Microsoft Streamlines Its Licensing Structure

New Orleans — July 14, 2009 — In today’s economic environment, customers are looking for ways to compete in a global marketplace through combined strategic investments in IT innovation and careful cost management. Microsoft Volume Licensing policies and programs keep pace with customer needs and pave the way for new computing models.

Joe Matz, corporate vice president, Worldwide Licensing and Pricing, Microsoft

Joe Matz, corporate vice president of Worldwide Licensing and Pricing, discusses how Microsoft is advancing the company’s licensing models and policies so that customers achieve greater choice and flexibility in how they purchase and deploy licensed software and services.

PressPass: What’s driving the licensing improvements at Microsoft?

Matz: Customer feedback. I regularly visit with organizations around the world to better understand their licensing needs. My team conducts global customer surveys that take the pulse of more than three million customers each year. Our licensing partners also play an invaluable role in giving us ongoing feedback about patterns in customer purchasing and satisfaction. Customers feel the pressure of the economic environment and look for ways to save money on the IT investments they have already made. They are looking to Microsoft to deliver software licensing that provides flexible and affordable purchasing solutions that align with how they buy. That is top of mind for us as we design Microsoft Volume Licensing programs.

PressPass: How is Microsoft responding? How will the new policies improve on the earlier policies?

Matz: Several years ago, Microsoft began simplifying licensing and making it even more valuable and relevant to our customers today. We’ve made a lot of strides by reducing the number of licensing programs and streamlining the agreements. But we need to continue to evolve and support the new wave of software and services innovation by providing predictable costs and simplified asset management.

To better reflect how customers purchase and save money, Microsoft will release packaged solutions on Oct. 1, 2009, like the new Microsoft Enrollment for Application Platform. This platform is a suite of products that includes Microsoft SQL Server database software, Microsoft BizTalk Server, Microsoft Office SharePoint Server, Microsoft Visual Studio development system and Microsoft Dynamics xRM business software.

Customers can purchase this offer through the Enterprise Agreement (EA) as an enrollment. By signing a Microsoft Enrollment for Application Platform, customers can choose between one of two flexible licensing models — one-year true-up or three-year true-up. For customers with a three-year true-up, we provide predictable costs with fixed payments for the term’s life. Customers may realize lower ongoing costs for new deployment with price savings of up to 40 percent.

PressPass: How else is the EA evolving to align with how customers buy?

Matz: For customers seeking a well-managed and security-enhanced core infrastructure, the Enrollment for Core Infrastructure is a new and easy way to license Windows Server, Microsoft System Center server management, and Microsoft Forefront Client Security together at a cost savings. When customers purchase server infrastructure through the Enrollment for Core Infrastructure, which will also be available Oct. 1, 2009, partners can be sure that the licenses for the solutions they sell and implement will be easy to manage, and will be future-proofed as the solutions grow over time. Previously, customers would have purchased our infrastructure technologies using a combination of licensing models including per server, per processor, per Operating System Environment and subscription. With the Enrollment for Core Infrastructure, this is all accomplished using a simple, per-processor basis.

PressPass: How have technologies like cloud computing affected your licensing philosophy and policies?

Matz: As new technology trends emerge, Microsoft must strike a balance between providing traditional licensing solutions and expanding into new ways to purchase and use software like subscription and online purchasing. We need to listen to our customers. We need to deal with changing market conditions, and we need to be consistent and predictable. If we do this, we can keep pace with the latest innovations and keep our commitment to customers around choice and flexibility.

PressPass: Can you give us an example?

Matz: Sure. We recently released new Online Services into the market like the Microsoft Business Productivity Online Suite. We are making it easy for customers that already do business with us by allowing them to simply add these services to their Enterprise Agreement or Campus and School Agreement. Or customers can directly subscribe online through the new Microsoft Online Subscription Program, which offers a 12-month term with flexible payment terms.

This week we also announced several changes to the Services Provider License Agreement (SPLA) that should help service providers and Web hosters be more agile and grow their businesses.

We are also introducing a new program called SPLA Essentials. This program is a simplified version of the SPLA that covers basic program rights with an easy online experience to enroll and manage software licenses. SPLA Essentials provides an opportunity for small to midsize hosters and Web developers to grow their business through a simplified SPLA offering.

We also made a change to the Product Use Rights for the Windows Server operating system in SPLA. Today, these offerings are differentiated based on the type of authentication that occurs. To reduce complexity and provide more value to partners, Microsoft now differentiates the offerings based on the type of service partners provide (outsourcing and non-outsourcing). This helps support more Web scenarios at a lower price point and makes it easier to understand which offering to license in a dynamic marketplace.

Finally, SPLA partners can now use prior versions of Microsoft licensed software, providing more flexibility and bringing consistency and alignment with other Volume Licensing programs. This allows a partner to transition their solution to a hosted business model more easily, using the version of the Microsoft technology that best meets their business needs.

PressPass: What other emerging technologies are driving licensing changes?

Matz: Virtualization is clearly impacting how we license software. Last year, we updated our software licensing policies for 41 server applications, eliminating the 90-day reassignment rule. Now, as a customer’s virtualized workload moves from server to server, the license can move with the workload. This change reduces the number of licenses a customer needs in a virtualized environment.

PressPass: What trends do you see in how customers will buy software licensing in the future?

Matz: How customers license software will gradually shift based on how they are using software and services. Ultimately, we will offer one unified purchasing experience so that customers can purchase and use software licenses when they need them, with minimal to no barriers to purchasing and deployment. What this means is that customers can purchase through one agreement and manage their licenses through one platform, instead of managing multiple agreements today.

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