News

Microsoft Unveils New Volume Licensing Plan

Program will let companies use a single ID to track their licensing contracts company wide

• By Kurt Mackie
• 07/02/2008

Microsoft has a new software volume licensing program in the works for large organizations, according to an announcement issued by the company today. The Microsoft Select Plus program, planned for later this year, will let companies use a single ID to track their licensing contracts company wide.

Availability of the Select Plus program is planned for sometime in the fall. It' an upgrade to Microsoft's current Select licensing program, but it costs the same if customers have an existing Select account.

The program may help large organizations qualify for volume discounts.

"There are some significant benefits," explained Chris Voce, an analyst at Forrester Research. "One is that it allows customers to aggregate the purchasing within disparate parts of their organization in order to leverage a greater overall number -- i.e., it translates to a deeper discounts in purchasing."

Licensees typically get discounts based on a point system associated with various Microsoft products, which are licensed in three categories: applications, systems and servers. As the licensing points go up, the organization becomes eligible for the next discount tier.

Microsoft also has a software maintenance program called Microsoft Software Assurance (SA), which is fixed to a three-year contract. SA lets organizations upgrade to the next software version and also provides support and training. With Microsoft Select Plus licensing in place, customers can sign up for the SA program and get a full 36 months of coverage.

Previously, the SA program gained infamy for truncating a licensees' coverage based on when they signed up for the program. For instance, if they signed up mid-year for SA, they would receive just 30 months of coverage instead of 36 months. There's also some guesswork associated with the SA program. If Microsoft slips a projected software upgrade schedule, SA participants are faced with having to buy another three years of SA coverage to take advantage of the upgrade.

Microsoft has the highest rates in the industry for its software maintenance program, according to Voce, but Microsoft also adds incentives to SA, such as online training. He estimated the SA cost for desktop products at 29 percent on top of the licensing fee per year. For those using Microsoft server products, the SA cost is 25 percent on top of the licensing fee per year.

Still, Microsoft's SA program brings more to the table than just a software upgrade.

"If you look at Oracle, Oracle charges 22 percent," said Duncan Jones, senior analyst at Forrester Research. "Most software companies charge around 20 percent, maybe some as low as 15 percent. But there is more in Microsoft's program than just the upgrade rights, so the comparison is a little difficult."

Organizations can qualify for Select Plus if they are already participating in another Microsoft volume licensing agreement or if they have an existing "Enterprise Agreement, Enterprise Subscription Agreement, Campus Agreement or School Agreement," according to the announcement. For new customers, it takes 500 points to participate in the program.

More details on Select Plus and other Microsoft licensing agreements can be found here.