Software licensing woes still dog Microsoft

Five years after Microsoft sparked a firestorm with new volume licensing and upgrade programs, customers are still struggling with the system many say is delivering less than promised.

The programs have not adequately addressed the complexities of licensing, stemmed cost increases or provided a simplified upgrade path, customers say. Microsoft continues to tweak the program last week when it rolled out another handful of features for its Software Assurance (SA) maintenance and upgrade program.

The company has made things even more complicated by introducing a dizzying array of licensing combinations and options for Office 2007 and Windows Vista products. Some of those offerings are available only to volume licensing customers and some don't come with published price quotes. In some, products and feature sets are available only to SA customers.

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Five years after Microsoft sparked a firestorm with new volume licensing and upgrade programs, customers are still struggling with the system many say is delivering less than promised.

The programs have not adequately addressed the complexities of licensing, stemmed cost increases or provided a simplified upgrade path, customers say. Microsoft continues to tweak the program last week when it rolled out another handful of features for its Software Assurance (SA) maintenance and upgrade program.

The company has made things even more complicated by introducing a dizzying array of licensing combinations and options for Office 2007 and Windows Vista products. Some of those offerings are available only to volume licensing customers and some don't come with published price quotes. In some, products and feature sets are available only to SA customers.

"Overall, licensing for everything in the Microsoft world is not getting any easier," says George Defenbaugh, manager of global IT infrastructure projects for petroleum company Amerada Hess in New York. "With SA, the gamble now is on a product-by-product basis, and you have to be cognizant of product life cycles, release dates and upgrades to new versions."

Absent that, he says, users open themselves up to making major financial mistakes that can run into millions of dollars.

"I am the guy who is cursed with the responsibility of becoming an expert on Microsoft licensing," he says.

Amerada Hess has found carrying SA on its client access licenses (CAL) provides flexibility in upgrading software, but SA for servers is purchased only if the product's next version is imminent.

Defenbaugh says SA's complexity is born out of more product choices, rollout scenarios and timing issues, all factors that have not let him realize SA's promises of reduced licensing costs.

In 2001, Microsoft said 80% of customers would see costs decrease or remain unchanged with SA, a claim users disputed with such an unprecedented uproar that the program's start was delayed nearly a year.

By 2004 only 40% of customers said their costs had decreased or were unchanged, according to The Yankee Group. By 2005, that figure rose to 62%.

Laura DiDio, the Yankee analyst who conducted the surveys, says the 2005 jump is part of the evidence Microsoft has made a 180-degree turn from where it was four years ago when CEO Steve Ballmer admitted the licensing program was complex, created economic hardships and was in need of additional benefits.

"Microsoft is becoming more proactive and customer-centric," DiDio says. She says Microsoft has crafted SA to help users from inception and planning all the way through to transition and migration. "That is all good stuff. They have turned a boondoggle into a boon."

Since 2003 Microsoft has added nearly 20 benefits to SA, including training vouchers, deployment guidelines, home-use rights, disaster recovery options and technical support. Last week, Microsoft expanded SA's training voucher program, added deployment planning services, workshops, 24/7 phone support and conversion of SA support to Premier Support for customers with those contracts.