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Microsoft Software Assurance deals questioned by IT chiefs

Cliff Saran

One in four companies that bought into Microsoft’s Software Assurance licensing programme in 2004 are being deterred from renewing the three-year deal because they perceive it to be poor value, a study by Forrester Research has revealed.

Users running Software Assurance, which was introduced in July 2001, are facing their second round of renewals. But more than 25% of IT managers polled said they would not be renewing their Software Assurance subscription, and 18% said they would renew the licensing only for some Microsoft products.

One company facing tough decisions regarding its Software Assurance strategy is global property firm Knight Frank. Head of IT Owen Williams said the company bought Software Assurance on some Microsoft products, but he said renewals would be considered carefully.

“I fundamentally do not like the Software Assurance approach. It removes choice in the way companies manage product upgrades and increases the cost of running a Microsoft infrastructure,” he said.

The main benefit of Software Assurance was always the upgrade guarantee, said Ollie Ross, director of research at IT directors group The Corporate IT Forum.

“Unfortunately, many users have not benefited here, and they are understandably questioning what they have received for the large sums of money involved,” she said.

Nick Leake, director of operations and infrastructure at broadcaster ITV, said the company’s policy was not to buy Software Assurance.

He said the annual charge needed to be reduced to reflect how businesses were deploying Microsoft software. “Increasingly, organisations do not upgrade every three years. They would rather upgrade every five years or more. I predict many organisations would upgrade even less frequently if they did not feel forced into unwanted upgrades.”

Alexa Bona, research vice-president at analyst firm Gartner, estimated that Microsoft’s renewals on Software Assurance were only 50% to 60%, compared with 90% for maintenance contracts from other enterprise software companies.

Bona said she expected Microsoft to add some new features to increase its renewal rate, such as providing applications and service packs that would be available only through Software Assurance.

She urged users to speak to Microsoft now to tie down their existing and new licence terms and conditions.

Microsoft said the main benefit of Software Assurance was predictable budgeting for software and support, with access to 24-hour phone support and unlimited web-based support.

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