Filed under: Data Center, IT Financial Management, IT Strategic Planning, Microsoft, Negotiations, Oracle, Outsourcing, Risk Mitigation, SaaS, Software, Subscriptions, Total Cost of Ownership
Microsoft is aggressively discounting its hosted / SaaS solutions in order to gain market share, and I suspect, to sway customers from the EA / Select / perpetual license model, onto the rental / cloud / SaaS model.
Microsoft cuts prices on BPOS, to issue refunds -
http://ct.zdnet.com/clicks?t=475224883-f5935ee3a0b078029592318f09b1ea8e-bf&brand=ZDNET&s=5
Microsoft seeks to lure Salesforce, Oracle users with six months free of CRM Online
Microsoft chops prices of its hosted enterprise cloud offerings
But you’ll note that’s only on the hosted offerings.
Also of note, Microsoft’s huge new billion $ datacenters in Chicago and Dublin are now open for business. With more coming soon.
http://ct.zdnet.com/clicks?t=475224883-f5935ee3a0b078029592318f09b1ea8e-bf&brand=ZDNET&s=5
On the traditional licensing front, Microsoft just announced price increases for SQL Server.
So, clearly, MSFT is betting big chunks of cash on swaying customers to its hosted services, and as a consequence the traditional licensing models are becoming slightly less attractive. I would advise Microsoft customers to consider the true costs and benefits of moving from a traditional licensing approach, to a model such as BPOS. As in most things regarding Microsoft’s sales practices, there are hidden factors that may not come to light unless you ask the right questions.
-Scott Braden
Filed under: Hardware, Microsoft, Oracle, SAP, SaaS, Software, Subscriptions
There appears to be a significant amount of buzz around Web 2.0, what it is and how do you get some… If you do a Google search on Web 2.0, you are using Web 2.0 technology! Just by the fact you are reviewing this blog post means you are using Web 2.0 technology.
Why would a professional optimization firm write about Web 2.0?
The newest versions of applications, services and hardware touted by companies like IBM, Oracle, Microsoft and others are being sold as Web 2.0 necessities.
So what is Web 2.0?
If you click on some of the results from your “Web 2.0” Google search, many people say Web 2.0 is nothing more than a marketing spin on the natural progression of Internet technology. So why then are Enterprises being encouraged to pay premiums based upon marketing and hype? Continuing a tradition among technologists to buy the latest and alleged to be the greatest? Beyond that, we have no clue! But, we can try to put some context around what is Web 2.0?
Quite simply, one can look at a website or application as being Web 2.0 if it contains any of the following characteristics:
- A user centric customizable interface (i.e. use of widgets to customize pages)
- Community updates like those found in Blogs or Wiki pages
- Uses the Web as its delivery platform and is entirely browser accessible
- Allows for collaboration like that found in Instant Messenger or other Social Networking sites
- Utilizes user generated “Dynamic Content” for updates
- Software as a Service (SaaS) by definition, uses the Web as its delivery platform
- Provides for a rich use experience
Who can argue with those, almost like motherhood and apple pie (all good). Those characteristics are so all encompassing, almost all software fits into at least one of the categories above. Still, by using the latest buzz word and labeling products “Web 2.0”, technology companies are jumping at the opportunity to capitalize on the ambiguous definition of “Web 2.0” and trying to use it to compel buyers to pay a premium to obtain it. At NET(net), we consistently rally against hype and focus on business value received relative to financial investment expended. This is where Web 2.0 falls flat (in our humble opinion).
Filed under: IT Financial Management, IT Strategic Planning, Microsoft, Subscriptions, Total Cost of Ownership | Tags: Microsoft Enterprise Agreement EA ESA Subscription
bullseye
Microsoft Enterprise Subscription Agreements (or ESA’s) as their name suggests are Subscriptions to Microsoft Software. “Enterprise” means the client agrees to cover all of the desktop “qualifying” pc’s in the organization with the same bundle of software, typically Windows upgrade/SA, Office Pro Plus/SA, and Core CAL / SA. This is commonly referred to as a ‘full platform’ ESA.
In the case of the ESA, the client pays an annual fee (typically in a three year deal) to maintain useage rights for the products in the subscription. When the subscription ends, the client no longer has any useage rights for any of the products in the subscription and must remove the software from all the machines.
Microsoft includes “buyout” terms in the ESA contracts for when / if the client eventually decides to exit the ESA. This gives the client the ability to purchase the underlying perpetual license. At that time, the client can decide whether or not to cover the purchased license with software assurance.
Typically the cost of the ESA subscription + eventual buyout adds up to be higher than if the client had simply purchased licenses via other means. This, in my opinion, is the biggest “downside” of the ESA: the cost to exit is usually higher than the cost to purchase and/or maintain, making the real-world TCO higher than conventional Enterprise Agreements (EA’s) or a more optimized approach.
ESA’s are a good fit in a very limited number of cases:
1. Clients that have made a conscious, long-term infrastructure decision to aggressively invest and stay leading–edge on Microsoft products but need to avoid capital costs and would prefer to expense the investments.
2. Clients who need to get / stay current for the next few years but are likely to significantly reduce the size of their business by organic decline (not divestitures), or who experience business cycles of less than 3 years where the infrastructure significantly grows and shrinks.
We frequently see cases where a client needs to get compliant or otherwise upgrade large portions of their infrastructure to the latest Microsoft versions. In these cases Microsoft typically proposes an EA. If the cost is too high for the client, sometimes Microsoft will offer an ESA as an alternative, since the per-year and initial costs are lower. But, if a client simply needs to reduce licensing costs (capital or expense), there are other more effective methods that offer improved beneftis over this approach.
