• Chart: Software Assurance Benefits
• Chart: Microsoft Volume Licensing Programs
• Sidebar: Software Assurance in Brief

To encourage more customers to purchase upgrade rights through its controversial Software Assurance (SA) program, Microsoft has added a long list of enhancements. They partially answer one of the chief complaints about the program—that Microsoft’s upgrades are more expensive than what competitors charge for both upgrades and technical support. However, customers who take the time to figure out the complex new program will find that their actual mileage varies, depending on factors such as their size, their current software support system, the number of desktops they have, and the type of volume licensing agreement they are in.

New Benefits

The enhancements that will be added to SA in Sept. 2003 fall into the following categories:

• Technical problem resolution by Microsoft personnel
• Access to technical education resources, such as documentation, for the customer’s employees and support staff
• Software tools that customers can use to manage and deploy their software
• Inexpensive access to software for home use for the customer’s employees.

Few of these benefits were developed from scratch for SA; most are existing Microsoft programs and resources that will be available for free to customers who purchase qualifying quantities of SA on their software.

(For a description of each benefit, see the table "Software Assurance Benefits"; for background on SA itself, see the sidebar "Software Assurance in Brief".)

Problem Resolution from Microsoft

As was widely expected after Microsoft executives mused about the need to include a support component with SA, the new SA benefits include problem resolution support from Microsoft’s Product Support Services.

Eligible customers can get Web-based support any time of day, and phone support during business hours, with the number of incidents and their Web or phone options based on the type of agreement they have, whether their server products are Standard or Enterprise Editions, and the number of servers they have purchased with SA.

Problem resolution is not available for desktops; relatively few companies purchase support for desktop products, and the cost of a desktop failure is generally low. Servers, however, are inherently shared systems whose failure can harm a company’s business and leave many employees idle until the problem is fixed.

Technical Education Resources

Other support benefits added to SA place the onus mostly on customers to come up with answers themselves, using resources that Microsoft provides for this purpose. Although many of them are not well-known, these resources are actually quite substantial—if nothing else, customers reviewing SA benefits may realize how much effort Microsoft has put into developing easy-to-use educational and support resources for its customers. Although SA customers get these resources for free, they are available without SA as well, and most of them are fairly inexpensive.

These support resources include the following:

The Microsoft eLearning Library (MELL). MELL provides computer-based training that can be loaded either on an individual’s desktop or on a server where any employee with the proper license can access it (costs are as low as US$10 a seat per year). The regular MELL product includes courseware, just-in-time learning (for instance, a user unable to create a table in Word can access MELL for a description, examples, and demonstrations), and the full text of dozens of Microsoft Press titles. However, the SA version does not include the MS Press titles.

TechNet. TechNet, originally a CD-subscription service which is now also available on the Web, is a knowledge base of technical and support information about Microsoft software, aimed primarily at help-desks and technical support personnel (in contrast to the analogous Microsoft Developers Network for developers). Most of its resources are available for free over the Web, but customers can subscribe to value-added features, including an online "concierge" (a chat session with a Microsoft support person who can help locate a particular TechNet article), managed newsgroups in which subscribers get rapid responses from Microsoft support personnel who monitor Microsoft-related Internet newsgroups, and evaluation and beta versions of new software and other tools.

Training vouchers. SA customers are eligible for free training vouchers that can be used for courses at a local Microsoft Certified Technical Education Center. These courses typically have a value of US$300 to US$400 a day and cover a wide range of desktop and server products and topics.

Software Tools

SA customers will also get access to the following software tools to help manage their systems:

Corporate Error Reporting (CER). CER is a behind-the-firewall add-on for Windows Error Reporting (WER) that creates a server location for logging detailed information about application or OS failures on a corporate network. Administrators can use this information to identify specific application failures, report them to Microsoft if they wish, and see whether Microsoft has posted a fix to the problem. (For more information about CER, see "Windows Error Reporting Tracks Down Bugs".)

Windows Pre-installation Edition (WinPE). Valuable to organizations that want to install system images over their networks onto bare PCs, WinPE is a bootable subset of Windows XP that contains enough network and device drivers (such as for a CD-ROM drive or network interface card) to boot a machine, partition and format disks, and then access additional files from the network or CD-ROM. WinPE offers a streamlined installation that gets a PC ready quickly for a more comprehensive installation.

Extended life-cycle hotfix support. Although Microsoft typically stops providing mainstream support, such as patches and service packs, for its software after five years, customers frequently want to run applications and OSs longer than that. To get custom hotfixes from Microsoft after mainstream support expires, customers have 90 days after mainstream support ends to ante up US$30,000, which gives them the right to ask Microsoft for a hotfix any time over the next two years; Microsoft then charges another US$30,000 per hotfix. Microsoft will now waive the US$30,000 ante for eligible SA customers, but not the additional US$30,000-per-hotfix charge.

Enterprise Source Licensing Program (ESLP). The ESLP offers access to the source code for Windows and other OS components to customers with at least 1,500 desktops. This program has been in place for more than two years—before SA was available—but it is now restricted to customers with Enterprise Agreements or SA.

Employee Benefits

Two programs added to SA provide benefits directly to employees of participating organizations.

The Home Use Program allows an employee to purchase Office System products, such as Office, Visio, or FrontPage, for home use at a nominal cost for media and handling (approximately US$30). This program is more flexible, less expensive, and involves less administrative overhead than Microsoft’s Work at Home license option, which is used to license employees for home use of applications that are also loaded on their work computer.

The Employee Purchase Program lets employees purchase a wide variety of Microsoft software, including games, productivity, and reference applications, at substantial discounts.

A Complex Offering

Not all customers with SA are eligible for all of the benefits listed previously. A large customer who buys all of its software licenses through volume licensing and always purchases SA is eligible for all of these benefits, but a customer who purchases a few copies of Office with SA through the Open Business program gains access to only the Home Use Program and MELL.

Calculating exactly what an organization is eligible for depends on several factors, including the following:

The type of volume licensing agreement. In general, volume licensees that purchase selectively and don’t always purchase SA will get substantially fewer benefits than customers who sign up for companywide licensing of Office, Windows, and server Client Access Licenses (CALs) on all their desktops and purchase SA on all those licenses. The former type of customer, for example, is not eligible for the Employee Purchase Program, WinPE, and Corporate Error Reporting.

(For a description of Microsoft’s volume licensing programs, see the sidebar "Microsoft Volume Licensing Programs". For information on which benefits are available in which volume licensing program, see the chart "Software Assurance Benefits".)

Desktop or server. SA benefits vary depending on whether the customer has purchased desktop products or server products. In most cases, the differences are logical. Desktop-only SA customers do not get problem resolution services, certain TechNet resources, and OS hotfixes, but they can get training vouchers, which are not offered for server purchases. (Vouchers obtained as a result of desktop SA enrollments can be used for server-related courses, however.)

Standard or Enterprise Edition. Many Microsoft servers come in Standard or Enterprise Editions, and this dictates the type of problem resolution SA customers can access. Standard Edition customers may use only Web-based support, while Enterprise Edition customers are eligible for phone support during business hours.

The number of licenses purchased. The number of licenses purchased often dictates the type of additional SA benefits gained. An Open Value customer—typically a smaller firm—that purchases five server licenses with SA, for example, gets a relatively stingy two Web-based support incidents over the next three years. On the other hand, a customer who purchases servers and server CALs with SA through a Select Agreement—which requires a higher purchase volume—is eligible for unlimited Web or business-hour phone support (depending on their server edition) for two to 16 authorized callers (depending on their purchase volume).

Calculating the Benefits

The large number of benefits and the many eligibility requirements make it impossible to offer any general advice as to whether the new benefits really change the bottom line for customers or make SA more compelling.

Some customers stand to benefit immediately and significantly. Microsoft’s regular problem resolution support is costly—though not out of line with others in the industry—and customers with a lot of servers and complex systems could find that the technical support offerings alone justify the additional cost of SA, with upgrade rights being a secondary benefit.

Training vouchers and wider use of TechNet and MELL can deepen an organization’s pool of knowledge about its own software, thus reducing its own support requirements and costs.

Other customers, however, will find the benefits modest. For instance, an Open Business customer who pays US$450 each for a few copies of Office, plus US$263 for two years of SA on each license, gets the right for employees to purchase inexpensive copies of Office for their home use, which may provide no direct benefit for the company, and a few seats of MELL, which the organization could purchase separately for about US$50 each. If the customer would not otherwise have purchased MELL, the new program offers them little new value.

Customers who outsource their support to a consulting firm or integrator may find that they have little use for the support benefits they get through SA, as they already pay someone else to provide these services.

A Hidden Cost

Customers also need to be aware that they will need to appoint a benefits administrator to properly administer these new benefits. For large organizations this could be a full-time position, not only because of the number of employees but also because the volume of their purchases entitles them to the full spectrum of new benefits.

The benefits administrator will be required to, among other things, learn the details of the benefits for which the organization is eligible and ensure that employees and support staff are aware of them; receive media from Microsoft (for TechNet and MELL, for example); download training vouchers; supply Microsoft with employee e-mail addresses so that Microsoft can notify employees of their benefits and supply them with user IDs or plan numbers necessary to access resources or attend courses; and keep track of the benefits that the organization has used.

Summing Up the Program

The impact of the new SA benefits on Microsoft’s customers and the company itself are also difficult to measure.

The new program offers something that the old one didn’t: customers are guaranteed to get something for their SA payment. In the old program, if Microsoft’s product teams took longer than two years to release an upgrade to a product covered by SA, some customers would have paid for SA in vain and would have been better off waiting for the new version and then paying full price for it.

However, the dizzying array of options and eligibility requirements for the new program will make it difficult for many organizations to take full advantage of it. Furthermore, most of the new SA benefits are available outside of an SA purchase for much less than the cost of SA. Customers who can’t justify the purchase of SA on the basis of upgrade rights alone may not find that the new benefits tip the scales in favor of an SA purchase.

Therefore, software upgrades remain the strongest reason to buy SA, and the program's fundamental unpredictability remains. At the time customers purchase upgrade licenses—in some cases years before the next upgrade is likely to be released—Microsoft cannot tell them when the upgrade will appear and whether it will contain any features that the customer would want.

The design of SA makes it difficult for Microsoft to address some of these problems, because any significant changes now would require mid-term modification of existing volume license agreements that include SA. As a result, Microsoft is unlikely to deal with the most fundamental problems for at least another year.

In the spring of 2004 the first round of SA contracts will begin to expire. If Microsoft finds that renewal rates are low and customers are not purchasing SA even with the enhancements, the company could redesign the program with a new set of rules and benefits that would come into place as agreements are renewed.

Resources

For a comprehensive review of Microsoft licensing programs and Software Assurance, see the June 2002 Research Report, "Understanding Microsoft Licensing."

More information about Microsoft licensing and Software Assurance is available at www.microsoft.com/licensing.

TechNet is at www.microsoft.com/technet.

MELL is described at www.microsoft.com/mspress/business.

The Employee Purchase Plan is described in "Employee Purchase Program Expanded" on page 27 of the Apr. 2003 Update.

Product life cycles and Microsoft’s support for products over their life cycle are described in "New Support Life-Cycle Policy" on page 23 of the Nov. 2002 Update.