Oracle Cloud Fraud Case: It is alleged that Oracle artificially inflated its cloud sales numbers by offloading cloud products to customers under the duress of audit or by offering heavy discounts to on-premises contracts. Please help us stamp out this sloppy behaviour by sharing your experiences. [Click this link to participate in the survey].
We’ve been reporting for a number of years of software vendors using software audits for revenue rather than compliance. See audits getting out of hand from 2015.
An audit, or the threat of an audit, is used to identify shortfalls or otherwise push the customer onto the back foot, then a proposal for resolution is suggested that involves buying a new shiny strategic product from the vendor. As recent as last month at our Melbourne conference, we heard of this technique being used by Microfocus during sales conversations, “buy this, or we’ll audit you”, is what is known as the Audit-Deal-Cloud rinse cycle.
The software company can then report to shareholders that it is relevant and down with the kids, despite knowing that their new offering is sold under duress.
This technique is so prevalent in the software industry that savvy ITAM professionals use it to their advantage. One way to break up an aggressively bundled archaic contract of stuff you might not need anymore, is to negotiate that the contract is restructured in exchange for buying the vendor’s shiny, new (usually cloud) offering. See “Buying Oracle cloud as a means of reducing maintenance”.
This “audit-deal-cloud” sales technique has gotten Oracle into deep water with one of their investors, who, to cut a long story short, invested in Oracle based on their cloud sales growth. See “Oracle cloud class action lawsuit – a deep dive” for the revealing and damaging story.
We speculated in 2018 that Oracle’s cloud growth might be built on sand, that prediction seems alarmingly accurate – securities fraud accurate.
Please help us stamp out sloppy sales techniques and dubious audit activities that drive software vendor revenue by sharing your experiences.
Have you first-hand experience of the audit-deal-cloud rinse cycle from Oracle? Please share your experiences to help us stamp out this behaviour.