commentary In May 2001, Microsoft overhauled its volume licensing programs for enterprises and introduced a software maintenance plan called Software Assurance.
The idea was simple: through Software Assurance, Microsoft would earn more money at a faster rate. Customers would have to pay 29 percent of the licence cost annually per user. Previously, every few years, users could purchase version upgrades at 50 percent to 70 percent off the total cost.
It was soon clear that a combination of bad communications and second-rate marketing had let the company down. Microsoft did such a shoddy job in articulating the changes to its licensing regime that the rollout of Software Assurance was delayed for a year.
The prime gripe by customers was that the eventual cost of Microsoft's software was too high and didn't match the returns.
Over the years, however, Microsoft says its learnt a great deal from listening to customers.
The Software Assurance of today is loaded with bells and whistles, with sweeteners such as free training and support added to lure more users and to pacify existing ones.
Staying true to the saying "when it rains, it pours", Microsoft recently announced more goodies for volume licensing subscribers. Apart from two online services, MapPoint Web Services and Microsoft Office Live Meeting, Software Assurance licensees would enjoy disaster recovery aid.
From June 1, 2004, Microsoft will provide volume licensing customers with the ability to install a copy of their software on a "cold" server that is dedicated as a back-up for disaster recovery scenarios," Thomas Kablau, licensing marketing manager at Microsoft Australia, told ZDNet Australia .
Kablau said no formal activation is required. "If the production server is licensed, enrolled in Software Assurance, and has all required CALs (client access licences) also enrolled in Software Assurance, the customer is eligible for the cold backup disaster recovery benefit.
"Customers can install software for their cold backups using the volume licensing media from their Microsoft Volume Licensing kits," he added.
He said Microsoft, in Australia and globally, has learnt from customers, industry experts and field partners that disaster recovery is a benefit of great value.
"We have listened to our customers and they have told us that disaster recovery is extremely important to them. Microsoft has responded by providing a formalised program that is simple in order to meet customers' business needs," Kablau said.
Isn't this the epitome of customer service? Software Assurance users should count their blessings that Microsoft is finally listening to them.
But wait. Does this mean that prior to June 1, 2004, these users contravened their agreements by having Microsoft software on their back-up machines?
Technically, this is the case and the reason why some analysts were taken aback by Microsoft's move.
"I think customers will be annoyed and frustrated," said Meta Group senior analyst Michael Warrilow. He doesn't see the disaster recovery element as a benefit, but a simple expectation for enterprise customers. "Anything less is untrustworthy ... interestingly, one of the pillars of Microsoft's Trustworthy Computing initiative is business integrity," Warrilow told ZDNet Australia .
Brian Prentice, also a senior analyst at Meta Group, pointed out that Microsoft has had an interesting history of "finely-tuned licensing rules." The other issue, Prentice said, is the software giant's unearned revenue or monies earned from long-term contracts -- which has been on the decline.
Microsoft registered US$8.95 billion in unearned revenue as at June 30, 2003, but this dipped to US$7.53 billion at March 31, 2004.
Is Microsoft's latest move an attempt to plug a gaping hole in unearned revenue by locking customers deeper into its Software Assurance program, or a genuine move to make up for an earlier oversight?
Either way, users will have to question the real value of Software Assurance and not operate at the behest of Microsoft.