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Microsoft Licensing Program 6.0

Learn about the latest trends and challenges in Microsoft licensing, including budget cuts, extended product life cycles, and disruptive migrations. Discover the benefits of the new Microsoft Licensing Program 6.0 and how to navigate the negotiation process.

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Microsoft Licensing Program 6.0

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  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 > 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. Checklist The First Crucial Step: Getting Ready to Negotiate • Know what’s 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. Checklist Preparing to Negotiate (cont’d) • 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. • Who’s 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 (cont’d) • 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 (cont’d) • 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 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 Select 5.0 vs. Select 6.0

  16. 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 Select 5.0 vs. Select 6.0 (cont’d)

  17. 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 Enterprise 5.0 vs. Enterprise 6.0

  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 (cont’d) • 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 (cont’d) • 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 (cont’d) • 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. Today Assures access to Microsoft product upgrades. Unique services or preferred pricing available to Members from: Microsoft’s Gold Certified Partners Microsoft’s Certified Technical Education Centers (CTECs) Future Planned Benefits Integrated services: Content & tools Customer-specific fixes Profile database of customer’s technical environment Community & dialogue Online software update service Software Assurance

  25. 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. Software Assurance (cont’d)

  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 (cont’d) • Open agreement (2 years), SA is co-terminus. • At renewal, customers can order licenses, SA, or L&SA; 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 Microsoft’s 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. Best Practice 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. Best Practice Conclusions and Recommendations (cont’d) • Engage Microsoft, OEMs and resellers. Don’t 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@charter.net

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