Microsoft scrambles to simplify its licensing

The effort to streamline licensing is incomplete

Microsoft is pledging dramatic improvements to its notoriously complex enterprise licensing, but experts are skeptical about the potential impact of the plan.

Microsoft's licensing policies and procedures are devilishly convoluted, a situation that has worsened in recent years with the popularity of virtualization, cloud computing, mobile devices and the consumerization of IT.

By fracturing the conventional software hosting, access and delivery structures, these four trends have muddied the waters of software use rights for most vendors and their customers. Microsoft in particular has been very affected, due to its huge and varied roster of products, coupled with a licensing scheme that lacks uniformity and consistency.

See related story: A peek into the licensing abyss, courtesy of Microsoft.

Recognizing that confusing licensing is bad for its business, for its partners and for its customers, Microsoft last November announced in a blog post that help was on the way.

"We are taking careful, deliberate steps to introduce a next-generation approach to commercial licensing with a new, more flexible and simplified purchasing experience across all solutions," wrote Richard Smith, general manager of Microsoft's global licensing and pricing division.

At the center of the effort is the new Microsoft Products and Services Agreement (MPSA), which the company describes as the "next generation" and "end-to-end transformation" of Volume Licensing, the long-standing program designed to let businesses buy products and services in bulk and get discounts and benefits not available to retail customers.

However, some experts aren't convinced that the MPSA will generate ground-shaking changes. "I don't believe that this is a 'transformation' as Richard describes it," said Duncan Jones, a Forrester Research analyst. "It is a good simplification, but not a huge change."

What is the MPSA?

The MPSA, launched in limited scope in December after a pilot program, has three main components: a revamped contractual structure, a reworked buying platform and new licensing-management systems and tools. It's designed to give customers a streamlined licensing process for buying products and services, more purchasing flexibility and simplified asset administration.

Microsoft said it will use the MPSA as the "foundation" for the future of its Volume Licensing program, which currently has six plan options: three for organizations with up to 250 computers and three for organizations with more than 250 computers.

For the time being, the MPSA will co-exist with the Volume Licensing plans, but it will eventually replace at least one of them: Select Plus, which is for midsize and large organizations that want to license software in bulk for one or more specific business units -- as opposed to their entire user base -- while getting volume discounts as a single organization.

According to Microsoft, the MPSA offers a broad range of benefits over Select Plus, such as the fact that the contract is almost 30 pages shorter while at the same time being broader in scope in a number of ways, thus encompassing more account types and scenarios.

A key advantage is that it can be used to consolidate in a single contract the purchases of both traditional on-premises software and cloud-hosted products, and later even professional services. In Select Plus, that requires the signing of three separate contracts: the "foundation" Select Plus agreement, the Business and Services Agreement and the Online Services Agreement. The MPSA consolidates "all applicable terms and conditions" from those three contracts.

"Mixing and matching cloud and on-premises products in the same agreement, and allowing customers to migrate back and forth, is something every software company needs to work on from a licensing perspective," IDC analyst Amy Konary said.

However, it's not clear how the MPSA will impact the other two Volume Licensing plans for larger organizations: Enterprise Agreement (EA) and Enterprise Subscription Agreement (ESA). Both are for companies that want to license Microsoft products in bulk across their entire organization, not in some select business units.

Microsoft declined to be interviewed for this article. A company spokeswoman said via email that the MPSA is "suitable for mid-sized businesses with at least 250 employees or devices" and that the company is "working closely" with Enterprise Agreement customers "to understand their evolving needs," and "will continue to enhance the EA over time."

Questions about Microsoft's 'next generation' of Volume Licensing

So a number of things about the MPSA and about Microsoft's grand plan to simplify licensing aren't yet clear. For starters, the MPSA is still in limited availability and it isn't fully implemented. Ironically, this transitional period could add to Microsoft licensing complexity and confusion.

In December, Microsoft launched the MPSA for medium-size companies in the U.S., Germany, Canada and the U.K. In a follow-up blog post in March, Microsoft's Smith reported that early adopters "are finding value in consolidating multiple agreements into one MPSA" and that Microsoft would be expanding the availability of the new agreement to six new countries: France, Poland, the Netherlands, Denmark, Italy and Switzerland.

Microsoft licensing chart
A comparison of Microsoft's current Select Plus licensing plan and its replacement, the Microsoft Products and Services Agreement.
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