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Forrester Examines Strategies for Microsoft Licensing

Will Microsoft try to move its business customers more toward paying Software Assurance licensing fees?

• By Kurt Mackie
• 05/31/2011

Microsoft may try to move its business customers more toward paying Software Assurance (SA) licensing fees in the near future because of forthcoming developments in mobility and cloud-based server access.

That's just one of the ideas floated in a new Forrester Research report, published this month.  Consider These Five Criteria When Choosing a Microsoft Volume Licensing Program offers IT management strategies when assessing the many volume licensing programs Microsoft offers.

The reason for the possible shift, Forrester says, is that "the twin revolutions of client mobility and cloud servers will kill device-based licensing, which is Microsoft's existing model." Microsoft earns about 30 percent of its revenue from its multiyear volume licensing agreements. These profitable agreements bring in the kind of regular revenue preferred by financial-market analysts that monitor Microsoft's performance, according to Forrester's report.

Microsoft's Software Assurance licensing option offers a software upgrade benefit which might be available every three years if Microsoft keeps to its general life-cycle product schedules on a timely basis. However, opting for SA is still a gamble for organizations. At the same time, SA represents a 29 percent premium for Microsoft for its Windows and Office products and a 25 percent premium for Microsoft for its Client Access Licenses, according to the report.

Most organizations typically acquire SA coverage automatically when they buy Enterprise Agreement licensing from Microsoft. SA also provides access to training resources and the Microsoft Desktop Optimization Pack.

(For a scathing interpretation of SA and how it may not serve Microsoft's customers well, see this commentary by Paul DeGroot of Pica Communications. DeGroot formerly served with the Directions on Microsoft consultancy, specializing in Microsoft licensing issues.)

According to Forrester's report, the five basic criteria to consider when purchasing Microsoft's volume licensing are price, upgrade cycles, budget, value, and SA benefits. Organizations that desire a better deal will need an alternative program in mind before negotiating with Microsoft, according to Forrester, or they'll have to be willing to forgo a purchase. Microsoft's Enterprise Agreement is typically the lowest priced option for customers with 250 PCs or more that also buy into Microsoft products across their organizations, the report explains.

Organizations planning virtual desktop infrastructure deployments to support mobile employees may find that a Microsoft Enterprise Agreement is the least expense option, according to Forrester. However, the report cautions that each employee-owned device used for business purposes may be counted by Microsoft in the overall licensing cost estimate.