Microsoft's Software Assurance licensing program has always stood out among software maintenance plans for the unique value proposition it offers customers. You pay nearly twice as much as other vendors charge for half of what other vendors give you, and that's if you're lucky. And, in spite of the grab bag of additional Software Assurance benefits Microsoft announced today, that's still pretty much the take-it-or-leave-it-deal Redmond is offering its corporate customers.
The value of Software Assurance is a subject that's been much on the minds of some of my readers in recent months. That's because it's now been three years since they had to decide whether to knuckle under when Microsoft eliminated upgrade pricing for volume license customers and buy into SA. And as their three-year commitment to SA has come up for renewal, many of those who did look back and realize they received diddily-squat while essentially paying Microsoft their original licensing fees all over again.
"We've paid 29 percent a year for three years, and for what?" wrote one reader. "Where's Longhorn? Where's Office 12? This has to be one of the biggest sucker jobs of all time, and they still have the gall to tell us we need to sign up again so as not to lose the 'value' of our investment. They can forget that. Who knows if they'll be any 'value' in anything they ship the next three years either."
Another reader had her own analysis of the value her company has received from SA. "Yes, we could have deployed Office 2003 to our users had we chosen, but that was such an interim release that it made no sense," she wrote. "This was a major investment on our part, and Microsoft simply hasn't delivered what it promised. We didn't pay all this money to get TechNotes or training vouchers. Next they'll be offering us discounts on Bill Gates coffee mugs or something."
Such resentment is fueled by SA's very high price tag of 25 to 33 percent per year of the original cost of the licenses. Maintenance programs in the software industry have traditionally run in the 15 to 20 percent range and included support as well as new versions of the product. Microsoft sells its support services separately, but since the introduction of SA it has periodically added additional inducements like training vouchers, hot fix support incidents, and home use rights. (But not, unless I missed it in this morning's announcement, discounts on Bill Gates coffee mugs.) Today's announcement of another forgettable assortment of side benefits is Microsoft's latest attempt to convince corporate customers that SA really is worth the exorbitant price. And it remains to be seen if the headline-grabbing story -- a version of Vista "exclusive" to SA customers -- turns out to be vaporware, scare tactic, and/or the death knell for Microsoft's Open and Select licensing programs.
While this or that extra benefit might turn out to have some real value for a particular customer, the real problem with SA has always been that it confronts customers with an enormous leap of faith. "It's just so expensive and there are so many variables," says Patrick Bohnenkamp, a founding partner of IT consultancy Corporate Contracts. "The sticker shock is always there. We go through a lot of analysis trying to show our clients the likelihood of what they'll get in that three-year period, but in the end there's a roll of the dice. There are changes to Microsoft's roadmap and changes internal to the customer. Do you know what your hardware upgrade cycle is going to be over the next six years? When Office 12 does ship, are you sure you're going to want to deploy it?"
If Microsoft wants to change customers' perception about the value of SA, it will have to get serious about providing some true flexibility in its licensing approach. "Three years ago we had clients who knew they weren't going to be interested in deploying Office 11 but were looking at Software Assurance for Office 12," Bohnenkamp recalls. "Office 12 was on Microsoft's roadmap at that point, but even then it looked like it would be borderline to come by the end of the term. And some customers just couldn't afford that kind of commitment without being sure they'd get the product. So, we asked, why not just guarantee that the customer will be entitled to Office 12 when it comes out? No way, Microsoft would not budge on that."
Will Microsoft's latest handful of extra trinkets change customer perception of the value of Software Assurance? No doubt some companies will feel compelled to throw good money after bad, but hopefully others have learned their lesson. The thing that Software Assurance has always assured is Microsoft revenue -- what the customer has gotten is risk, and lots of it. Expecting Microsoft to deliver value when they've already got your money is just not a very good bet.
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