Saturday, April 12, 2008

Software Assurance Ripoff

Over at SBS2K Yahoo Group There's a discussion about software assurance.

SA, in it's standard format, is a two-year program in which you get all the updates for a product.

In my mind, this is just strange. The only Microsoft products that have a true refresh in any given 24 month period are video games. Even MapPoint doesn't get a regular refresh.

Service Packs can be obtained for free, so you don't need SA for them. Only version upgrades need SA.


Here's a rough timeline for SBS:

Release SBS2003 to the wild: Q4 2003.

Release of R2: Q3 2006.

Release SBS 2008 to the wild: Q3 2008? Q4 2008?

So, if you sold your client SA between November 2003 and September 2004, there is no possibility that they could get anything for their money.

And the "anything" you got with R2 is not worth the cost of SA.

If what you really want is access to the next real version release of the product, you would not sell SA for SBS before December 2006. That's a good, safe date.

But did you have any way of knowing this in 2004, 2005, or 2006? No. In fact, you spent most of 2007 not sure whether SBS would be in 2007 or 2008.

Microsoft provides minimal guidance around this. They have general roadmap information online. But software development is a lot harder to do than most people imagine. And they have to adjust to the evolving environment in which the eventual product will be released.

Microsoft can't be expected to release new versions on a tight schedule determined years in advance.

But they can and should design Software Assurance so that people get something for their money.

We ask people to pay something extra in good faith that they'll reap the benefit. How is a client supposed to know in mid-2006 that their Software Assurance will expire before Microsoft releases the next version?

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Today, we're selling SA on SBS because we really believe clients will get the new release.

We're not selling SA on Office because Office 2007 was just released. You won't get any value from SA.

We're not selling SA on Server 2008 for the same reason.

We're not selling SA on Exchange 2007 for the same reason.

It is immoral to sell something when you know for an absolute fact that people will never get anything out of it.

I like the open value subscription plan because it has real benefits for the client -- as does open value generally.

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Upgrade strategies.

Jeff Middleton has been pinging me a lot about upgrade strategies and the business strategies behind moving to the new code. This will have some serious focus at his I.T. Pro conference in May. See http://www.conference.sbsmigration.com/.

Consider what you're selling today.

If someone just buys new hardware, do you move their SBS2003 original release product to that hardware? We don't. Too many service packs and updates. It's cheaper for everyone to just sell them the current version of SBSR2 with most of the updates in place.

And we sell SA because we really think they'll get the bits.

BUT: we don't plan to install that SBS2008 upgrade when it comes out. OMG. No, two server migrations in a 12 month period is too much for anyone.

So, we don't put off the current upgrade. But we do plan to do the second migration down the road a bit. Perhaps late 2009 or on release of SP1.


We are not putting off upgrades and migrations in anticipation of the release. Clients with stable systems will not want to jump right into the new product anyway.

We also have some beliefs about the future of this space that come into play.

Because all the good SBS support is in Texas, and there is no usable first-line tech support for SBS, we believe the boxes need to be as vanilla as possible. That means we're no longer putting a bunch of line of business applications and other important stuff on the SBS box.

We believe that 2008 will be the last version that ships with Exchange Server. And that's a good thing.

So we're building systems with a five year plan that takes into consideration the current install and the next anticipated install.

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Twenty years ago people bought computers and believed that the investment was over. They did not think they would need to replace it.

That's not true today.


What's your five-year strategy for upgrades?

Will you sell SBS 2008 with Software Assurance when it's released later this year?

6 comments:

  1. Ran Hooper4:29 PM

    I struggled with this forever and basically decided this:

    OVS costs more money over the long run. A great vertical for OVS is Real Estate & Mortgage folks. Simply for true up/true down. When they are up they are really up, cash flow isn't a problem. When they crash (they always do, eventually) they crash hard and cash flow is an issue. The "A" list ones don't usually have the cash problems as in they can't pay you for some reason but they certainly tend to go through employee layoffs and growth depending on how the housing market is doing. So for them, OVS makes good sense. For anyone else, it depends on how long they want to be around and whether or not they want to own a depreciating asset or not. The commitment is the same. (Three years)

    I disagree on not selling SA with Office 2007. Today I am absolutely selling OV LIC/SA with Office 2007. There will be new software within three years so it's a no brainer. On average, 32-bit releases of Office on Windows have been something like 2.283888889 years apart. According to my guesstimate (what else can you do but guess?) we'll see Office 14 around May 12th 2009.

    I really believe that Open Business + SA is CRIMINAL and Microsoft just needs to stop. Enough is enough. MS will sell it to anyone asks for it on one hand, on the other hand "Licensing Guru's" that work for MS will tell you that you are ripping your customers off. Huh?

    As far as pure costs, it just depends on when MS feels like releasing something. Don't forget once you own the license the SA renewals are much cheaper than LIC+SA.

    I took Office average release dates, mapped it out for the next 12 years and determined that OVS was roughly the same at that point vs. OV. OB+SA was cheaper by $112/license than Open Value (again why sell OB+SA, the benefits are so inferior to OV for the same price). Buying straight OB as Office is released was the most expensive, $594/license more over 12 years.

    Servers it's just a crap shoot and we have to feel it out on a case by case basis. SA likely would have worked well for SBS 2000, Windows 2000. NT 4.0 & 2003, SBS2k3 not so much. Except at the EOL. Again, how do we determine the EOL? How many of your clients need training on servers?

    For Office I can say "Look I don't know when what is coming out when but I can tell you that if you do OV or OVS it will cost $x to get started and $y to maintain it for as long as you are in business". I can also tell you that if you decide to OB Office and want to stay current you will likely pay more over the long run and miss out on the OV SA benefits.

    I totally agree there is no point in rushing into things once Cougar is out. Save it for the next hardware refresh.

    Something you didn't mention, SA for desktops. I am unable to justify this in any way shape or form given that any new boxes I'm selling that still require XP it also has OEM Vista Business as well. Just in case. I wouldn't dream of putting Vista on anything I sold prior to Q2 2007.

    ReplyDelete
  2. Ran Hooper4:36 PM

    Another thought, is OVS a gateway to "Office in browser" hosted by Microsoft? Or Office on Softgrid? You are already paying for a subscription....

    ReplyDelete
  3. Karl, focusing only on the upgrade part of SA is such small thinking. The upgrade component is only a small piece of the entire benefit.

    When a client signs up for OVS or SA they are entitled to so much more. How about the network use rights, at home rights, training voucher plus more benefits.

    The training vochures alone are worth the investment in SA.

    However, OVS is the way to go today.

    Time to think big about SA and stop just focusing on the upgrade. I haven't had a chance to chime in on the SBS2K group yet about this.

    See you soon in Dallas

    Stuart Crawford
    http://www.stuartcrawford.com
    http://www.thewealthyprofessional.ca
    http://www.weareitpros.ca

    ReplyDelete
  4. Stuart, I appreciate the thought. But once we ignore the marketing fluff and look at the real world, there's not much value here.

    Visit http://www.microsoft.com/licensing/sa/default.mspx and click on "Find out which benefits you are entitled to."

    You get new versions. For at least half the life of the product this benefit is zero.

    Virtual PC Express? Ask you clients what that means.

    E-Learning has potential value. Ask you clients how many have taken advantage of it.

    Home Use? Great idea. But who really takes advantage? The five people with laptops. That's great in a five person company. But in a 25 or 70 person company, why page extra money for office times 25 or 70? It only takes a few SA licenses to break even by just buying another five licenses.

    24x7 support? Our clients call us. They don't call MS.

    Cold backups? Again: Ask your clients.

    Extended hotfix support. Uh whatever.

    Oh, and that home use for SBS2003. How's that workin' out?
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    The point is: Basic SA with open license is good for one thing -- getting the next version.

    The rest is marketing fluff. Ask your clients. They consider it to be worthless.

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  5. Anonymous12:17 PM

    If you don't care for SA, then what do you see as the value for OVS? Unless, you just meant in the case of Office 2007 where you thought it would be suitable for SA. With Open Value Subscription you do seem to be more on a lease versus buy model. Do you just see it making more sense to "lease" as it were?

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  6. Thanks to Susan for chiming in (see her blog.

    Remember, she's over counting nickels for a real client trying to decide the best way to spend their resources.

    As for OVS, that's a different story. Remember OVS is three years and you get to spread out payments over three years. Spreading out payments so that you don't one huge outlay is a serious benefit.

    Also, over three years you might actually get an upgrade.

    Sorry, Ran, I don't think you'll see a new version of office in 2009. Probably not 2010. Maybe 2011. So even today, 2-year SA is not going to get you an upgrade. Three year OVS might. But spreading out payments is a benefit by itself.

    Look at every major product Microsoft has for business. None of them have a two year cycle for version upgrades. Ocassionally you see a three year cycle. Four and five are more common.

    ReplyDelete

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