Filed under: IT Strategic Planning, Microsoft, Negotiations, SaaS, Subscriptions, Total Cost of Ownership
Continuing its direction toward rental-based agreements, Microsoft has recently been ptiching EAP’s and EAI’s to some of its customers.
Simply, these agreements are the “balloon payment, low interest mortgage loan” of the licensing world. They look great right up until the time the balloon payment comes…
Visit http://www.netnetweb.com/blog/entry/new_microsoft_agreements_eap_enrollment_for_application_platform_and_e/ to read the full article.
Filed under: IT Strategic Planning, Microsoft, Negotiations, SaaS, Software, Subscriptions, Total Cost of Ownership | Tags: Microsoft, Microsoft Enterprise Agreement EA ESA Subscription, Software Assurance
In an interesting development which may be useful for many of our Clients, Microsoft has announced the ability to rent its software.
And some great commentary by Mary Jo Foley, here:
This is a new offer, but it’s not really the first ‘rental” deal that Microsoft has offered.
Today, there are several ways to purchase and use Microsoft products:
– “OEM preload” – the typical way that Windows is sold, preloaded by the manufacturer on new PC’s. Microsoft also offers a few other products via OEM, notably the home and small business flavors of Office. This license is a perpetual license for a one-time cost (typically included in the cost of the PC).
– Full package product (“FPP”) or shrinkwrap boxes. Traditional retail packaging, this is a perpetual license for a one-time cost.
– Volume Licensing – via the Open, Select, Enterprise Agreement structures – Microsoft customers can get volume discounts for full, perpetual licenses, and also purchase Software Assurance to cover future upgrades, which then become perpetual rights to the new versions.
– Subscription models – Microsoft offers several “rental” programs via the various contractual structures.
Enterprise Subscription Agreement (most commonly for enterprise customers) or Open Value Subscription for smaller enterprises. These contracts are structured similar to normal volume licensing deals; the main difference is that there is no “perpetual” component to the licensing; when the agreement ends, all rights to the software expire and the customer must remove the code from all the machines covered.
– Various hosted / SaaS options – Microsoft and a large partner community offer online solutions for most of the business products in Microsoft’s portfolio. Recently, Microsoft has made a big push into selling Exchange and SharePoint services via the cloud, under their BPOS (Business Productivity Online Suite) brand umbrella. They have also announced plans to deliver Office and other products under this model. Again, this is a true subscription approach, so no perpetual rights are transferred to the end customer and usage rights terminate with the contract.
– and finally, the new Rental offer, which is interesting in that it allows an owner of a perpetual license to make a one-time purchase, which grants the right to rent the software to other customers.
On first blush, the new Rental rights may be useful in cases where clients need to have temporary usage of a product set on seasonal or project-based needs, where the user count will increase then decrease in a period of less than a year.
Filed under: IT Financial Management, Microsoft, Negotiations, Software, Total Cost of Ownership
Microsoft’s Select and Enterprise Agreements have long provided for a 30-day grace period at the expiration of the Agreement, for customers to decide whether (or not) to renew Software Assurance.
However: In the latest version of Microsoft’s Agreements, the 30-day grace period was eliminated. This now means that Software Assurance must be renewed before the expiration of the enrollment or customers may be required to purchase new licenses to remain in compliance with their Agreements.
The apparent goal of this change is to shift the balance of negotiations power to Microsoft at the time of renewal. Clients should be in a position to make final decisions 90-days prior to Agreement expiration, and the time required for a Client to fully review its Microsoft investments averages 90 days.
As a result, NET(net) now recommends an engagement start date of no less than six months prior to Agreement expiration for Clients to perform an initial assessment of their Microsoft Agreements and/or renewals.
In addition, the Change of Channel Partner (COCP) form for your Large Account Re-Seller (LAR) is also changing. The time between the date a customer signs the COCP and the day the COCP takes effect will increase from 30 to 90 days. This is another good reason why Clients want to be prepared to implement all changes 90-days in advance of Agreement expiration and/or renewal.
With the COCP change, we now recommend that EA customers review their LAR relationships annually, and if dissatisfied, there will be ample time to either remedy the LAR relationship or to change LARs before the next annual True-Up.
NET(net) will help Clients perform Microsoft Investment Optimizations and/or annual LAR evaluations, at least six months prior to Agreement expiration to ensure Clients have enough runway to achieve their Microsoft Investment goals and objectives.
Note- many Clients have annual true-ups in June, so January is a great time to get started.Stay tuned to this blog for more information on how you can make the most of your technology investments.
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 –
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.
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.
Filed under: Convergence, Data Center, Hardware, IT Financial Management, IT Strategic Planning, Outsourcing, Telecommunications, Total Cost of Ownership, Universal Communications, Voice Over IP | Tags: co2, Data Center, energy efficiency, EPA, Green, smart data center, smart grid, sustainability
According to the U.S. Environmental Protection Agency, “energy consumption by servers and data centers in the United States is expected to nearly double in the next five years to more than 100 billion kWh.”
This is the first in a series of blog posts that will be exploring the topic of developing, managing, and sustaining a resource efficient enterprise data center and the related infrastructure around us. We will be exploring the responsible consumption of resources that make up the IT environment for the enterprise, examining the popular notions of the “Green” data center and going beyond the mainstream in tackling topics that have an important impact on IT related resource consumption.
We have a responsibility to be good stewards of the resources contributing to our consumption of information technology. As global citizens we are on a collision course that is unsustainable, given the rapid consumption of energy across the planet as underdeveloped countries advance their economies and developed nations continue to grow and increase their use of automation and other energy consuming conveniences. Our planet’s uses of energy through non-renewable fossil fuels will likely outpace our ability to find new sources if we don’t reduce and improve the efficiency of our consumption first. In the most recent U.S. Energy Information Administration International Energy Outlook report in 2009, total world consumption of marketed energy is projected to increase by 44 percent from 2006 to 2030. The largest projected increase in energy demand is for the non-OECD (Organization of Economic Cooperation and Development; developing countries) economies (http://www.eia.doe.gov/oiaf/ieo/world.html).
An unfortunate and vitally important consequence of this energy consumption is our output of Carbon Dioxide emissions. Scientifically regarded as a contributor to climate change, total CO2 emissions—as calculated with all projected full measures of CO2 emission reduction programs underway or planned—are projected to increase by 17 percent from 2010 to 2020 (http://www.state.gov/g/oes/rls/rpts/car/90324.htm).
We clearly still have our work cut out for us.
According to the U.S. Environmental Protection Agency, “energy consumption by servers and data centers in the United States is expected to nearly double in the next five years to more than 100 billion kWh, costing about $7.4 billion annually”. Similar energy cost increases are expected in Europe, Asia, and elsewhere. (http://www.energystar.gov/ia/partners/prod_development/downloads/EPA_Datacenter_Report_Congress_Final1.pdf).
However with data centers, and the other information infrastructure we have in businesses and the homes to support our information and communication needs around the world, it is still a drop in the bucket compared with overall energy consumption. What we do have is the capability to turn the information technology into solutions for energy savings.
We see this today with smart grid technology applied by the utility companies to manage home energy usage and provide bi-directional communication between the home appliances and the energy company to manage energy usage wisely and efficiently. Applied to the data center, smart energy technology can be timed with the business cycles to reduce energy consumption on resources that don’t have to run full throttle for supporting a business application that is comparatively idle.
We will explore these ideas and more in upcoming blog posts, as we delve into improving our information to energy ratio; squeezing more information out of the energy necessary to produce it—and, perhaps taken to the extreme, spending less energy on information that has less value. Now that’s a tricky topic!
Stay tuned for future posts.
Filed under: IT Financial Management, IT Strategic Planning, Microsoft, Risk Mitigation, Service & Support, Software, Total Cost of Ownership
Microsoft is entering a period of new product releases; Windows 7 is widely expected to ship in time for Christmas 2009, and Office “14” along with refreshed versions of key products, such as SharePoint, are expected as well in late 2009 or early 2010.
Since many Microsoft customers are evaluating their Microsoft agreements in the next few months, as many Microsoft deals come due at the end of the calendar year, customers are again being asked to pre-pay Microsoft for planned innovations that may or may not ever reach a product release, and when or if they do, may or may not be of interest to customers, who may or may not be able to effect meaningful ROI by upgrading.
Which key product upgrades should customers expect in the next few years? How can customers best optimize Microsoft investments in light of the coming planned upgrade cycles?
NET(net) has researched and summarized the key upcoming product releases so you can effectively plan your organization’s IT rodamap.
Filed under: IT Financial Management, Microsoft, Total Cost of Ownership, Uncategorized
Microsoft reported earnings for their fiscal 3rd quarter.
– The big news is that this is their first ever year over year decrease in revenue and earnings (as a public company).
– “Unearned Revenue“ is Microsoft’s bucket for future Software Assurance (SA) / Payment obligations, usually via Enterprise Agreements that are in flight. This number went from $12.2b to $9.6B (-21%) from June 30 2008 to March 31 2009.
o Unearned Revenue is down across all of their key product segments, even Servers which is their strongest at the moment.
o This is one of the key numbers to watch in their financials and being so significantly down it means that customers in droves are defecting partially or wholly from the EA / SA model, which is bad news for Microsoft’s annuity business and thus, its stock price.
o It also casts doubt on the typical MSFT story about EA renewal rates being “in line with historic” which they are on record as saying recently.
o This number is mainly disconnected from PC shipments so they can’t use that excuse either. I view this as one of the most significant numbers reported.
– Random note – they settled with the IRS re: the 2000-2003 audit, paying $3.1 billion during 1Q09.
– $1.4 b to the EU for antitrust settlement, more pending.
– Class action suits re: the “ready for Vista” pc scam: up to $2.7b
– You may recall their share buy-back program; they announced up to $40b in spending on that, so far they’ve actually only spent $5.5b. hmmm, maybe they need to use their cash elsewhere?
– In the usual note about forward looking statements, MSFT noted “intense competition across all markets”. Perhaps some clients should note that as well?
– They’re still in fine shape re: cash, with $40b or so current assets and cash flow of $6b./qtr. But I noted that they started up a couple of lines of credit, maybe for insurance purposes?