Microsoft Software Assurance: Opportunities Lurking for Resellers?By Jacqueline Emigh | Posted 2004-06-18 Email Print
Many resellers and customers are still puzzled by Microsoft Software Assurance licensing, but there may be opportunities for canny resellers.
How can Microsoft do a better job with its Software Assurance licensing customers? Interviews with partners and users point in several directions: more compelling product releases, lower SA pricing, a less complex service model and major marketing improvements on Microsoft's part. Meanwhile, some of the biggest fishes in Microsoft's licensing pond see opportunities for smaller resellers who know how to take advantage of SA.
By and large, interviewees' responses strongly suggest that SA suffers from a big-time image problem. Until September of 2003, when Microsoft expanded the program, SA covered software upgrades only. In the expansion, Microsoft added training, support, "at home" license coverage and other offerings to the mix.
Joe Brunner, MIS manager for Sleepeck Printing Co., is one SA customer who plans to renew his contract with Microsoft. Brunner cited the relatively new training and support as two of the program's biggest pluses.
"But even today, many resellers still look at SA only as a software upgrade program," according to Keith Ackerman, director of marketing and CIO at OneSoft Corp., a Microsoft-certified Enterprise Software Advisor headquartered in New Berlin, Wis.
Microsoft's main partners for sales and fulfillment include distributors such as Ingram Micro and Tech Data; LARs (large account resellers); and smaller resellers such as OneSoft and UK-based Interquad, which focus specifically on licensing.
Other resellers, however, can earn SA referral fees of about 10 percent, Ackerman estimated.
"I haven't heard any resellers say that SA cuts into their revenues from support and training. Instead, SA complements what resellers do," he said.
Yet many of the smaller resellers and customers contacted by Channel Zone said they'd never even heard of Microsoft's SA program. Some others were aware of SA, but had never participated in it. Partners' comments also suggest that those who still think of SA strictly as an upgrade program tend to see value only for certain sorts of customers.
"Lots of our customers aren't using half the features they already have. They don't perceive much of a need to invest in upgrades," admitted one New York-based reseller, who asked to be identified only as Vinnie P. "I don't want 'the wrath of Microsoft' to descend upon me after this article comes out," said Vinnie P.
Other customers, described by Vinnie P. as "leading edge," do like to stay up to date with all the latest releases. In his view, though, these relatively early adopters can't be stereotyped by either size or vertical market. VinnieP.'s employer services Fortune 1000 corporations, along with schools and hospitals.
"There's a clear benefit to SA for some types of users," said Chris Majdi, an account executive for Yoralinda, Calif.-based CGT Consulting Inc. CGT hasn't participated in SA, either, though. "We're just not that kind of firm. We don't really resell other people's software. We're a systems integrator specializing mainly in ERP and CRM," Majdi said.
"But I do think SA appeals to companies that want to adopt new features which meet their requirements for a certain period of timeand then to be able to quickly move on to something else. Other customers, though, definitely prefer the 'comfort zone' of the familiar."
But, has Microsoft released any products lately that are really worth an upgrade? "With the latest version of Outlook, the interface is easier to manage," VinnieP. said. He's less impressed with Windows XP. "Microsoft isn't exactly known for its security," he contended.
"Customers haven't been adopting either Windows XP or Windows 2003 in droves," concurred Randy Britton, a spokesman for Hanover, N.H.-based Tally Systems, a custom software solutions company.
Some partners, though, don't realize that customers can buy SA for certain products only, without swallowing the whole enchilada, according to Britton. "A customer who uses Microsoft Office a lot, but doesn't need Microsoft Access, might limit the purchase to SA for Office," he said.
"Opportunities exist for resellers who can be proactive in helping companies decide what to buy. Customers need to make informed decisions about SA, so they don't get hosed. Many of them are over-licensed right now," said Britton, whose company makes tools for assessing software usage.
"When SA first came out, a lot of customers felt compelled to buy it. Why? Job security. If something went wrong, they didn't want the CEO to come down and say, 'What are we going to do now? Why didn't you get Software Assurance?'"
SA pricing is another customer complaint. "We're sticking with Microsoft all the way. But I do wish that Software Assurance cost a little less," Sleepeck's Brunner said.
SA service plans are complicated, too, said OneSoft's Ackerman. SA is built into Microsoft's Enterprise Agreement plans, but it's also available to businesses through the Select License and Open Business plans. "Pricing varies according to products and numbers of users," he noted. Academic and nonprofit Open Business customers get special discounts.
"Licensing is definitely a challenge because Microsoft carries so many products," Ackerman said. "For instance, now there's Microsoft CRM. This is a double-edged sword. When you sell lots of products, you give customers a lot of flexibility. At the same time, though, there's more complexity."
Microsoft, however, keeps seeking ways to make SA better, the licensing partner insisted. "I've taken part in a number of conference calls. Microsoft has run lots of end-user focus groups. Things have come a long way since SA was truly 'upgrade protection only.'"
With enough input from partners and customersincluding those who are hanging backmaybe Microsoft will come even closer to getting SA exactly right.