Microsoft hike key license price by 15%. How can you offset the rise?

A few days ago, Microsoft (or rather, many of its resellers) announced a 15% price rise for it’s user-based Client Access license, for a range of applications. The price hike was pretty much immediate, taking effect from 1st December 2012.

The change affects a comprehensive list of applications, so it’s likely that most organizations will be affected (although there are some exceptions, such as the PSA12 agreement in the UK public sector).

Under Microsoft’s client/server licensing system, Client Access Licenses (CALs) are required for every user or device accessing a server.

Customers using these models need to purchase these licenses in addition to the server application licenses themselves (and in fact, some analysts claim that CALs provide up to 80% of  license revenue derived from these models).

What’s interesting is that the price rise only affects User-based CALs, not Device-based CALs. Prior to this change, the price of each CAL was typically the same for any given application/option, regardless of type.

This is likely to be a response to a significant industry shift towards user-based licensing, driven to a large extent by the rise of “Bring your own Device” (BYOD). As employees use more and more devices to connect to server-based applications, the Device CAL becomes less and less attractive.

As a result, many customers are shifting to user-based licensing, and with good reason.CALbeforeafter

15% is a big rise to swallow.   However, CAL licensing has often been pretty inefficient. With the benefit-of-proof firmly on the customer, a true-up or audit often results in “precautionary spending”: “You’re not sure how many of our 5,000 users will be using this system, so we’d suggest just buying 5,000 CALs“. This may be compounded by ineffective use of the different licensing options available.

Here are three questions that every Microsoft customer affected by this change should be asking:

Do we know how many of our users actually use the software?
This is the most important question of all. It’s very easy to over-purchase CALs, particularly if you don’t have good data on actual usage. But if you can credibly show that 20% of that user base is not using the software, that could be a huge saving.

Could we save money by using both CAL types?
Microsoft and their resellers typically recommend that companies stick to one type of CAL or the other, for each application. But this is normally based on ease of management, not a specific prohibition of this approach.
But what if our sales force uses lots of mobile devices and laptops, while our warehouse staff only access a small number of shared PCs. It is likely to be far more cost effective to purchase user CALs for the former group, while licensing the shared PCs with device licenses. The saving may make the additional management overhead very worthwhile.

Do we have a lot of access by non-employee third parties such as contractors?
If so, look into the option of purchasing an External Connector license for the application, rather than individual CALs for those users or their devices.  External Connectors are typically a fixed price option, rather than a per-user CAL, so understand the breakpoints at which they become cost effective.  The exercise is described at the Emma Explains Microsoft Licensing in Depth blog.  Microsoft’s explanation of this license type is here.

The good news is that the price hike will usually kick in at most customer’s next renewal. If you have a current volume licensing agreement, the previous prices should still apply until then.

This gives most Software Asset Managers a bit of time to do some thinking. If you can arm your company with the answer to the above questions by the time your next renewal comes around, you could potentially save a significant sum of money, and put a big dent in that unwelcome 15% price hike.

Image courtesy of Howard Lake on Flickr, used under Creative Commons licensing

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s