Redmond Negotiator

A Lack of Progress

Scott shares his take on Microsoft's recent Software Assurance changes and the current state of asset management.

Like every other Microsoft watcher on the planet, I've been reviewing Microsoft's recent announcements regarding Software Assurance.

My reaction? A lot of ho-hum, but a couple of interesting changes:

1.Windows Vista Enterprise and Microsoft Windows Fundamentals for Legacy PCs 
Historically, Microsoft has been accused of using "terms creep" instead of regular price increases to effectively raise revenue per PC (kudos to Gartner for accurately predicting this many years ago).

Examples include changes in CAL rules, eliminating concurrent licensing, and now "Vista Enterprise" and "Windows Fundamentals" -- both of which sound like neat products and both of which could be sold as a separate license, but Microsoft has chosen to bundle them into Software Assurance.

The reason is obvious: Today, Windows desktop has possibly the least compelling argument for Software Assurance. After all, what are the odds that the next major release of Windows will be out in the next three years? Besides, studies show that most of corporate America is still a version or two behind Microsoft's latest. Plus, when you do finally replace your old PCs, the new operating system comes with the new hardware "free." So why should you buy SA for desktop Windows? Well, if you support a large number of users, you now have an answer.

And voila, Vista Enterprise is only available for SA customers. So basically, the "cost" of Vista Enterprise is $X per desktop (insert your price quote for SA Windows coverage).

Is it worth that to you? Are there other utilities on the market that do the same thing better or cheaper? Hard to say, since you probably haven't even seen the Vista product yet and won't till sometime in 2006. FUD wins again.

2. Increased Emphasis on Partner-Delivered Services as SA Benefits (Including Information Work Solution Services and Desktop Deployment Planning Services)
People often ask me "Why doesn't Microsoft simply release smaller upgrades on a more frequent basis?" My answer: So what if they did? Corporate IT departments simply can't keep up. Increased frequency of upgrades is not the answer, and Microsoft has realized that corporate customers simply can't (won't) implement new upgrades as fast as Microsoft would like to release them.

By getting partners to share the workload of helping customers implement Microsoft technology, it creates a win/win/win situation: Microsoft generates SA revenue, partners get service revenue (both from Microsoft, but also from the customer -- after all, you don't really expect your SA benefits to completely cover the cost of your Partner consulting engagement, do you?) and, finally, you the customer gets a discount on services that you might have to buy anyway, or would have to forgo because you couldn't afford them. That's not such a bad thing, is it? Well, that's up to you.  

The point is, for a relatively small investment per PC, Microsoft can help customers believe that they will be able to more rapidly move to new technologies. That should result in more customers signing up for SA. Is it worth it for you?

Overall, I believe these new SA benefits are designed to incrementally bring a few more customers into SA at the lowest hard-dollar cost to Microsoft. And in the future we'll continue to see new SA benefits being incrementally added (along with the occasional product that's only available via SA), as Microsoft sweetens the offer and lures more customers into the SA revenue stream.

Are We There Yet? Five More Years...
Last week I was in Los Angeles (Beverly Hills, actually, dear) for the Gartner IT and Software Asset Management Summit

The key conclusion I drew from this conference? That it's 10 years later and corporate IT still hasn't got a handle on asset management in general, and software license management in particular.  

Sure, industry forces like Sarbanes-Oxley and ITIL are helping push big organizations toward better IT asset management, but most IT shops still are a long way from an automated, consistently accurate way to track and manage even the simplest IT assets like PCs. Throw in something complicated, like servers or software, and most IT managers simply throw up their hands and revert to old fashioned spreadsheets and manual inventories. Software license management, for example, is a writhing can of worms.

In my view, it comes down to this question: How can organizations create an automated way to reconcile purchases and owned licenses with the data that's discovered?

This remains the biggest challenge facing the tool vendors. There are some interesting approaches that are in very early stages (not yet ready for prime-time) that I'll be watching. I'll update you in this space.

About the Author

Scott Braden has helped more than 600 companies negotiate Microsoft volume license deals. For a free case study, "How a Mid-size Company Saved over $870,000 on a $3 million Microsoft Enterprise Agreement, in Less Than Three Weeks," visit www.MicrosoftCaseStudy.com.

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