New Microsoft program to make volume licenses 'evergreen'

Summary:Microsoft took the wraps off a new licensing program -- Select Plus -- which company officials said is aimed at simplifying software and services purchases by large and mid-size businesses.

Microsoft took the wraps off a new licensing program -- Select Plus -- which company officials said is aimed at simplifying software and services purchases by large and mid-size businesses.

Customers cannot purchase Microsoft's new Select Plus license, announced July 1, until October 1; Microsoft is announcing it this week to give customers and partners time to digest it before the company's annual Worldwide Partner Conference in Houston next week, according to company brass. (July 1 also is the first day of Microsoft's fiscal 2009, which perhaps also plays into the announcement's timing.)

Select Plus ultimately will supersede Microsoft's current Select volume-license agreement, said company officials.

"We needed to be a little more flexible about how customers buy software" and services," said Chris Blackley, a director in Microsoft's Worldwide Licesing and Pricing group. Select Plus "is the next step in our evolving business of trying to simplify licensing. It's a multi-year evolution."

Select Plus does not make any changes to licensing at the product level -- so there are no changes being introduced around cores or virtualization, for example.

But one of the biggest changes in the new licensing program is that volume-licensing contracts under Select Plus are "evergreen," with no expiration date, according to Blackley. Microsoft's marketing slogan around this change: "Keep renewals at the IT budget level rather than the boardroom level.")

Update: Frances O'Brien, an analyst with Gartner, had this to say about the no-expiration-date part of Select Plus:

"Since the agreement is now evergreen, instead of having one renewal date; companies will have multiple renewal dates. Select is already administratively burdensome compared to an EA (Enterprise Agreement). Multiple renewal dates could exacerbate that. I have not seen an update of the new Microsoft Licensing Statement which will allow clients to get a view of their software entitlements across the board so I am not sure how much that will help clients manage the multiple renewal dates."

The new program also ends the current Microsoft policy of allowing customers to pro-rate Software Assurance (SA) contracts when purchased by Select volume licensees. Under Select Plus, SA annuity-licensing contracts will last for three full years for all products for which customers purchase them. (Software Assurance is Microsoft's controversial licensing plan that allows customers to pay for their licenses over a three-year period and obtain product updates for that period of time.-

"The 36-month SA, no matter when you buy it feature is nice," said Scott Braden, Senior Vice President of Microsoft Services for NET(net) Inc. "Customers and resellers have constant headaches figuring out the 1-2-3 year pro-rata pricing that's currently in place.  However the down side is that a customer will end up with a mess of expiration dates scattered across their environment, which will be another management challenge. "

Another change introduced with the new Select Plus Program involves forecasting. Under the current Select program, customers are required to forecast their software and service purchases for three years ahead. If they fail to meet the volumes they project, they are downleveled and required to pay more (as higher volume purchases reduce per copy/per service rates customers pay). With Select Plus, however, forecasting goes away and actual purchases are used to calculate license fees, Blackley said.

Under the new program, customers' multiple volume-licensing contracts with Microsoft will be consolidated from an administration and management standpoint.

"On first blush it looks like a net benefit for clients, simply by virtue of offering another choice and model for acquiring licenses and SA," said Braden. "However as always with Microsoft licensing, the devil is in the details."

Any customers out there who currently buy Microsoft products via Select? What do you think of these new changes?

Topics: Software, CXO, IT Employment, Microsoft

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Mary Jo Foley has covered the tech industry for 30 years for a variety of publications, including ZDNet, eWeek and Baseline. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008). She also is the cohost of the "Windows Weekly" podcast on the TWiT network. Got a tip? Se... Full Bio

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