Microsoft Simplifies Its Volume Licensing Programs

Microsoft is trying to simplify its complex volume licensing programs and the customer agreements that fall under them.

As part of that initiative, the Redmond, Wash., software maker has slashed the number of price points and product SKUs in the different programs, and updated the language and the content flow in each agreement to give consistency across all volume licensing contracts.

Navigation has also been improved, with a new table of contents and summary titles, and a new signature form is being introduced for a single signature event with the customer, said Stacie Sloane, Microsofts director of marketing and communications for worldwide licensing and pricing.

Microsoft has also reduced the length of the agreements under its Enterprise, Select License and Open License programs by as much as half, depending on the program.

As an example, Enterprise Agreements have been reduced from 13 pages to 12 pages, or from eight pages to four pages, depending on the specific situation, Sloane said.

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The changes are important, as volume licenses are used by Microsofts largest customers to buy, manage and administer software.

The changes are a solid step in the right direction and will make contract administrators, purchasing agents and IT executives happier, according to Rob Enderle, an analyst with The Enderle Group. However, he added, the long-term problem for Microsoft is that IT buyers are questioning the value of what they are purchasing, and these licensing moves do not address that.

"The real problem behind volume licensing is the customer belief that they are overpaying for things they do not need. To address this, Microsoft needs to increase the perception of value for the solutions that fall under these licenses," he said.

While these changes will reduce the overall aggravation customers have had with volume licensing, they do not address the dissatisfaction that is driving the Microsoft customer base to seek alternatives, Enderle said.

Earlier this year, however, Kevin Turner, Microsofts chief operating officer, boasted about increases in Windows volume licensing.

This was the "best rate weve seen in many, many years," he said of annuity licensing contracts, acknowledging that Windows Vista Enterprise and the Microsoft Desktop Optimization Pack were major drivers of this.

But Microsofts oft-delayed product road map may have created a perfect storm against software upgrade contract renewals.

According to Forrester Research analyst Julie Giera, an unprecedented number of Microsoft customers are facing licensing renewal decisions this year, and many of those with Software Assurance are questioning the offerings future value.

"The economics of buying Software Assurance, at 29 percent of the licensing fee for desktops for the next three years without any guarantee that theyll recoup their investment, is making holding off buying new licenses until they are actually needed an attractive option," she said.

Lengthening release schedules, uncertain product road maps, and the complexity, cost and time associated with installing a new release make the value of this program even more uncertain, Giera said.

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Among the latest changes is a new signature form that the customer has to sign, which replaces the signature block on individual documents and consolidates the signature of all documents associated with a customers program.

Customers can now "use one signature form for multiple enrollments on a single program type, and a single customer representative can sign all enrollments," Sloane said.

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