Santos can't shake Oracle licensing costs

Energy company Santos says it expects to pay upwards of AU$830,000 in licensing fees to Oracle next year due to a complex licensing model it can't easily exit.

The Australian-owned oil and gas exploration company has almost completed a review of its Oracle licensing arrangements, which began early this year.

Santos uses 42 Oracle products across its business, including the vendor's application server, database, and e-business suite.

"We're going through rapid growth and we wanted to make sure that the licensing that we had was flexible," said Mahree Waldeck, IT business applications team leader, Santos.

Santos engaged Oracle partner Red Rock Consulting to help with the review.

Last year Santos paid Oracle AU$830,000 in maintenance and support fees, a sum which was "constantly rising", she said.

Despite the almost-complete licensing review however, Santos is poised to pay Oracle even more next year.

"We're in the process of finalising migration paths we're going to take with our licensing," she said.

"We looked at other opportunities, whether we could cancel and re-purchase, whether we could migrate, whether we could shelve licensing.

"[But] I think we might end up paying a little bit more than that next year."

Part of the problem was the cost of exiting some Oracle licensing agreements.

"I've always thought licensing was a little bit like an annual magazine subscription, you could turn it on or off at whim," said Waldeck.

"That's certainly not the case with Oracle licensing."

"It's very difficult to move out of existing licensing, to decide 'I'm not using that product I don't really want to license it anymore'. And you have to work through some fairly complex calculations to see whether there's true value in doing that."

The review process also uncovered some staff misunderstood the Oracle licensing arrangements, to the detriment of the business.

"We discovered that our IT project office understood, for some reason, that we had corporate Oracle licensing," said Waldeck.

"So any of the business cases that were put forward didn't consider the cost or implications of either the licensing or the way that the team might choose to deploy the software.

"It's important that that analysis is done up front at the time that any business case is generated. So we've changed that process."

Santos had a "complex and historical" licensing model with Oracle, according to Waldeck, having bought licences from the vendor since 1993.

However, the licensing review would still deliver some benefits, particularly for Santos's management of Oracle databases.

"We had a very old 1990s metric for our database use and it was extremely difficult to measure how we were performing against that licensing metric," said Waldeck.

"It was a concurrent device and it's certainly not right for the 21st century and it's not right for the way applications are deployed these days.

"So we identified an opportunity to migrate both licences to CPU and named user plus licences, and as part of that we've been able to rationalise our database deployment across all of the servers."

Santos ran 20 Oracle database servers before the licensing review.

"We've actually reduced the number of servers that we have deployed, and therefore we've reduced our requirement for licensing."

Similar improvements had been made with the management of Oracle's e-business suite. Around 1,900 Santos staff use the suite, with over 20 modules for financials, supply chain, projects etc.

"We identified that there were some licences that weren't being used.

"We identified migration opportunities for others, and one bonus, because of our long history licensing the e-business suite that dates back to 1997, just on one or two occasions we've actually spawned a new licence for a new product that we planned to deploy and those things aren't often known to you unless you go looking for them."