starts.

If we determine a license shortage, should we buy those licenses before the license audit begins?
Oracle will almost always take your order now instead of waiting for the audit to be completed, which can take many months.

How do we figure out what our Oracle license position is?
Getting external help from a partner who can analyze Oracle audit scripts. Then, you can remediate any exposure before the audit begins.

What mistake software audit should we avoid?
Don’t hand over any SAM tool data to Oracle without analyzing it.

We trust Oracle to do the right thing and have a good business relationship with It. So why should we use external help?
Even if Oracle can be good-hearted, inexperienced license auditors will lead to mistakes.

Our CIO/CFO received an Audit Letter, and Oracle LMS is contacting us now. Should we reply to their letter?
Take your time. Per your contracts with Oracle, you usually have 45 days to reply to the notification and are not contractually obligated to acknowledge the letter until the 45 days are up.

If you want more than 45 days, you can try to negotiate a contract term giving you a 90-day notice period.
If you need more time, you can negotiate a longer notice period, like 90 days.

We received an email from our sales rep with an Excel spreadsheet they want us to complete with our licenses. Should we cooperate?
No, you have no obligation at all. This is not a formal audit.

What happens if we don’t reply to Oracle within 45 days?
Oracle will start to “chase” you, but there will be no consequence for delaying. Once Oracle contacts you, let them know you missed the notification and are willing to discuss the audit.

Can we postpone the audit?
Yes, this happens all the time. How long it will take depends on how well you negotiate with Oracle. The Oracle audit clause says, “The audit shall not reasonably interfere with your business operations.” Oracle is often nice enough to delay an audit for a few months if you provide them with a reasonable business justification for why you want to postpone the Oracle licensing audit. Good reasons can be that you are currently undertaking changes in your IT infrastructure.

Can we persuade Oracle to cancel the license audit?
That is more difficult, but I have seen it happen; usually, that involves you making a large purchase. Then, Oracle can withdraw the audit notification.

What should be our first step after we have received the audit letter?
Review your contracts; what does the audit clause say? Does Oracle have the right to audit you? Action to take: If you and many others don’t have copies of your agreements, you might want to contact Oracle to get copies of all the relevant contracts. Support renewals are insufficient; they should be Oracle OMA, OLSA, and Ordering Documents.

We reviewed our Oracle audit clause and concluded that Oracle has the right to audit our company. What should be our next step?
Now, you should negotiate an NDA and ask Oracle to sign your company’s NDA. This usually takes them a few weeks, buying them more time to prepare for the audit.

And once our NDA is signed by Oracle?
Oracle always wants to schedule a kick-off meeting as soon as possible. This meeting aims to discuss the project plan, share scripts, and more.

Oracle is asking us to schedule a kick-off meeting; why are they in such a rush?
Oracle always wants to schedule the audit kick-off immediately; say no. Oracle suspects that the more time you have to prepare for the Oracle audit, the greater the chance you might discover and fix any license gaps before the audit begins.

During the audit, will Oracle come onsite to our data center?
Oracle does not have the right to access your data center and does not have a discovery tool to locate all of your Oracle Software. However, remember that the Oracle audit cannot occur without your collaboration.

We are a global company, and Oracle wants to license audit our subsidiary. Should we allow it?
You can try to say no, but how can Oracle, locally, determine if they have enough licenses? You might have spare licenses on another subsidiary covering any license shortfall. The audited subsidiary might have a shortfall of 20 Weblogic Licenses, but those might be available from another entity. It is challenging for Oracle to conduct an Oracle licensing audit on a subsidiary as you may have a surplus of Oracle licenses on another legal entity.

Oracle wants to include our Oracle ASFU Licenses in the Oracle licensing audit.
This is not allowed, but I have seen that Oracle LMS sometimes includes Oracle ASFU licenses. Per the contract, any audit on ASFU licenses should go through the partner from which you bought them.

Why is our company being selected for a license audit? Is it simply “our turn”?
No, there is no such thing as a “your turn system” when it comes to Oracle License Audits. The software audits are not random. You have been selected by your Account Manager with the support of Oracle LMS. There is almost always a reason to suspect that Oracle has good grounds for suspecting that you are audited. Some customers have not been audited for ten years, while others are audited every 3-4 years.

What actions should we take internally while we fend off Oracle with NDAs and negotiations?
You must figure out your compliance gap and how to fix it before the audit starts. 95% of all Oracle audits are short, usually in the millions. However, most license gaps are not caused by customers “overusing” Oracle.

How do we figure out what our Oracle license position is?
I strongly recommend getting external help from a partner who can analyze Oracle audit scripts. Once Oracle hands the LMS scripts over to you, you run the scripts and then give the licensing partner the output. Once they get the output, they can analyze what Oracle will find out.

We are not a big Oracle customer; should we be concerned?
We have helped companies that only have five Oracle Software servers running, and they are being found to be millions of euros non-compliant. One customer had four servers and faced a 9-million USD license gap.

What mistake software audit should we avoid?
Don’t hand over any SAM tool data to Oracle; you need to analyze it. Oracle-verified tools are not verified to analyze them correctly. If they were, Oracle would trust your SAM tool reports. No, they want the raw script data under the tool, showing that you are out of compliance. Also, even if you have skilled in-house Oracle SAM staff, you should consider getting external help if you are under audit. It can help to have “fresh” eyes looking at data to verify that you are correctly licensed.

Where does the contract say I need to run Oracle audit scripts?
You can find the Oracle audit clause in your Oracle OMA. Many contracts do not mention running Oracle data measurement tools. However, some later versions have contract language saying you must. If Oracle audits you, Redress Compliance can analyze the Oracle LMS Script and tell you what Oracle will discover in the audit. The independent audit will give you more options before the official Oracle audit begins.

Which tool does Oracle use when they are auditing customers?
Oracle uses the Oracle LMS Collection Tool, an in-house-developed set of scripts that measures licensing and deployments for Oracle databases, middleware, and applications.

We tried to do the audit with Oracle ourselves. Can you still help?
Yes, we find errors in almost every Oracle audit report we review. These errors can either reduce the findings or strengthen your negotiation position. Compare Oracle’s price list to the price of our services. Calculating an ROI is easy.

How quickly can you help us?
We can usually start an engagement within a few days after you and we agree to the commercial contract.

What is included in the preliminary report we received from Oracle after the audit, and what should we do with it?
The preliminary report contains Oracle’s findings on your software deployments, backups, and user numbers. Reviewing the information to ensure no mistakes and confirm the report’s accuracy is essential.

How can the audit report be inaccurate?
You may have provided Oracle with incorrect information about your Oracle deployments, backups, or several users. Additionally, Oracle may make mistakes in its calculations or miss the licenses that you have.

What other types of mistakes can Oracle make in its audit report?
Oracle may miscalculate licensing, misinterpret contract terms, or overlook licenses you have already purchased. There are many possibilities.

Does Oracle deliberately include errors in its audit reports?
No, it is simply because the Oracle License Management Services (LMS) team that conducts the audit often has auditors with only a few years of experience in Oracle licensing. Years of experience are needed to understand Oracle licensing thoroughly.

What else should we consider when reviewing the audit report besides errors?
Oracle will typically assume the worst-case licensing scenario, which may not be necessary for your situation. Many licensing models are available for Oracle software, and it’s essential to understand which model is most appropriate for your organization.

Do we have to purchase the licenses the audit report says we are missing within 30 days?
No, it is best to acknowledge that you have received the report and need time to review it. Never agree with the report immediately; doing so will start the 30-day period during which you must resolve any licensing gaps with Oracle.

Can we negotiate discounts when resolving the audit?
Yes, but expect the discounts to be lower than those you may have received in the past. The average discount for audit-related purchases is 30-40% lower than regular purchases.

Do all customers get treated equally in a license audit?
Unfortunately, no. Your success in an Oracle license audit depends on your knowledge, negotiation skills, and determination to pay zero. To avoid overpaying, it’s best to work with expert firms that can share their experiences with other companies.

What if Oracle starts the 30-day countdown before we confirm the findings?
Let Oracle know they are incorrect and you need more time to review the report.

Can we extend the 30-day negotiation period by talking to Oracle?
Yes, the rule of thumb is that negotiations can extend until the end of Oracle’s fiscal year (end of May). However, Oracle may not agree to extend it beyond this date.

What is the difference between a preliminary and final Oracle license audit report?
The only difference is that with the final report, you are contractually obliged to resolve any licensing gaps within 30 days. Disagree with the report’s findings as the clock will start ticking.

What is your best and final advice?
Contact us for help; engaging with us may be your company’s best investment this year.

Oracle License Audit Defense Service

Former Oracle license auditors deliver our Oracle License Audit Defense service, which includes the following services:

Oracle Licensing Assessment: We assess your current Oracle licensing and provide a comprehensive report on your compliance status.
Oracle License Compliance Report: Our report includes a detailed analysis of your compliance risk, financial exposure, and recommendations for solving compliance issues.
Contractual Compliance Review: We review your contracts and agreements to ensure you meet all your contractual obligations and maximize your licensing benefits.
Advisory in Oracle License Audit: We provide guidance and support throughout the entire Oracle license audit process, from initial notification to final resolution.
Audit Negotiation Service: Our experienced negotiators work on your behalf to minimize any financial exposure and ensure a fair outcome for your organization.

Read more about our Oracle Audit Defense Service.

Do you want to know more about our Oracle License Management Services?

Author

Fredrik Filipsson

Fredrik Filipsson has 20 years of experience in Oracle license management, including nine years working at Oracle and 11 years as a consultant, assisting major global clients with complex Oracle licensing issues. Before his work in Oracle licensing, he gained valuable expertise in IBM, SAP, and Salesforce licensing through his time at IBM. In addition, Fredrik has played a leading role in AI initiatives and is a successful entrepreneur, co-founding Redress Compliance and several other companies.
View all posts