Microsoft boosts benefits for Software Assurance agreement holders

The new benefits will be offered beginning in September

Microsoft Corp. yesterday unveiled a new package of benefits that it plans to start offering in September to customers that purchased its controversial Software Assurance agreement to gain upgrade rights to various products.

The long-pledged move to "add value" to Software Assurance is being seen as an effort to begin addressing the firestorm of complaints and concerns that have been raised by customers since the program's introduction in May 2001 (see story).

Customers with Software Assurance pay an annual fee of 25% of the volume license fee for server products and 29% for desktop products in order to gain upgrade rights to products. Until now, that's been the chief payoff they have gotten. Some corporate users have complained that the percentage fees are out of line in comparison with other vendors and suggested that Microsoft should consider packaging some level of support, particularly since several other key vendors provide support as part of their maintenance plans.

"I think there was a feeling [that Microsoft] either needed to do more or charge less," said one customer, who asked not to be identified.

Bill Landefeld, vice president of worldwide licensing and pricing at Microsoft, said the benefits being added to Software Assurance are the result of feedback the company collected from more than 2,000 customers during the past year.

Benefits that will be extended to any company holding a Software Assurance agreement for desktop products include employee home-use rights for Microsoft Office and Office System and free access to the Microsoft Enterprise Learning Library (MELL) for online, self-paced training of end users. Without Software Assurance, the average price for MELL would be $25 per user, according to Microsoft.

Software Assurance holders with Select and Open Value license agreements for desktop software will also get vouchers that can be redeemed for classroom training at certified technical education centers operated by Microsoft partners.

For server products, any company holding a Software Assurance agreement will gain free access to the MELL training modules as well as Microsoft's TechNet online services, which typically cost about $1,000 per license, according to Rebecca LaBrunerie, product manager of worldwide licensing and pricing at Microsoft.

Companies holding Select and Open Value agreements for the enterprise edition of server products protected under Software Assurance will also get access to business-hour telephone and Web support. Those using the standard edition are eligible only for Web support, LaBrunerie said.

Other benefits being added to Software Assurance include a corporate error-reporting tool that allows IT managers to collect problem reports via the LAN and decide which ones to send on to Microsoft and a Windows pre-installation re-imaging tool that can help with large deployments.

One Software Assurance customer who also holds a Premier Support contract with Microsoft said he hopes the new support options will enable his company to reduce the number of Premier Support hours it now buys from Microsoft.

Joe Brunner, MIS manager at Sleepeck Printing Co. in Bellwood, Ill., expects the self-paced online training for end users to be particularly helpful, since the company's IT staff is small. "This is a tool I can give them that doesn't take away from my time," he said. "It's available when they need it."

Brunner said he had hoped there would be more enhancements to Software Assurance when his company signed up last July. Although he said that he "could always think of more things" that Microsoft could do, he also believes that "what they're offering now is much more directly usable and meaningful to us."

Alvin Park, an analyst at Stamford, Conn.-based Gartner Inc., said companies will need to take stock of each of the new benefits being built into Software Assurance and put a price tag on them to determine if Software Assurance makes sense. Some companies may find the new options helpful; others may not see much value in them, he said.

"I don't think there's going to be an answer of, 'Oh yeah, it's obvious that Microsoft has now added significant value to Software Assurance,' that everyone should go out and buy it," he said. "The one-size-fits-all, that's just not going to happen."

Dwight Davis, an analyst at Boston-based Summit Strategies Inc., said Microsoft was forced to look beyond just software to enhance the Software Assurance program because of the lengthy time between major releases, particularly for the operating system and some server software products. He said customers have been paying for Software Assurance on "blind faith," without any assurances about what they will get during the contract in terms of upgrades and releases.

"Microsoft should think long and hard about its release cycle for its software and try and build a little more predictability into its software update cycle," Davis said. "If people knew they would get releases in the next two to three years, they would probably enter into those contracts more easily and with a lot less trepidation."

Al Gillen, an analyst at IDC in Framingham, Mass., said the new benefits package for Software Assurance will not only be good for customers, but will also enhance Microsoft's ability to sell the program and get existing customers to stay with it. He noted that many Software Assurance customers will be up for renewal in the next 12 to 18 months.

Copyright © 2003 IDG Communications, Inc.

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