End Users See Benefits in New BackOffice Licensing Model

In early June, Microsoft Corp. announced a new per-processor licensing plan for most of its BackOffice family of products, with Exchange 2000 excepted. At the time, the software giant indicated that its licensing restructuring would benefit customers, especially those in the application service provider (ASP) and Internet commerce spaces. But what do Microsoft’s enterprise customers have to say?

Microsoft (www.microsoft.com) had charged customers on a per-user basis, and also charged additional fees for "Internet connectors" associated with many of its BackOffice applications.

In the Internet age, however, per-user licensing models don’t make financial sense. An e-commerce data-center, for example, could serve hundreds, thousands, or hundreds of thousands of users per day. Obviously, obtaining licenses for all these users -- many of them itinerant Web surfers checking out a site for the first time -- would be ludicrous.

Microsoft’s new per-processor licensing model -- under the terms of which an IT organization must pay for the number of processors that it uses to serve aggregate visitor traffic -- means IT organizations are not barred from deploying BackOffice applications in e-commerce implementations. Benjamin Zachary, senior network engineer at systems integrator Advanced PC Solutions (www.advancedpcsolutions.com), believes this is a good thing.

"For several of our e-commerce and B2B [business-to-business] companies, which often have several domains and mail accounts for people all around the country, we often look at Unix-based solutions because of [Microsoft’s] per-user license fee," he explains. "The per-processor idea is most likely a better solution, because it better determines the dependency of the software and its needs."

While a per-processor licensing policy makes a lot of financial sense, some IT managers indicate that it also represents a welcomed, streamlined change from Microsoft’s befuddling licensing policies of old.

"Per-processor licensing used to bother me, but since I have seen how confusing the old licensing scheme was for Microsoft and its customers, [especially] with the Internet age upon us, I concede that this gives them the appropriate flexibility in terms of being able to price their product," says Andrew Baker, a brokerage information systems coordinator at Lewco Securities Corp. (www.schroders.com), a unit of Schroder Group.

Under the new per-processor licensing model, an IT organization acquires a processor license for each processor running its server software. This processor license supports an unlimited number of users -- whether they’re connecting from a corporate LAN or from the Internet. The new system does away with the cumbersome server licenses, client access licenses, or Internet connector licenses of old.

The Redmond software giant has arrived late to the per-processor pricing party, however. Competitors such as IBM Corp. (www.ibm.com) and Oracle Corp. (www.oracle.com) introduced per-processor licensing last year. But as Lewco Securities’ Baker points out, the revised licensing restructuring is better late than never.

"Basically, you're paying for how many clients you intend to support, using a criteria that's easily determined and met, resulting in a significant reduction of administrative burden for all," he says. "The midrange platforms all do this, and since this is where Microsoft is trying to go, they have to present a familiar face to licensing for this level of customer."