Microsoft Licensing Program 6.0

1
Microsoft Licensing Program 6.0

• Laura DiDio
• Principal
• Information Technology Intelligence Corp. (ITIC)

2
Overview of Industry Trends

• Uncertain economic climate budget cuts and
  delayed upgrades.
• Less than 20 of corporations aggressively
  upgrade every two (2) years and about one-third
  upgrade every three years.
• Product life cycles are extended. About 50 of
  companies upgrade every four-to-six years.
• Software is evolutionary NOT revolutionary.

3
Industry Trends, contd.

• Migrations are disruptive to both IT staff and
  the end users!
• Network upgrades are extremely complex.
• Upgrades often require sweeping changes to the
  infrastructure.

4
Are the Funds Available for Microsoft Licensing
6.0 Program?
Yes No Not yet determined
12
42
36
Source ITIC/Sunbelt Software, Inc.
5
Does your organization understand the terms of
Microsoft Licensing 6.0?
Yes No Somewhat Haven't tried to
22
24
45
9
Source ITIC/Sunbelt Software, Inc.
6
Has Your Business Done a Full Analysis of the
cost to upgrade to Microsoft Licensing Program
6.0?
37
Yes No
63
Source ITIC/Sunbelt Software, Inc.
7
If yes, what does your business estimate that it
will cost to upgrade to the new Microsoft
Licensing 6.0 Program?
1
Decrease by 5 to 20 Decrease by more than
20 Licensing Costs will remain the
same Licensing costs will increase by 5 to
20 Licensing costs will increase by 20 to
30 Licensing costs will increase by 30 to 50
Licensing costs will increase by gt than 50
Licensing costs will double Licensing Costs will
triple
1
7
14
21
22
14
11
8
Source ITIC/Sunbelt Software, Inc.
8
Has Your Business Decided What it Will Do?
9
The First Crucial Step Getting Ready to
Negotiate

• Know whats on your network! A thorough inventory
  of devices, objects, users and licenses is
  imperative.
• 90 of companies have non-compliance issues 40
  have a significant issue of non-compliant
  licenses.
• Review the terms of your current licensing
  agreement.

10
Preparing to Negotiate (contd)

• Check for over-payment and under-payment and
  number of CALs. Determine usage levels SLA
  compliance levels and technical service and
  support levels.
• Implement corporate desktop standardization.
• Whos doing the purchasing? One skilled person(s)
  or many uninformed, ill-prepared people?

11
Microsoft Licensing 6.0 The Latest News

• The new program, launches on August 1, 2002. It
  favors a subscription-based licensing scheme.
• Perpetual licenses are still available for 15.
• Main benefits companies that upgrade every 2 to
  3 years and buy large-volume quantities.
• The further behind corporations are in their
  version releases, the more it will cost them to
  upgrade under 6.0.

12
The Latest News (contd)

• Businesses can still purchase Upgrade Advantage
  for their current products until July 31, 2002.
• Current products are Windows 2000
  Professional/Windows XP, Office 2000 and Office
  XP and Windows 2000 Server.
• Any firm that fails to purchase UA before July 31
  will pay the full price for a new license at the
  time they upgrade and will be required to
  purchase Software Assurance for maintenance and
  future upgrades (or, pay the full price).

13
Licensing Changes Under 6.0

• A new Enterprise Subscription Agreement
  (non-perpetual license)
• Entry level for EA has been cut from 500 licenses
  to 250 licenses
• Annual PC count only pay for the coming year
• Buyout clause 1.5x the 3rd year fee
• Price protection based on EA
• Single point for sales and technical service and
  support

14
6.0 Licensing Changes (contd)

• Can be treated as an operating expense in certain
  countries
• BackOffice CAL no longer available
• Core CAL no longer includes SQL Server must be
  purchased separately
• Same 3-year period for both Select and Enterprise
  agreement
• Enterprise customers may be able to purchase from
  Microsoft
• Introduction of Software Assurance

15
Select 5.0 vs. Select 6.0

• Select 5.0
• Customers commit to 1,000 points over two years
• Term Two years with option to renew for two
  years
• Options Upgrade Advantage and pay upon order or
  in annual payments
• License Tracking Quarterly status reports
  monthly reports mailed by Microsoft

• Select 6.0
• Customers commit to 1,500 points over three years
• Term Three years with option to renew for one to
  three years
• Option Software Assurance, payment due on order
  SA is co-terminus for life of agreement
• License Tracking Secure online confirmation
  site mailed status reports

16
Select 5.0 vs. Select 6.0 (contd)

• Payment Options Upfront payment at time of
  license purchase
• Annual Level Assessment Verify at end of first
  year that half of the commitment has been met
• Forecasting Customers forecast needs for two
  years for each product pool

• Payment Options Upfront payment with option to
  annualize payments
• Annual Level Assessment Verify at end of first
  and second year that 1/3 and 2/3 of level has
  been met
• Forecasting Customers forecast needs for three
  years for each product pool

17
Enterprise 5.0 vs. Enterprise 6.0

• Enterprise 5.0
• Minimum 500 licenses
• Perpetual license
• Core BackOffice CAL includes all server based
  packages
• Upgrade Options CUPs, LUPs, VUPs and PUPs

• Enterprise 6.0
• 250 license minimum
• Core CAL replaces BackOffice CAL. SQL Server sold
  separately
• Upgrade Options Software Assurance
• EA Subscription Pay only for upcoming year
• Buyout clause 1.5x 3rd year fee

18
Enterprise Subscription Agreements 6.0

• Agreement is structured with a Master Business
  Agreement and Enrollments.
• Enrolled Affiliate concept.
• License is leased, products are not owned. When
  agreement expires, so do usage rights.
• Term 36 full calendar months (3 years).

19
Enterprise Subscription (contd)

• Customers are now enrolled affiliates. The
  entire organization or multiple affiliates across
  an organization may submit enrollments.
• Example Full platform enrollment for one
  affiliate, Core CAL enrollment for another
  affiliate. This business can have enrollments for
  different product sets, different pricing, and
  they can start and stop at different times.
• Direct and indirect enrollments available can
  purchase from Microsoft (direct) or from LAR
  (indirect).

20
Enterprise Agreements Payment/Pricing

• Enterprise Products
• Price levels per pool set at signing by initial
  Enterprise Product orders.
• Prices set at signing (including true up
  pricing).
• Payments for initial order amortized annually
  over term or can be paid in lump sum.

21
Enterprise Payments and Pricing (contd)

• Additional Products
• Price levels per pool set at signing by
  Enterprise Products.
• Level A for any remaining pools!!!!!
• Prices set at initial purchase (including true
  up).
• Payments for initial order amortized annually
  over term or lump sum.
• Price for others added after initial order L
  years of SA ½ year SA for install year.
• Renew SA for 1 or 3 year options. There is NO 2
  year option.

22
Enterprise Subscription Agreement Pricing

• Enterprise Products
• Annual price 15 discount over new perpetual
  EA.
• Initial price level established at signing for
  all Enterprise Products enrolled.
• Prices set for each price level at signing.
• Price level may change annually based on PC
  count.
• Price level set at Level A for pools where no
  Enterprise Product is enrolled.

23
Enterprise Subscription (contd)

• Additional Products
• Annual price 15 discount over new perpetual
  Additional Products.
• Initial price level per pool established by
  Enterprise Product level.
• Prices set for each price level at initial order.

24
Software Assurance

• Future Planned Benefits
• Integrated services
• Content tools
• Customer-specific fixes
• Profile database of customers technical
  environment
• Community dialogue
• Online software update service

• Today
• Assures access to Microsoft product upgrades.
• Unique services or preferred pricing available to
  Members from
• Microsofts Gold Certified Partners
• Microsofts Certified Technical Education Centers
  (CTECs)

25
Software Assurance (contd)

• Allows purchase of upgrades but only if license
  is current.
• Simplified administration ordering process.
• 29 of desktop, 25 of server.

• Eligibility to purchase or renew Premier Support
  starting in October 2003.

26
Open Agreements 6.0

• Few changes made to Open Agreements.
• Open Business purchase five or more licenses.
• Open Volume larger initial order in one or more
  product pools (applications, systems and
  servers).
• Targeted at small businesses.
• Provides an average of 18 to 28 discounts.
• Software Assurance has been added as an option.

27
Open Agreement 6.0 (contd)

• Open agreement (2 years), SA is co-terminus.
• At renewal, customers can order licenses, SA, or
  LSA or any combination of the three.
• eOpen, tool that allows Open customers to track
  licenses more easily.
• Simplified payment options.

28
Desktop OS Licenseand Software Assurance

• Microsoft will still sell an OS upgrade ONLY in
  the new 6.0 programs as the L for desktop OS.
• Check Microsofts product list to verify that
  your current operating system qualifies.
• Software Assurance will be offered for OEM/Retail
  OS within 90 days of purchase of that OS.
• NO Software Assurance for Windows XP Personal
  Edition.
• Linux is NOT a qualifying upgrade OS.

29
Visual Tools, MSDN SA

• Upgrade SKUs for Visual Studio, Visual Tools or
  MSDN removed. Customers must purchase MSDN.
• Three levels of MSDN
• MSDN Universal MSDN Enterprise MSDN
  Professional
• Each MSDN level will have two prices
• License Software Assurance for new customers
• Software Assurance current existing MSDN
  customers
• MSDN licenses media are concurrent with volume
  licensing

30
Work at Home

• Allows customer to mirror the software at home
  that is licensed for on the at work desktop.
• SKU not version-specific.
• Has no separate SA if there is SA on the at
  work desktop, then WAH mirrors any upgrades to
  that desktop.
• Product Licenses offered in Select EA 6.0
• Office Standard, Pro W2K TS CAL
• Product Licenses removed
• Project, Publisher, Front Page, Office Premium
  all Visio

31
Conclusions and Recommendations

• Get Educated and informed.
• Know what you need. Do a realistic
  cost/performance analysis of licensing
  requirements.
• Move quickly to address any software
  non-compliance issues.
• Construct a comprehensive business case
  justification.
• Set a reasonable timetable for your migration.

32
Conclusions and Recommendations (contd)

• Engage Microsoft, OEMs and resellers. Dont be
  shy about voicing complaints and asking
  questions.
• Comparative shop. Check out what rival vendors
  are offering get quotes from multiple vendors
  where possible.
• Ask for bigger discounts and concessions.
• Determine a business case justification.

33
Methodology

• Joint ITIC/Sunbelt Software, Inc. independent
  Web-based surveys of 1,500 corporations
  worldwide
• In-depth interviews with over 50 corporations

34
Questions?

• Laura DiDio
• Ldido_at_charter.net