Microsoft hikes software costs by four times for some charities

Specialist charities such as housing associations face paying nearly four times as much for Microsoft software due to licensing changes.

Specialist charities such as housing associations and social enterprises face paying nearly four times as much for Microsoft software due to licensing changes to be introduced by the software giant in September.

The changes will see housing associations and other organisations lose their designation of voluntary status and with it access to software prices that are similar to academic bodies.

From 30 September, organisations that received academic-level discounts - the highest available - will only continue to do so if they receive over 10% of their revenue from donations. Those that receive less than 10% through donations will be moved onto the more expensive public sector licensing agreement.

Keith Saunders, group ICT manager at North Star Housing Group, said the organisation has lost its voluntary sector classification and the academic price rates it received through the National Housing Federation. 

“We have had a short window of opportunity to purchase licences now, under a new Select Plus Agreement, that means we have Software Assurance on those licences for a three-year period.  If, however, we had waited until later this year to purchase new licences we would have been paying the public sector rate by having to buy through the PSA12 pricing that was agreed by the Treasury for public sector bodies.”

He gave an example of the significant increase in costs that organisations such as his face. 

"We were looking to upgrade a couple of our servers' operating systems, Exchange and Office over the coming year. To ensure we received value for money on those licences I have purchased them this month at a cost of approximately £11,000. Had we waited this would have cost us nearly four times as much."

Microsoft said in a statement: “Microsoft's new discount frameworks recognise the increasing importance of the UK’s 70,000 social enterprises in driving public services. The new frameworks for social enterprises complement the discounts and free options already available to 174,000 UK charities, as well as public sector organisations and public sector mutuals. 

“Charitable organisations and social enterprises looking to buy new technologies from Microsoft will be entitled to different levels of discount depending on their levels of voluntary contribution or how they generate their revenue, if applicable."

Charitable organisations will be eligible for Microsoft’s academic discount package as long as they receive more than 10% their revenue from donations.

If they receive less than 10% of their funding from voluntary donations, and they receive the majority of their funding from public sector contracting, then these organisations will be eligible for Microsoft’s costlier pricing framework for the public sector

Smaller registered charities that need software to run on up to 50 computers can access a wide variety of free Microsoft software from Charity Technology Exchange (CTX), which charges a small administrative handling fee. 

“Housing associations are encouraged to contact either CTX or large account resellers to discuss their needs," added Microsoft.

But North Star's Saunders said very few housing association will qualify either as charitable organisations with 10% of  revenue from donations, or have less than 50 computers where they would qualify through CTX. 

“While I appreciate that the costs under the public sector agreement are less than commercial enterprise licensing costs, it will still see an average increase in licensing costs to housing associations of up to four times what we currently pay.”

Microsoft's private sector customers also face price hikes of up to 25% from 1 July, as the software giant tries to harmonise licensing terms across Europe. Businesses using the affected volume licensing agreements are some of the biggest in the world and Microsoft risks causing anger among some of its best customers as a result.

“One can't help but be in awe of the approach taken by certain suppliers of licensed software over their determination to increase revenue at any cost and by whatever means,” said David Roberts, executive director at user group The Corporate IT Forum.

If you are affected by this change in Microsoft's licensing terms, please leave a comment below to tell us what you think.


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