Avoid a similar fate

Thomas R. Temin

One hopes that the sorry state of affairs between Oracle Corp. and California doesn't scare government agencies off the idea of enterprise software licenses.

California's $95 million contract for Oracle database software has succeeded in embarrassing the companies involved, the governor and the state's IT shop. The state is working to find a way out of the deal.

Disputes among Oracle, Northrop Grumman Information Technology and California center on the number of software licenses the pact encompasses, whether the contractors calculated the purported savings accurately, whether state IT employees acted properly and how political contributions came to be made while the deal was being negotiated.

As the parties sort it all out, onlookers shouldn't interpret the tangle to mean enterprise software licenses are something to be avoided.

If'and it's a big if'they are negotiated properly, such license deals can yield tremendous benefits to agencies. Enterprise software licenses can mean regular technology refreshments. They can produce predictable costs. They can ensure adequate user support. And, of course, they can cut overall software cost of ownership.

But an enterprise software license requires an agency to do a lot of homework before negotiating with vendors. To start with, agencies need to act like enterprises. Plus, government executives need to know the outlines of their demand. They need a clear picture of their starting software inventory. And they need a road map of where they are going technically and how that fits with ongoing programs.

Without such information, agency negotiators can end up committing to too much, or too little, in the way of software use and costs.

In California, an apparent breakdown in communications occurred among the IT shop, the governor's office and the Legislature. The lesson here goes back to Point 1: acting like an enterprise. Although the unit costs of an enterprise license may be low, the absolute dollars can be large. And that means you've got to keep all stakeholders in the loop.

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