Microsoft has reduced the confusing array of volume licensing options to only four programs:

  • Open
  • Select
  • Enterprise Agreement
  • Enterprise Subscription Agreement

And although many IT managers have expressed their discontent with the possibility of subscribing to licenses, this could actually be a good solution for scores of companies looking to ease the administration of their licensing and its associated costs. Here’s a closer look at Microsoft’s new licensing and how it will affect different organizations.

Open License agreements are great for small organizations
Only five licenses are needed to acquire an Open License agreement, which has two levels of pricing: Open Business and Open Volume. An Open License provides opportunities for growing companies to receive volume license pricing from Microsoft. The customer’s discount level is determined by the first purchase of licenses; the discount then lasts for two years.

How do Select Licenses and Enterprise Agreements work?
With Select License and Enterprise Agreement, a company agrees to purchase a certain number of perpetual licenses for a minimum of 250 desktops. For Select, as the company grows and meets the various level requirements, Microsoft automatically promotes the agreement to the improved pricing level that’s reached. Monthly reporting for Enterprise Agreements determines the need to true-up or add to the current license-in-use amount, the number of licenses added that month. If you have a layoff or a division is sold, you still have to pay for those seats.

The greatest benefit of these agreements is indisputably the CD subscription kit. This provides the customer with a predetermined set of Microsoft Software CDs, including evaluation software, that doesn’t require separate activation codes. Windows XP is included.

Many people have worried that Windows XP’s new activation key would be a disadvantage to the enterprise customer, but Rebecca LaBrunerie, Microsoft Program Manager Volume Licensing, said that corporate Volume License Product Keys will be provided to each Select and Enterprise Agreement customer, which will make product activation unnecessary for those customers.

How about an Enterprise Subscription Agreement?
While the Enterprise Subscription Agreement has received a great deal of negative press, I would like to point out some benefits of this type of licensing for some companies. A subscription agreement provides reduced up-front costs to the customer and benefits corporations who “expect significant fluctuation in the number of PCs in the organization over three years.”

A subscription customer has a commitment to lease software over a three-year period at a reduced cost. Subscription customers have the added advantage of the opportunity to true-down their licensing for a period when the number of desktops is lower or reduced for some reason, such as a division of the corporation being sold or phased out. Be sure to check with your tax adviser, since there may be tax savings in leasing vs. purchase plans.

Software Assurance = new upgrade licensing
Organizations who sign agreements have the opportunity to enroll each application license in a new program called Software Assurance. Software Assurance is the new SKU available to Microsoft’s volume license customers, replacing all of the confusing CUPS, PUPS, LUPS, and VUPS upgrade options previously offered with Upgrade Advantage.

That’s right, I said replacing. All other upgrade options in volume licensing will be gone, and only Software Assurance is to remain for the Open/Select/Enterprise 6.0 customer. Software Assurance gives the customer rights to the latest version of each software application. Customers with an agreement in place who purchase hardware with OEM Microsoft products are eligible to enroll these products in Software Assurance within 90 days of purchase. Microsoft still recommends using the OEM versions of software, as they have been customized by Microsoft and the manufacturer to work properly with that specific hardware.

This offers the greatest advantage for those who are migrating hardware systems as well as operating systems. With Software Assurance on your server OS, Select and Enterprise customers are entitled to the latest version, and Microsoft does not object to running the two in parallel during migration. “We realize that that’s exactly how today’s IT manager[s] run [their] business and that they don’t deploy all at the same time. They just want to know they have the rights to it and roll it out at their convenience. With an Enterprise Agreement, they always have access to the latest versions of the products,” said LaBrunerie.

“Today, the IT manager, whether he has 50 desktops, 500, or 5,000, doesn’t always know what underlying licenses he owns based upon what version upgrades he has purchased. Within the last three years, he may have bought three or four types of upgrades, and now he doesn’t really know what he owns. So we’ve eliminated that confusing option and simplified it, so that he knows he either has the license or he has software assurance.”

BackOffice licensing changes
If you previously purchased BackOffice client licenses, contemptuously cursing because you had to pay for expensive SQL Server client access licenses even though you don’t use SQL Server, you will be happy to note that Microsoft has remedied this. BackOffice client licenses have been replaced with Core Client Access Licenses (or Core CALs). Core CALs include the following clients:

  • Exchange CAL
  • Systems Management Server CAL
  • Windows CAL
  • SharePoint Portal Server CAL

SQL Server CALs are now a separate product.

Online licensing tracking
Microsoft now has an online site called eOpen to track licenses purchased through Open Licensing and Volume Licensing Services to track licenses purchased through Select and Enterprise Agreements. This can further simplify management of your licensing by providing a central location for administrators to verify their current licensing situation and to always know exactly where they stand with respect to licensing of Microsoft products.

Existing Select and Enterprise customers
Select 5.0 and Enterprise 5.0 customers (who have an agreement in place prior to Oct. 1, 2001) still have the opportunity to enroll in Upgrade Assurance from Oct. 1, 2001, to July 31, 2002. The Upgrade Advantage Brief outlines this information. See Gartner’s report “Act now to cut Windows upgrade costs by up to one-half” for clarification on this change.

Other available agreements are specially tailored for academic organizations and government agencies. Additional details regarding Microsoft Volume Licensing Software Assurance can also be found at Microsoft’s Web site.

For a clearer understanding of Microsoft’s Volume Licensing plans, I recommend checking out the Licensing ConCall Webcast (and the downloadable presentation from that site), a one-hour teleconference/presentation regarding the new Microsoft corporate licensing plans.

How have Microsoft’s licensing changes affected your company?

We look forward to getting your input and hearing about your experiences regarding this topic. Join the discussion below or send the editor an e-mail.