Users baulk at Microsoft regime

By RICHARD WOOD

Large enterprises believe Microsoft's new licensing regime will cost them more.

The controversial Software Assurance scheme takes effect tomorrow, but customers have been slow to sign on.

A survey of 50 businesses with 200 or more staff found that 24 per cent were considering alternative systems to reduce their exposure to Microsoft.

The survey results in the latest MIS magazine are based on a telephone poll in Australia and New Zealand.

Fairfax Business Research principal analyst and managing editor of MIS Rob O'Neill says the findings are startling. Users are looking for alternatives now - "This is no longer a religious issue, it's pure economics."

Ninety-two per cent of respondents said the new arrangements were likely to cost more than their existing ones, and 58 per cent said they definitely would.

At the time of the survey, in early July, 63 per cent had not signed up. The deadline is tomorrow, except for those on existing "enterprise agreements".

Vicki McCulloch, of licensing consultancy Accordo, said acceptance depended on the size of an organisation.

She predicted that of those companies with 20 to 50 users, 30 to 50 per cent would sign up. It would be more like 50 to 60 per cent for those with 50 to 500 users. Above 500, 70 per cent plus would sign up.

She said many big organisations had had similar licensing arrangements for years so it was less of an issue.

She agreed that, on average, the new regime would probably cost more. "Microsoft is certainly not doing this to reduce its income."

Many large Government bodies have avoided the decision so far because of existing enterprise agreements that could be extended for another year until the new G2003 "all-of-government" deal is in place.

Their agreements, like those of many of the biggest companies, already tend to include a form of maintenance similar to Software Assurance.

However Defence Force technology officer Warwick Sullivan said that in Government circles there was concern about Microsoft pricing, including Software Assurance.

McCulloch said emotional reactions since the change was announced 14 months ago had settled down in the past two months and most of her customers had chosen to go with the programme.

She said Accordo had no vested interest in which way its customers decided. It was independent of Microsoft and was paid a fixed fee for its consulting work by the customer.

IDC analyst Peter Hind said people were resigned to the licensing changes.

"People are not happy but they aren't seeing any option."

Hind said business was already starting to question the merit of regular upgrades and this licensing change had added to that.

"My gut feeling is in the long term this will be counterproductive for Microsoft because people will delay their upgrades.

"Instead of thinking 'a great new product', they're thinking 'how can we lock people up?' If you do this, eventually you will come undone." Hind said he did not encounter the same affection for Microsoft that he did for that other big computer company, IBM.

"Modern CIOs needs this licensing arrangement like a hole in the head. Their biggest challenge is to justify their IT spend, and along comes Microsoft wanting to slug them for more money. They have not helped the cause of the IT manager."

McCulloch said that in the past New Zealand had been a leader within Microsoft for taking up maintenance agreements.

She said that uptake would increase this time around, and the only people to be upset would be those who had not picked up on the change or failed to give it the attention it deserved.