Oracle's California deal underthreat

Database giant Oracle is facing the embarrassing collapse of an £86m licensing deal with its home state of California.

Database giant Oracle is facing the embarrassing collapse of an £86m licensing deal with its home state of California.

The controversial database licensing deal hit the headlines last month when auditors claimed the state had received no benefit from the contract.

Since then, the California Governor has announced that he is trying to rescind the contract, state officials have resigned and the future of the states central IT agency is in doubt.

Oracle continued to defend the enterprise licence agreement last week, but it also offered to undo the contract if a deal could be worked out with the reseller and a financing firm also involved in the deal.

Industry analysts said the fiasco is another illustration of what can happen when a technology roll-out is not vetted carefully enough upfront. "This is not a new story," said Joshua Greenbaum, an analyst at Enterprise Applications Consulting.

"Like a lot of companies, the state didn't obtain the right amount of consensus and didn't have the right review process. Anyone who thinks this is unusual doesn't understand how governments and companies obtain software."

Oracle officials declined to comment on the company's sales tactics but in March, when analysts group Gartner claimed that Oracle's sales force was trying to sell companies more database licences than they needed, Oracle said it "does not condone or encourage" such behaviour.

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