Aside from the disturbing “disguise”, this tongue-in-cheek rant on Microsoft licensing and how the big company is “never wrong” has great entertainment value.
Archive for September, 2009
With October a day or two away, and the launch of Windows 7 nears, Microsoft’s licensing hasn’t gotten any clearer. Two analysts at Directions on Microsoft, an analyst firm that reports on the company, has released a report that breaks down five reasons why Microsoft licensing is supposedly difficult:
1. Many products and markets.
Microsoft offers a broader set of products than any other software vendor, sells in virtually every country, and deals with customers of all sizes. A one-size-fits-all product packaging, licensing, and pricing approach couldn’t possibly work; complexity is simply unavoidable.
- 2. Decentralized decision making.
- Although Microsoft has a central licensing division that, among other things, designs and administers licensing programs such as Open and Select, numerous Microsoft product groups decide independently what types of licenses are required for a product and how they are priced. Each product group cares most about responding to its competitors, maximizing its revenues, and addressing specific customer requests. Consistency, simplicity, and ease of compliance often take a back seat.
- 3. New technologies.
- Developments such as the Internet, multicore processors, virtualization, mobile devices, and cloud computing have all forced Microsoft to adjust licensing rules. Each adjustment triggers many transition complications for existing customers and may introduce obscure new rules or exceptions designed to generate new revenue from emerging trends.
- 4. Limited enforcement and compliance tools.
- Most Microsoft products do not include features to help medium and large organizations match product use to license purchases or comply with license usage rules. Customers are responsible for building the complex infrastructure and processes necessary to police themselves. Weak enforcement tools can lead customers to buy more licenses than they need or sign up for “all-you-can-eat” license programs, such as Enterprise Agreements.
- 5. Lack of incentive.
- Microsoft executives don’t see current licensing policies as a problem-customers are still buying-and the executives are reluctant to tinker with such a complex system. Any major restructuring of licensing policies could raise a tsunami of transition issues with great risk of costly, unanticipated, or unintended consequences for both customers and Microsoft. Furthermore, Microsoft would likely face at least a short-term hit to revenues to mitigate transition costs for customers.
The analysts make some good points, but they all seem like reasonable changes that Microsoft should move on – and sooner rather than later. New technology shouldn’t be an excuse for a technology company not to change, especially considering that they are partly responsible for this new technology!
We often get asked by clients, when is a good time to go to an Enterprise Site License versus staying with Server or CPU licenses with Oracle? This answer is complex, as each business is different, but we suggest upgrading to the Enterprise Site License only when you can predict that your licensing needs are going to significantly change in the near term. Otherwise, stick with what you have.
In most scenarios when licensing needs are going to require double or triple the amount of licenses you currently have – a new product launch, expansion, or just general growth of the business – an upgrade is justified. However, don’t get the Enterprise Site License as a result of M&A activity. The organization you are teaming up with is unknown, and it will take several months, if not years, to bring assets together, so this isn’t a good time or reason to change your licensing program with Oracle.
If usage is going up, definitely consider it. In most cases, it will save you money.
We have been giving many examples of companies that had to shell out to vendors after being audited and caught by the BSA. Most of them have been overseas so it didn’t hit as close to home as these next two examples will:
Mueller Services, Inc., of Tonawanda, NY paid $62,270 to settle claims that it had unlicensed copies of Adobe and Microsoft software installed on its computers. The tip came in through the BSA’s reporting website anonymously.
Bankers Warranty Group Inc., of St. Petersburg, FL, paid $70,000 to settle claims that it had unlicensed copies of Adobe, Microsoft and Symantec software installed on its computers. This tip also came in through the tip website. Both companies had to agree to delete all unlicensed copies of software on its computers, purchase any licenses necessary to become compliant, and commit to implementing stronger software asset management (SAM) practices.
These folks aren’t messing around. With organizations like the BSA and big clients like Microsoft and Adobe, you had better believe vendor audits will only continue to increase.
Have a look at this hilarious take on Microsoft’s licensing policies on virtual machines. I like the use of green M&Ms.
The big Oracle acquisition that has The Street talking is none other than Sun Microsystems, Inc. The acquisition of Sun following on the heels of Oracle’s HP Oracle Database Machine last year signals a new era at Oracle – selling hardware. Despite the European Commission review of the Sun-Oracle deal, we believe that once the E.U. completes its investigation, it will rule in Oracle’s favor and the company will get its Sun business back on track.
In the meantime, we continue to get a lot of questions these days about how Oracle licensing will be affected by the Sun acquisition, and how customers might benefit … or not. While we can’t say for sure, as Oracle hasn’t announced any plans yet, I can only tell you what I think will happen and how Oracle and Sun customers will benefit.
Initially, we believe that Oracle will push the lower-end Sun boxes because of their popularity, and announce a bundled pricing of hardware and software with major discounts in licensing contracts with a two-year shelf-life. In the short-term, the pricing will be a relative bargain and everyone will be happy.
In my opinion, though, it is likely that the licensing will have strict limitations to prevent server substitution at a later date – meaning that you won’t be able to move the licenses onto another server (not even another Sun server). With that said, these bundles and discounted licensing would be a win-win for everyone. From a cost perspective, Sun and Oracle customers will get better pricing all around, while Oracle can go head-to-head with IBM.
However, if these super discount bundles come to pass, companies will need to pay attention to how this affects their longer-term IT strategy and budget. While Oracle may offer a sweet two-year deal, the reality is that technology will outgrow the licensing, as is the norm, and when the server is upgraded, cost will be, too. If our assumptions are correct, our advice to those purchasing a future discounted Sun-Oracle combo is to look for the best value while negotiating on the price. Don’t forget to look carefully at the Terms & Conditions. For example, negotiate for fixed ratios to be inserted versus naming the types of servers you are purchasing. By doing so, you will be able to move your license along to another Sun server when you upgrade.
Either way, Sun could be a game changer for Oracle as the company starts down the path of hardware sales. Despite the news that Sun’s Q4 loss feeds talk of Oracle selling the hardware unit, I believe Oracle will turn Sun Micro into an extremely profitable business. Larry Ellison hasn’t lost his Midas touch yet!
Many organizations purchase licensing for planning and development that don’t actually get used and were not needed in the first place. The question is, can they go back to the vendor and “return” them? The short answer is yes; the long answer however, is much more complicated.
Going back to a vendor and requesting a credit for unused licenses isn’t out of the question, but most vendors will then push to re-negotiate their contract, which could lead to unforeseen costs, and even open you up to an audit. You have to evaluate the loss versus what it could mean. If you go back to the vendor is the potential cost of an audit worth what those unused licenses cost you? Are you prepared for an audit? We suggest before approaching the vendor, do an internal audit and make sure that you are 100% compliant, even get outside help to be sure that you wouldn’t face fines if audited. Then, and only then, go back and try and re-negotiate your contract!
The Department of Homeland Security (DHS) has just revealed that as part of their efficiency review, they were able to save $89 million in software licensing fees by renegotiating contracts with Microsoft and Oracle. $89 million that can be used elsewhere. Their IT budget in 2009 was $6.2 billion.
How did they do it? According to InformationWeek “The agency consolidated 487,000 licenses into a blanket software-and-maintenance agreement with Microsoft at a savings (or “cost avoidance”) of $87.5 million over the next six years. Separately, Immigration and Customs Enforcement consolidated 200 Oracle licenses into one “unlimited” license at a savings of $1.5 million over the next year.”
All government agencies should take a page from DHS’s book and follow suit. It’s wasted money to lack efficiencies, especially when we are talking budgets in the billions!