As of July 1, 2011, Microsoft is no longer offering the Select volume license agreement. Customers can choose to keep and renew their existing Select agreement however, Microsoft provides incentives to move to a Select Plus agreement.

First, the migration is easy and customers can move to it at any time. They will just stop purchasing under the Select Agreement and start buying under the Select Plus Agreement keeping the same price levels. When the Select Agreement expires, they will need to renew Software Assurance, services and subscriptions under the Select Plus agreement.

There are some inherent benefits to the structure of the Select Plus agreement. It is an evergreen contract—perpetual agreement—signed under the Microsoft Business and Services Agreement (MBSA). Customers can acquire software licenses or services under the master Select Plus agreement using a unique customer ID. Organizations can centralize reporting while management of licenses and Software Assurance benefits is decentralized and can happen at the business unit, division or subsidiary level.

One of the biggest advantages of the Select Plus agreement is that organizations no longer need to provide a three-year spending forecast. This was extremely difficult and cumbersome for any large organization with many decentralized business units. With the Select Plus agreement, price levels are determined by the number of points a customer has earned in each product pool—each acquisition of a new license, Software Assurance or renewal of Software Assurance is categorized in one of the three following pools: System, Application, and Server and carries a point value. Price levels are set based on the annual number of points reached in each pool. For commercial organizations, there are four levels in each pool: A (500 points), B (4,000 points), C (10,000 points) and D (25,000 points), with each of them providing a specific discount level.

At any time, a purchase order can place the organization at new price/discount levels. The new price levels are automatically applied across the entire organization. Microsoft requires a license compliance check, once a year, of what software has been purchased compared to what has been deployed in an enterprise. If the minimum for the current level has not been met with purchases made in the last 12 months, the customer is moved, at most, one level down per year. Again, as soon as the minimum point level is reached, the organization will move back to prior price level.

Organizations under Select Plus get full value for purchasing Software Assurance and that wasn’t the case under Select. With a Select agreement, a company buying a license in month 10 would pay for 36 months, but would receive only 26 months of coverage. With a Select Plus agreement, 36 months are received in full. This benefit comes with a drawback. Software Assurance benefits will need to be managed every day since they expire on the third year anniversary of their original purchase or renewal date. Under a Select Agreement this activity was once every three years for all Microsoft products within the organization. There may still be some benefit in being able to periodically review the Software Assurance strategy for an organization, rather than having to perform an upfront three year commitment.

The Select Plus agreement provides the same product use rights as the Select agreement: cross platform use rights, downgrade rights, secondary use rights, re-imaging rights. Training and evaluation software licenses are included: 20 copies per software title for use in a dedicated training facility and 10 copies per software title for a 60-day evaluation.

Since its introduction in 2008, the Select Plus agreement has not been as popular as the Select agreement. This is primarily tied to the way price levels (and hence discounts) are calculated. The Select Agreement price level was based on a three year forecast. With the Select Plus agreement, the first purchase must be large enough to qualify the organization for the first discount level (500 points). It will also set the prices for future purchases: a large initial purchase is required to reach upfront a good discount level. This practice is in use by other ISVs. Organizations migrating from a Select agreement won’t face this issue as they will keep their Select price levels when migrating to Select Plus. Overall the Select Plus Agreement offers a bit more of something every Microsoft customer has been looking for—simplicity!

How will the transition to Select Plus licensing affect your organization?

Ten years ago Microsoft unveiled their Software Assurance program to their customers. Software Assurance is a three year contract commitment with a yearly fee of 29 percent of the full license price for desktop software products and 25 percent for server software products. This program introduced a radical change in migrating from one release to the next. Prior to Software Assurance, the migration between releases could be purchased at a discount price, if the previous license was owned by the enterprise. Software Assurance provides access to new releases during the period covered by the contract. This upgrade model sounds reasonable, but has lead to controversy and complaints from Microsoft customers.

The Bad—Software Assurance has often been considered as a bet to get a discount. The rate is 29 percent per year, 87 percent over three years. If new releases of the software products covered by the maintenance agreement become available during the term of the contract, then customers can migrate their existing applications to the newer versions (e.g. Office 2007 to Office 2010) and get a 13 percent discount on new license purchases. If no releases are issued then the benefits of the contract are highly questionable. To overcome this issue, Microsoft is trying to issue new releases at least every three years for most products. However there have been gaps in the past, for instance with the delayed release of SQL Server 2005. Every delay of a software release from Microsoft worries Software Assurance customers. The price for Software Assurance, 25 to 29 percent, is quite high compared to industry standards. Most publishers provide support and maintenance, including access to new releases, for 18 to 22 percent of the license price.

The Good—A customer’s commitment to Software Assurance for three years enables enterprises to spread out their payments for upgrades and better predict their budget. There are multiple additional benefits that come with Software Assurance: home use rights enabling employees to install and use copies of the software on a home computer at low cost (around $US 10); roaming use right enable end users to access Office, Project and Visio outside the work environment such as on home PCs or internet kiosks; training vouchers for technical staff and access to online web based e-Learning training for end users; access to Microsoft phone and web support; planning services days to help the company with desktop, SharePoint, Exchange deployments or Business Value Planning Services to maximize the value of Microsoft Office suite.

Software Assurance is not very appealing if a company does not plan to migrate Microsoft products to newer versions within a three year timeframe. If migration is planned or envisioned, Software Assurance must be considered as a package, not as a single benefit allowing enterprises to access new product releases. A migration does not consist solely in physically replacing the software products. Migrations consist of multiple phases including:

A technical analysis must be performed
A plan has to be created
End users must be trained on the new release
Access to support (including evaluation licenses)

From this perspective, Software Assurance is a great offer that will provide high value to enterprises.

Software Assurance has a huge impact on license compliance and license optimization by providing these upgrade rights. Upgrade rights are set according to the duration of the Software Assurance contract and kept up-to-date during contract extensions or renewals. When new releases become available from Microsoft during the period covered by the upgrade right, all corresponding existing licenses should be automatically updated to reflect the new entitlement. This is hard to manually track even for small software estates; software asset and license management tools are really required to take advantage of these entitlements.

iQuate has discovered discrepancies between accepted and actual Oracle deployment and usage information in every customer we have worked with, and our customers have used this accurate data to achieve greater levels of control in several key areas.

For example, a high profile UK government agency delivering public facing services outsourced its  IT operations to a large Systems Integrator. In order to ensure they were compliant, the SI employed a team of Oracle experts to perform a manual Oracle inventory count.

iQuate were engaged to verify the result of this audit using iQSonar. The tool was initially deployed in a test environment to satisfy the client that running the tool would have no detrimental impact on the performance or availability of key business critical applications.

Once deployed across the entire network, iQSonar discovered that the manual audit was incorrect. This discrepancy was caused by the SI having prepared a list of Options installed, rather than Options in use. Had this been reported to Oracle, the licence position would have been overstated to a list price value of £1.1m

In a separate example iQuate was engaged with a major international insurance services organisation. During the scanning process our team was told Oracle would not be discovered on Windows-based or Virtual servers because installation  of Oracle on Windows or Virtual environments were against company policy and the customer had strict processes and procedures in place that governed the installation of software.

Within the first day, iQSonar had discovered Oracle on Windows server and Virtualized Windows and Linux servers, despite management being assured only days previously that this was not the case.

iQSonar uncovered seven digit  licence savings for the customer, and also prompted a review of operational procedures that led to improved operational management and control.

iQSonar is the only third party tool verified by Oracle as providing accurate and definitive Oracle deployment and usage data.

September 11th, 2009 by Matt Fisher

According to a recent report from Gartner (”Gartner Polls & Surveys Show an Increase in Software License Audits”, 31 July 2009), more than 50 percent of organizations it talked to say they have been audited by at least one software vendor in the last 12 months. In research undertaken between February and June 2009, 56 percent of respondents said they had been audited, compared with 30-35 percent for the same study in 2008.

When filtering the results to show only EMEA-based organizations, the result is even higher, with 63 percent of respondents reporting at least one audit request.

According to a variety of sources from both the software vendor and Software Asset Management (SAM) communities, the overall rise in audits is largely not due to an increased level of activity from vendors that already had active compliance programs in place, but instead due to a number of other vendors introducing compliance programs for the first time.

While Adobe, Microsoft, Oracle and IBM were cited as the most ‘prolific’ auditors, survey respondents also reported audit requests from no fewer than 18 other software vendors, including BMC, CA, HP, SAP and Symantec.

As the report states, “On-site audits aren’t pleasant”, and Gartner strongly advises that end user organizations adopt Software Asset Management and License Management practices and technologies well in advance of any audit, so that the company is better prepared to react in a timely fashion and without causing major disruption to normal business activities.