Who can use Oracle licenses is one of the most problematic, yet possibly least noticed, subjects Oracle customers face when a proper SAM process is not in place. You might think the answer is 'my entire company', but what is 'the company' in the Oracle contracts? This blog takes a look at the legal entities to clear things up.
What do we mean by Legal Entity?
In general, a legal entity is any company or organization that has legal rights and responsibilities, including tax filings. It is a business that can enter into contracts either as a vendor or a supplier and can sue or be sued in a court of law.
A contractual item often overlooked
We all know Oracle licensing is as complex as it gets, and most Oracle customers struggle with it. But even the ones who are savvier when it comes to managing their Oracle license estate, generally look at the Oracle products, focus on how to use them and how to count the licenses that they need for each product, but fail to realise the importance of other contractual clauses, which could generate serious exposure.
In today’s global market, many Oracle customers consist of multiple legal entities, spread out in different countries across the globe (a parent entity and multiple subsidiaries).
Why is this a problem for Oracle licensing? How does this expose me?
Oracle software is not free to use, you need a license for it, and anyone who uses the Oracle products must be licensed. In terms of entities, that means every entity must be licensed for all the products it is using.
Even if purchasing is done from a centralized point, you may still be in breach of contract. Oracle contracts (Master Agreements, Ordering Documents, etc.) have strict rules which govern who is allowed to use the products purchased under the Ordering Documents. For large companies with subsidiaries across the world this becomes an issue as the standard Oracle contracts only allow the “individual or entity” who has signed the contract to make use of the programs, and only in a certain territory.
And while the standard Oracle contracts give use rights only to the entity which signed the contract, the usage of Oracle products in multinational companies almost always spreads out to some, if not all, of the legal entities part of the company, as they share/access the same systems and applications which leverage the Oracle products.
How can Livingstone help?
Livingstone has seen these issues and we’ve been raising awareness and helping our customers understand the risks associated with improper contractual setup. Our Oracle experts read these contracts, highlight important clauses and how these can directly impact the compliance position.
Recently Livingstone have also added a new method to help with this, a Contract Intelligence tool that simplifies the contract review process, improving visibility, searchability and offering predictive analytics. Extracting key contractual terms and obligations takes weeks of laborious manual reading and data entry. Livingstone uses Optical Character Recognition and Artificial Intelligence to digitize your contracts and lay out the key details of every contract in plain English. The speed at which you can have visibility on your contract estate is unprecedented, with thousands of contracts digitized in hours.
If you need help from an Oracle consultant to pick your contracts or a tool to read your contracts, look no further, Livingstone is here to help you.
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About the author
Doru Mihăilescu is a principal consultant at Livingstone. He has deep knowledge of Oracle having previously worked at Oracle as a global licensing and advisory lead.
