Case Study – Oracle Audit Defense: How We Reduced a R$60M Audit to R$15M for a Brazilian Energy Company
Background
A Brazilian energy company (headquartered in Rio de Janeiro) involved in oil & gas exploration and production utilized Oracle software to manage critical operations.
Oracle Database systems stored geological data and managed asset tracking, while Oracle Primavera and EBS modules were used for project management and enterprise resource planning.
The company, with about 3,500 employees, also had several remote sites (oil platforms and refineries) where local servers ran Oracle databases that would periodically sync with central systems.
Historically, the IT department was more focused on uptime and growth than on license compliance nuances, and they assumed their Oracle environment was sufficiently licensed through a patchwork of contracts. Software audits were new to them, and Oracle’s audit notice came as a surprise.
Challenges
Oracle’s audit of the energy firm revealed several compliance gaps.
One major issue was environment duplication: the company had set up identical pre-production and testing environments that mirrored production, using Oracle Database and options like Advanced Compression to test scenarios, effectively doubling the installations, but they were only licensed for production instances.
Oracle also identified that the company made extensive use of Oracle Spatial and Graph in analyzing geological mapping data, an option that requires separate licensing.
Unaware of this, the company had been using those features as part of Oracle Database Enterprise Edition without additional licenses.
Furthermore, some Oracle databases on offshore oil rigs were running on powerful servers with many cores, and Oracle’s core-based licensing calculations indicated under-licensing there as well.
Oracle’s audit report estimated around R$60 million (Brazilian Reais, approx $12M USD) in license fees owed, a huge figure that included penalties and backdated support.
Oracle Brasil’s team applied pressure, threatening that the company would be out of compliance and at risk of legal exposure if a settlement were not reached quickly.
The energy company was anxious about this, as such an expense would cut into funds for exploration projects and potentially attract negative attention from auditors and shareholders.
How Oracle Licensing Experts Helped
- Licensing Assessment: The company engaged Oracle Licensing Experts to clarify the true extent of the shortfall. The experts conducted a swift yet thorough assessment, gathering details on each Oracle instance and the usage of features. They found that many of the testing and development databases could have been licensed under more cost-effective terms (some could run Oracle Standard Edition, which doesn’t charge for certain options, given their smaller size). For the Oracle Spatial usage, the experts quantified exactly how and where it was used – it turned out only one department was actively using those features, not enterprise-wide as Oracle assumed. Also, on the hardware side, the experts applied Oracle’s core factor table correctly to the oil rig servers, demonstrating that Oracle’s audit had over-counted processor licenses (Oracle’s own formula reduced the required licenses when accounting for the specific CPU types in use).
- Audit Defense Strategy: The defense strategy hinged on showing Oracle that the company was willing to rectify compliance, but on justified terms. Oracle Licensing Experts worked with the client to devise a plan: consolidate and reduce the number of Oracle instances in non-production environments, and to strictly segregate use of expensive options like Spatial to only where needed. They approached Oracle with an argument that the R$60M number was greatly inflated. For instance, Advanced Compression used in test systems did not deliver real business value, and once the client disabled it outside production, it shouldn’t count as a liability. Similarly, they argued that Spatial usage was limited and could be licensed à la carte for a small number of users rather than the whole company. A critical part of the strategy was also highlighting Brazil-specific economic conditions: currency fluctuations and the fact that such a large compliance bill would be unsustainable. This local context sometimes helps, as Oracle might prefer a smaller deal than a stalemate in emerging markets.
- Mitigation: The experts guided the company through immediate mitigation actions that they could show to Oracle. This included turning off the Oracle Spatial option on all databases except the one that truly needed it (the GIS team’s database). They also temporarily disabled Advanced Compression and other extra cost options on all test and dev databases, reverting those to default storage to demonstrate compliance intentions. Some lesser-used test databases were outright shut down or archived, since the team realized they could use production backups for testing if needed. Additionally, the IT department allocated budget to replace a few Oracle databases on remote sites with a lighter database system for data collection, which could then feed aggregated data to the central Oracle DB, thus planning to reduce Oracle deployment footprint. All these steps were documented to Oracle as part of a remediation report.
- Settlement Negotiation: When it came to negotiating with Oracle, Oracle Licensing Experts presented a compelling case that the actual compliance gap was much smaller after mitigation. They proposed that the client purchase a targeted set of licenses: specifically, licenses for Oracle Spatial for two processor environments (covering the GIS database usage) and a limited number of Oracle Database Enterprise Edition licenses to cover the key production and standby systems, plus the core-heavy oil rig servers. In numbers, this was perhaps 30% of what Oracle originally claimed. They also negotiated to have Oracle forgive the backdated support fees, citing that the client was now entering proper support on the newly licensed items (backdated fees are often negotiable, and Oracle can waive them). In financial terms, the settlement came to roughly R$15 million (~$3M USD) in new licenses and cloud credits. Oracle insisted on some cloud credit purchase as part of the deal, which the client accepted since they were considering testing Oracle Cloud for some workloads. The R$15M spent, while not trivial, was spread over a schedule and was a quarter of the original exposure, marking a significant win for the client.
Outcome and Impact
By engaging Oracle Licensing Experts, the Brazilian energy firm slashed its Oracle audit liability by 75%, from a frightening R$60 million to a manageable R$15 million package that even brought additional value (cloud resources).
The immediate benefit was financial – about R$45M saved – preserving capital for the company’s core activities in oil & gas projects.
The outcome also meant no interruption to their Oracle support or licensing status; they swiftly moved from audited to compliant, with Oracle acknowledging the resolution.
From an operations perspective, the proactive steps of consolidating databases and disabling unnecessary features led to a leaner IT environment.
The company noticed slight performance improvements and lower storage costs after turning off unused compression and archiving redundant copies.
The audit scare catalyzed the formation of a governance committee in the company to oversee software license use, something they hadn’t had before.
Culturally, it was a learning experience – the IT team became much more license-conscious, and procurement gained an appreciation for involving license experts in any major software changes.
The company’s executives were satisfied that a potentially adversarial audit was handled professionally and resulted in a solution that kept the business on track.
“Dealing with a R$60 million audit claim from Oracle was something we never imagined – it was overwhelming. Oracle Licensing Experts stepped in and changed the game for us. They helped us understand our actual usage, eliminate what we didn’t need, and negotiate the rest. In the end, we paid a fraction of what Oracle asked for, and even that spend was put towards things we can use like cloud services. We’re extremely relieved and wiser now about Oracle licensing. The audit could have been a disaster, but with expert help, it turned into a story of cost avoidance and smarter IT management.” — CIO, Brazilian Energy Company
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