Charities fight Microsoft, win discount

Negotiations on behalf of 17 charities with software giant Microsoft have created a cut-rate enterprise licence standard for non-profits at about 60 per cent of commercial fees.

Negotiations on behalf of 17 charities with software giant Microsoft have created a cut-rate enterprise licence standard for non-profits at about 60 per cent of commercial fees.

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Last year, the Redmond giant cracked down on non-profits using its cheap Academic Open licence, meant for schools, by introducing a new model called Charity Open, which contains a series of exclusive caveats.

Charities that generate funds through profitable works, such as aged care, are excluded from Charity Open, meaning that they face software licence fees over 200 per cent higher than under Academic Open.

Microsoft imposed transitional licence fees while many contemplated open-source deployments and the hefty integration they carry.

Not everyone was ready to accept the changes. The procurement arm of one of Australia's biggest non-profits, which did not wish to be identified, carried out some hard bargaining. A solid year of persistence saw a compromise reached that saw a 60 per cent discount created for excluded charities, which is about twice that of Academic Open.

The negotiating company had been representing some 17 predominantly faith-based charities such as the Salvation Army, Wesley Mission and Uniting Care. Many beneficiaries of the negotiations are members of the Not-for-Profit IT forum, which helps charities save money through collective procurement and knowledge sharing.

The objective of the negotiations was to secure a good rate for those that the procurement arm represents, and its sister faith-based organisations.

A key negotiator in the bargaining process said that, generally speaking, an affected charity will save some $600,000 from a $1 million deployment under the negotiated discount, but added that the rate may vary slightly.

"The hard work is done and we want others to benefit," he said. "It was a hard fight. Microsoft fought hard. We fought hard. But it is enormously better."

Staff reshuffles at Microsoft saw the company warm to the charities after what was described as 12 months of "no", and a deal finally struck earlier this year.

"It helped to be persistent, but it was a case of the wrong people out and the right in," the negotiator said.

Some non-profits bitten by the changes had earned even higher discounts, including Anglicare Tasmania, which the negotiator said secured a whopping 80 per cent price cut after the negotiators convinced Microsoft it did not qualify for exclusion.

Others that do not use revenue generation arms like aged care, including the Red Cross and the Spastic Centre, were transferred to the dirt-cheap Charity Open licence and avoided the fees.

Yet some, like Mission Australia, opted to buy full enterprise licences. Key negotiators are helping those charities that were stung with enterprise licences to get onto the discount rate.

The price squeeze is still affecting non-profits that were not part of the negotiation process. Rod Young, chief executive of the Aged Care Association Australia that represents about 98 per cent of Australia's 3000-odd aged care providers, said many are still battling under full enterprise licences.

"The prices are about double what they were paying and it is still hurting their income," Young said. "It takes away from their charitable services."

Battle won, war just begun

Many chief executives, even at cash-strapped charities, see Microsoft as a simple necessity and will approve software roll-outs worth a few thousand dollars.

Yet the mood changes and coffers close when the extra $150,000 to cover implementations are requested, according to Joe Perricone, IT manager at the Spastic Centre.

"It's a big problem for us, more than the cost of getting the software," he said.

Non-profits have called on Microsoft Australia to consider a US-style charity donation scheme where corporations looking to do social good can throw cash at the software giant, which then allocates money to pay third-party integrators to implement technology deployments.

"It is wonderful to get the discount pricing for software, but we don't have the internal resources for change," Perricone said.

"The impact of an upgrade to Office or Windows 7 is quite dramatic because we have more than 1000 employees."

Anglican Church chief information officer George Lymbers said non-profits should consider open-source alternatives and work on longer-term deployments. He foresaw the licensing dilemma well-ahead of the changes last year and had integrated a mix of Windows, Red Hat and Lotus Notes to balance the needs of users and limitations of cost.

"[The charities] were hit real hard, but they've done a fantastic job at negotiating and getting a good deal," Lymbers said.

IBM, Red Hat and Lotus Notes run alongside Microsoft products in what Lymbers now describes as a good balance that keeps Windows power users happy and cuts unnecessary spend on commercial software where open source can be used.

Microsoft declined to comment.

The Not For Profit forum is an informal panel of CIOs and IT managers that meets once a quarter to discuss infrastructure, procurement and professional pain. The next meeting will talk on storage and cloud: contact Joe Perricone at the Spastic Centre on 02 9479 7218 if you wish to attend.