Microsoft Customers Sour on Software Assurance

IT procurement managers are finding that Microsoft Corp.'s Software Assurance maintenance program may not save them money as hoped, according to a survey by Forrester Research Inc.

The Microsoft program guarantees updates to new products along with support and training tools. One of the most compelling reasons to buy Software Assurance was free upgrades from, for example, Windows XP to Windows Vista.

But Microsoft hasn't stuck to a consistent release schedule, which can actually mean the program could cost companies more money than simply buying new licenses as needed, according to the four-page Forrester report, written by Julie Giera, a vice president at the research firm.

For desktops, Software Assurance (SA) is 29 percent the cost of an annual license. If Microsoft goes at least four years in between releases -- the company went about five years between XP and Vista releases -- the cost of Software Assurance works out at 116 percent of a new desktop license, Giera wrote. For servers, Software Assurance is about 25 percent the annual cost of a license.

"The uncertainty regarding product releases makes it difficult for IT procurement and sourcing professionals to justify a three-year SA renewal," the report said.

Microsoft has also not yet published a road map for products released since November 2006, such as Windows Vista, Office 2007, SharePoint 2007, Exchange 2007 and other products.

Of 63 IT procurement professionals Forrester surveyed, 86 percent said their licensing arrangement with Microsoft will expire this year. Twenty-six percent said they will not renew Software Assurance, with 31 percent still undecided. Another 18 percent said they would renew for some products, with the remainder saying they would either probably or definitely renew.

About 74 percent of those who said they would not buy the same amount of Software Assurance maintenance said the economics did not make sense, and 59 percent said they did not expected to get a new product release.

Forrester is advising companies to negotiate early with Microsoft and hold out for better deals. "Discounts in the 7 percent to 15 percent range, depending on your size and level of spending, should be the foundation of any renewal discussion," the report said.

Companies should also simply do the math. "This sounds like common sense, but we're continually surprised by the number of companies that don't take the time to conduct a financial analysis of the costs and benefits of SA," Forrester said.

Microsoft could not be reached for immediate comment.

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