Microsoft volume licensing changes coming, but not in FY 2011

Microsoft knows its volume-licensing is going to need an overhaul if and when its customers and partners really start going gung-ho for for the cloud. But new policies and programs are still more than a year away.
Written by Mary Jo Foley, Senior Contributing Editor

Microsoft knows its volume-licensing is going to need an overhaul if and when its customers and partners really start going gung-ho for for the cloud.

In the company's fiscal 2011 (which runs from July 1, 2010, to June 30, 2011), Microsoft will be doing the ground work for an overhaul of its volume-licensing infrastructure and policies. But don't expect any actual new programs during that period, according to Joe Matz, the Corporate Vice President of Worldwide Licensing and Pricing.

Matz spoke at a session at Microsoft's Worldwide Partner Conference on July 13 about the company's Large Account Reseller (LAR) program.

"A lot is changing in volume licensing," Matz told the overflow crowd at yesterday's session. "We're going big with online services in volume licensing. We need to adapt volume licensing for online."

Microsoft is working on its back-end operations, systems and policies to enable this shift, he said. In addition to making licenses simpler and easier to manage, Microsoft knows it also needs to enable greater licensing flexibility, he said.

Matz said his team's second biggest priority in this fiscal year is to continue to modernize licensing.

"Licensing is always going to be complex," Matz said, "but it needs to be simpler, more manageable, scalable and agile."

The team is working on ways to allow partners and customers to attach new cloud technologies to existing licenses, rather than requiring customers to buy and manage new licenses every time they add a new technology to their existing Microsoft mix, he said. Microsoft also needs to make it easier for customers to transition from on-premises software to services on the licensing front.

He said to expect Microsoft to do more to integrate Microsoft financing with licensing in the coming year. Matz said more than 7,000 Microsoft customers in 15 countries spend billions per year with Microsoft to finance their technology purchases.

"Credit prices last year had an impact on us," he admitted. "But we now have our model back online and getting back to growth in this space is a priority."

Matz didn't mention the meltdown with Microsoft’s Volume Licensing Service Center (VLSC) earlier this year. Microsoft ended up having to roll out a “version 3.5″ of the site, incorporating new fixes and updates, because many customers and partners were unable for months to access their volume software licenses and products.

In addition to discussing volume-licensing in the LAR session, Microsoft officials also shared a few interesting statistics about the company's partner hierarchy.

Microsoft has 22,000 "major accounts," 80 percent of which are covered by Enterprise Agreement (EA) licenses with the company. The company has another 92,000 "corporate accounts" that it targets, only 19 percent of which are currently covered by an EA. (This is the group of customers that are still running lots of Windows XP, older versions of Office and no SQL Server, company execs acknowledged.) There are 5.3 million small/midsize business (SMB) Microsoft accounts customers out there, as well. (I didn't catch how many the company is claiming are Microsoft accounts.)

Across all categories, Microsoft still is seeing a lot of CIOs fear the unknown with the cloud, officials acknowledged, meaning there will still be "years ahead" of selling on-premises software for Microsoft's partners.

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