• Chart: Calculating SA Benefits
• Chart: Qualifying for Desktop Deployment Planning Services

A new round of changes to Software Assurance (SA), Microsoft's software maintenance offering, came into effect in Mar. 2006, featuring improvements in product support and additional training and new deployment benefits. Although the new benefits may not tip the balance in favor of SA for customers who don't currently have it, they will be welcomed by large customers who have Enterprise Agreements (EAs); these customers are entitled to SA benefits automatically, and the new offerings could make EA renewals more attractive, particularly since they can reduce the cost of the Premier Support agreements that these customers typically have.

SA Improved over Time

Originally, the only significant benefits offered by SA were upgrade rights. When Microsoft introduced the program in 2001, it cancelled most other forms of upgrade for volume licensing customers, which generally increased the cost of upgrades. For example, version upgrades typically cost 50% to 70% of a new license, and customers always got an upgrade when they purchased one. With SA, customers pay 25% a year for server licenses and 29% a year for desktop licenses, or 75% and 87%, respectively, over a typical three-year contract, and they are not guaranteed an upgrade—if no new version of the product is released during the SA contract period, the customer is not entitled to an upgrade or a refund.

The program had relatively little impact on many large customers, because SA was already included in the company's EAs, which, for an annual fee, license all desktops at a company for the latest versions of Windows, Office, and Client Access Licenses (CALs) for commonly used servers, such as Windows Server and Exchange. However, the SA program has had a significant impact on the Open and Select programs, raising the cost of upgrades for those customers.

Nevertheless, many customers bought SA when it was first introduced. That's because during the transition from old to new licensing programs, SA was the last chance for many customers to purchase a discounted upgrade on older software (through a license upgrade program called Upgrade Advantage, which was rolled into SA after two years). Today, customers can no longer purchase SA without first purchasing a new license, and Microsoft's upgrade revenue from SA in Select and Open has dropped significantly, as seen in a steady decline in unearned revenue in the two years after the transition period ended. In an effort to make SA more attractive, Microsoft has periodically rolled out new benefits for SA customers.

In Sept. 2003, the company added a large bundle of support benefits, discounts for employees' home use of Microsoft software, training vouchers, TechNet subscriptions, and some software that was only available for customers who purchased SA. Although the program ensured that SA purchasers got something for their money even if they didn't get an upgrade, the benefits were complex to manage and administer. (Some customers hired a special benefits administrator just to ensure that they maximized their SA entitlements.)

Minor upgrades followed in the spring of 2004 (the right for SA customers to run a backup server for disaster recovery purposes without acquiring an additional license) and the summer of 2005 (lower-cost access to hotfix support for software that has left the Mainstream support phase). Finally, in Sept. 2005 Microsoft announced a further round of improvements that would be implemented in Mar. 2006.

This round of benefits refines some existing benefits, such as technical support and training, and adds some new benefits, notably consulting services provided by Microsoft partners.

Technical Support Easier

The most significant changes simplify the technical support benefits for customers who purchased servers with SA. The benefits delivered in 2003 could be applied only to the actual server whose license was covered by SA. The hours and type of support (Web or phone) available depended on whether the server product was a standard or enterprise edition, and a limited number of people could call in support incidents. The rules were complex and often made it impossible to take full advantage of the technical support benefits.

The latest revisions make the technical support benefits under SA far more accessible. Microsoft no longer bases eligibility for phone support on the server that is licensed, but on the customer's SA spending. For each US$20,000 in spending on SA for servers, or each US$200,000 in spending on SA for desktops, customers get one technical support phone incident. (One complimentary incident is also offered for the first server for which SA is purchased.) Among other changes, this means that customers need no longer purchase SA on all of a server's CALs, which are not software and do not require technical support, to get phone support on that server, a previous requirement that significantly increased the cost of technical support under SA. While customers may still want to purchase SA on CALs for other reasons (e.g., to upgrade CALs to a later server version), they are not required to do so to get technical support.

(For a chart showing examples of the benefits available at different levels of SA spending, see the sidebar "Calculating SA Benefits".)

Another significant change is the right to convert SA phone support incidents into Premier Support incidents or support hours. Premier Support offers additional benefits, such as faster response times, managed support (Premier Support accounts have a Technical Account Manager, who can escalate an incident or order an onsite visit from a support engineer), and advisory services that an organization can use in IT planning.

The net effect of the change is that customers with both SA and Premier Support will be much more likely to use all of the support benefits they get through SA. Incidents or hours that are not required for technical support can be used for advisory services, training, workshops, or other purposes. In addition, organizations can reduce what they spend on Premier Support by purchasing fewer incidents or support hours or they can convert unused SA incidents and hours into additional Premier Support.

Microsoft has also extended Web-based support for Open Value (a volume licensing program for smaller customers; it requires the purchase of SA with all licenses). Previously these customers required at least five servers to qualify for two incidents, and those incidents could be handled only over the Web, unless at least one server was an enterprise edition. These customers now receive one complimentary phone incident for their first server of any type and have unlimited Web access for technical support on their servers.

Deployment Assistance

A new benefit offered in this round of SA improvements is consulting and deployment assistance for desktop PCs. The new benefit comes just as Microsoft is refreshing its two most important products, Windows and Office, both of which are updates to desktop software that most customers already have, and may not feel pressed to upgrade. (For example, among customers who have the right to upgrade to Office 2003 because they have SA or an EA that covers Office, less than one-quarter had actually upgraded by the summer of 2005.) Thus, the deployment consulting program is designed to solve not only a customer problem—complex desktop upgrades that are very costly because they require user retraining and possibly deskside assistance—but also a Microsoft problem—the prospect that the new versions of Windows and Office will get a lukewarm reaction from the business market. Customers who find upgrades expensive or uninteresting could begin to let SA and EAs lapse, damaging Microsoft's business.

The new consulting and deployment services are divided by the type of volume licensing plan a customer has. Customers (typically larger) who have EA or Select plans are eligible for Desktop Deployment Planning Services (DDPS), while customers who purchase licenses through the Open Value program get Information Work Solution Services (IWSS). In addition to qualifying for these advisory services based on their SA spending, customers can exchange SA training vouchers for additional consulting time.

DDPS engagements can run up to 15 days and include analysis of a customer's current environment, an introduction to Microsoft technologies and processes for desktop deployment, access to a Business Desktop Deployment Solution Accelerator (BDD, a combination of utilities and guidance that helps customers deploy new desktop software), and cost calculations for various scenarios. For 5- to 15-day engagements, Microsoft will develop a proof-of-concept that shows the customer exactly how they can use what they have learned to upgrade Office and Windows on their desktop PCs.

IWSS engagements are one- or two-day workshops that explore how Microsoft technologies can be used in specific desktop scenarios, such as electronic forms, document management, desktop application integration, securing documents through rights management, and developing self-service portals.

(To see the customer requirements for qualifying for DDPS and IWSS, see the chart "Qualifying for Desktop Deployment Planning Services".)

Partner Stake in Deployment Consulting

Partners play a significant role in delivering these consulting services. DDPS engagements can be provided by Microsoft partners or by Microsoft Consulting Services; IWSS engagements are provided by partners only. In addition to the IWSS scenarios that Microsoft has developed, partners can develop additional scenarios on their own. Also, while Microsoft reimburses partners for delivery of DDPS and IWSS services, partners can also offer them to other customers, such as customers without enough SA credits, on a fee basis.

Microsoft provides free training for IWSS partners, who must be Certified or Gold Certified Microsoft Partners. Partners delivering DPSS need not be certified, but must pass Microsoft's 74-139 exam, Deploying Business Desktops with Microsoft Windows Server 2003 and Microsoft Office 2003.

Qualified partners will be listed in online directories, enabling customers to search for a partner capable of delivering the services.

Other Benefits

The technical support and deployment assistance benefits are the most significant changes in this latest round of SA improvements, but other benefits have been tweaked as well.

Additional training vouchers are available for large customers. Customers with more than 30,000 desktops covered with SA can receive up to 2,100 training vouchers.

Computer-based training courses from Microsoft Learning have been expanded to cover more topics and will be available online starting Nov. 2006. Customers will be able to track employee training progress through the online system as well.

Specific products will be available only to customers with SA. They include the following:

• Windows Vista Enterprise, a high-end edition with better security, Unix compatibility, the right to run one additional copy of Windows in a virtual machine (a feature called Virtual PC Express), and a multilanguage user interface that permits deployment of a single Windows binary worldwide
• Windows Fundamentals for Legacy PCs (formerly code-named Eiger), an edition of Windows XP that can run light workloads on PCs with slower processors and less memory.

One product will no longer require an SA purchase: Windows Pre-Installation Environment (WinPE), a subset of Windows XP and Windows Server 2003 that can be used to boot bare PCs and servers to the network prior to the installation of a full system image. WinPE will ship with all business versions of Vista and can be used to upgrade any PC to Vista (but not to install other OSs, such as Windows XP, a right that only SA customers have).

Other SA benefits, such as the right to get low-cost software that employees can use at home, have not changed.

Choices to Make

The biggest winners in Microsoft's SA improvements are large organizations that already use EAs to cover desktop and server purchases. In many cases, they have gone this route to ease license administration, so the SA benefits are an added bonus. Because most of these organizations already have Premier Support Agreements, the new rules for SA benefits are a clear plus and can reduce their annual operating costs by permitting them to spend less on Premier Support.

The new benefits will probably play a role in many companies' evaluation of whether to renew an EA: SA's original focus, product upgrades, is becoming less valuable as Microsoft release timetables slip and major product releases, such as Windows and SQL Server, start to slip past three years (the point at which obtaining upgrades through SA starts to become more expensive than simply purchasing new licenses when required).

Large customers are also in a better position to have full-time SA benefits administrators who can manage employee access to the many types of SA benefits, such as training vouchers, computer-based training, and discounted employee software, as well as tracking the organization's use of technical support.

For smaller customers, SA is less valuable for two reasons: they get fewer benefits, and the cost of SA, including the cost of managing a complex matrix of benefits, starts to exceed the cost of simply purchasing specific benefits, such as training courses or technical support, as needed. In addition, not all benefits are equally useful to all organizations. For example, while some organizations attach great significance to discount software for employees, others do not.

As a result, small and midmarket customers, as well as larger customers who purchase many licenses through the Select program rather than through an EA, will need to evaluate the new matrix of SA benefits carefully.

Resources

Microsoft's licensing programs are outlined at www.microsoft.com/licensing.

Partners interested in qualifying to deliver IWSS can get more information at www.iwsolve.com/iwss. DDPS requirements are outlined at www.iwsolve.com/ddps.

A general overview of Microsoft's volume licensing programs can be found in the Dec. 2003 Research Report, "Understanding Microsoft Licensing."