Microsoft licensing: A special report
Second of three parts.
One of Microsoft's goals for Licensing 6.0 was to make the program not only more consistent and attractive to customers, but also easier to understand.
The program's message is starting to succeed, experts say, albeit slowly.
Robert Athey, a principal analyst at Detroit Edison, said his company made its initial enterprise purchase of Microsoft software through its hardware provider, Dell Inc., and since Microsoft changed its procedures and became the contact for licensing, he has had no contact with a representative. He said he tried to get more information about the new benefits of Software Assurance, which went into effect this month, but he had no idea whom to call. He was only recently contacted by a Microsoft rep, who wants to come by to discuss the changes.
But some customers say they are getting what they need to know from Microsoft. One of them is David Burke, CIO at Raycom Media Inc., a Montgomery, Ala., broadcasting company, who said he's been receiving plenty of information.
Microsoft has made many strides to inform customers about changes to the program, but getting the word out remains challenging. To this end, the company plans to have a day set aside each quarter to communicate any changes to the licensing program, said Rebecca LaBrunerie, Microsoft's licensing program manager.
On these days, Microsoft will offer a webcast or press release in conjunction with direct marketing plans, to discuss licensing changes with its customers, she said.
Since Licensing 6.0 was introduced in August 2002, there have been many cries of protest from customers who said they were caught off-guard by the program. Since that time, Microsoft has been sweetening the program with benefits in hopes of making amends.
For example, the company said the addition of its Software Assurance program -- which is the maintenance program within the actual license agreement -- gives customers a more accurate method of estimating their Microsoft software costs. It also gives them the right to upgrade to the next release of software.
Microsoft also said Software Assurance reduces the costs associated with customer benefits, such as the free support calls, training vouchers and online technical help that took effect this month. "A support call might be worth $500 or $1,000, so it may have paid for itself or the cost of the license," LaBrunerie said.
There were other changes during the course of the year. For example, software client-access licenses are now calculated per user, instead of per laptop or server.
And there is now a program that allows customers to consolidate their old Select Agreements. These agreements are volume discounts for large enterprises, and are among the most common type of license Microsoft issues. One large company may have dozens of these agreements in place, with different Software Assurance dates. If one them lapses, it can cause trouble for the IT staff, which must renegotiate the license from scratch.
Julie Giera, a vice president and research fellow at Forrester Research, Cambridge, Mass., ticked off some of the improvements to the program. For one, she said, Microsoft has developed some consistency between the Enterprise, Open and Select agreements in that all are now three-year contracts, and the renewal process is the same.
She said Microsoft has also cleared up a lot of the exceptions that have plagued different products in terms of their packaging and licensing.
In August, Microsoft also said that when Office 2003 becomes available, it will sell software packages that are more closely tailored to the needs of an individual business. Applications that are included will vary according to the intended audience. Also, there are variations within an application depending on its intended audience, so, for example, Word 2003 in one edition may not be the same as Word 2003 in another edition.
But by offering this level of choice, Microsoft also introduced a layer of complexity. "There is no way around that," Giera said. "This is the future direction of Microsoft. To do this you need a clean platform, and that's what Licensing 6.0 is, a clean platform."
FOR MORE INFORMATION:
Special Report, Part 1: Licensing 6.0 and Software Assurance: Who should renew?
Special Report, Part 3: Software-license pros emerge as a new IT breed