Microsoft Licensing Program 6.0

Laura DiDioPrincipalInformation Technology Intelligence Corp. (ITIC)

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.

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.

Are the Funds Available for Microsoft Licensing 6.0 Program?

Yes

No

Not yet determined

12%

42%

36%

Source: ITIC/Sunbelt Software, Inc.

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.

Has Your Business Done a Full Analysis of the cost to upgrade to Microsoft Licensing Program 6.0?

Yes

No

37%

63%

Source: ITIC/Sunbelt Software, Inc.

If yes, what does your business estimate that it will cost to upgrade to the new Microsoft Licensing 6.0 Program?

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%

1%

7%

14%

21%

22%

14%

11%

8%

Source: ITIC/Sunbelt Software, Inc.

Has Your Business Decided Has Your Business Decided What it Will Do?What it Will Do?

37%

19%

7%

38%

0%5%

10%15%20%25%30%35%40%

Do Nothing Purchase a UA

license before

Oct 1 or commit

to a upgrade

before Feb 28

Upgrade to EA We may switch

from Microsoft

products to rival

software

packages

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. 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? Checklist

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.

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).

Licensing Changes Under 6.0A 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

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

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

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

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

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).

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).

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.

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.

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.

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.

Software Assurance

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 (cont’d)

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.

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.

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.

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.

Visual Tools, MSDN & SAUpgrade 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

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

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.

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.

Best Practice

Methodology

Joint ITIC/Sunbelt Software, Inc. independent

Web-based surveys of 1,500+ corporations

worldwide

In-depth interviews with over 50 corporations

Questions?

Laura DiDioLdido@charter.net