In-Depth

Selling -- and Profiting -- from SA

While controversial and sometimes confusing, Microsoft's Software Assurance (SA) licensing program can be a lucrative revenue stream for your business. The trick is learning the ins and outs and explaining them to potential clients.

Software Assurance is rarely an easy sell, but armed with the right strategy, partners can build a compelling case for SA, and in the process, build a close—and potentially lucrative—customer relationship that will last for years.

SA was originally positioned as an upgrade program that would replace virtually all previous volume upgrade programs. The basic idea was that customers would pay a percentage of the original full license cost each year for the right to upgrade—25 percent per year for server software and 29 percent for desktop products.

With no guarantee these upgrades will ship, the program was not terribly compelling. In 2003, Redmond sweetened the pot considerably, and now SA is far more complex—and if you play your cards right—attractive.

Microsoft added benefits such as support and training, as well as software extras, including home-use rights, deployment and backup tools. Such features can help you justify SA for customers, after which you can offer your services to help them exploit the benefits. "Partners are looking at tighter and tighter margins. Through services, they can help their customers get the most value out of the [SA] investment," says Sunny Charlebois, product manager in Microsoft's worldwide licensing and pricing group. Services that may come into play include training, support, consulting on IT roadmaps, helping with product migrations and more.

But first, you've got to make the sale. Although SA was designed to replace a confusing plethora of upgrades programs, it is still inordinately complex. Your job is to make SA simple.

Start at the Beginning
Before diving into a deep discussion on SA, find out where the customer stands with licensing and what kinds of programs they've already signed up for, and then figure out what fundamental licensing makes the most sense.

Only then should you do an SA analysis, present those findings, and pitch the benefits of SA.

"A successful partner is someone who understands their customer's infrastructure, their network, their needs, their strategies and what direction customers are going in. Then they map the benefits to help the customer get there, and support them throughout that life cycle," Charlebois says.

Analyze the customer's approach to IT and imagine how SA and its more frequent upgrades could make it more effective. Develop two cost scenarios, one with SA and another where the customer upgrades at full price without the additional benefits.

Quick Tip: The Points System
SA comes bundled with high-end Enterprise Agreements, but not with programs such as Open and OpenSelect. But SA purchases with such programs do accumulate points that go toward higher volume discounts. You should run the numbers and see if adding SAand gaining all those benefitscan be justified through greater savings from deeper discounts. And don't forget to ask about special, limited-time discounts that crop up occasionally, with savings of 20 percent to 30 percent.

Build a New View of IT
Many customers see SA as simply giving Microsoft money for upgrades that may or may not materialize. Support is just one example of how you can help them see SA as a whole new way of looking at their Microsoft IT environments.

Don't go in simply trying to sell SA—what you are offering is much larger, a partnership that results in a whole new approach to IT management. And as a partner, you want to drive that shift and then work with the customer at every stage of a product's life cycle.

"We try to emphasize how the different benefits help them reinforce the relationship they have with their customers. It provides a deeper relationship and deeper connection with a customer," Charlebois says. "It really does help partners to help customers throughout the whole life cycle—from acquisition to maintenance and support."

One partner agrees. "It has gone beyond a licensing sale. SA helps us to get in deep and strong with the customer. It may start with Office and move onto storage, databases and more," says Belynda Talbott, senior licensing specialist at Amherst Technologies in Merrimack, N.H.

Part of the deeper relationship comes from the length of the contract—most SA deals are for three years with an option to renew. But SA also creates a deeper commitment to Microsoft technology with more frequent upgrades and a closer view into Redmond's directions. But the multi-faceted benefits package is where the closeness really comes into play. IT needs to plan for new products, upgrade hardware and add-on software around them, and make the actual move—all areas where partners can help.

Be the Expert
Customers also look to partners for help in wading through the various Microsoft licensing options, so it pays to anticipate their questions and position your company as an authoritative source. IT services company CompuCom, for example, has a series of offerings to teach customers the ins and outs, and lead them to the proper deal. The company conducts Microsoft licensing workshops that help customers pick the right program. The workshops explain how the various programs can help IT in choosing, buying, using, managing and supporting products, ensure good license compliance and help form an effective IT technology roadmap.

CompuCom services include an overall Microsoft licensing workshop, training on specific SA benefits, an explanation of licensing updates as they occur, and help with ensuring license compliance and preventing or surviving a software audit.

Becoming an expert takes commitment, because SA is complex and ever-changing. "I read everything I get my hands on and I get documentation. I have a huge archive of Microsoft documentation. I read, read, read," says Amherst Technologies' Talbott.

Explain the Economics
One tool that can help position you as an expert, while also aiding in cost-justifying SA, is the ROI model from Forrester Research: The Total Economic Impact of Software Assurance. This elaborate model helps quantify the economic value of the extra SA benefits. It includes a host of variables to calculate the value of those benefits, and is largely aimed at Microsoft direct sales and Redmond partners.

Designed to be run in close cooperation with the customer, the model allows the partner to run an array of "what-if" analyses. For instance, Forrester estimates that three-quarters of all employees will use home software to the benefit of the company. Without SA, shops typically pay between $75 and $500 per employee for such software. Forrester further argues that free or discounted work-at-home products increase job satisfaction and reduce costly employee turnover.

Forrester also estimates that vendor-backed problem resolution like that offered through SA shrinks the time it takes for a repair by between 20 percent and 80 percent, and reduces the number of admins needed to support servers from one for every 20 servers to one for every 22 servers.

The model also includes an area to calculate risk, and assess the economic impact if various technologies aren't deployed or exploited as expected. Be thorough here, as your credibility and long-term relationship are very much at stake.

Although it contains lots of variables, the Forrester model can be completed in stages, allowing you to add in details as you learn them.

Forrester's model isn't the only option. Glomark, a firm that helps service providers and other vendors economically justify products, has a somewhat simpler ROI model for SA (see "Get More Online," p. 46, for details on how to access the model). And don't be afraid to roll your own ROI analysis. Amherst's Talbott has her own closely guarded financial model for positioning SA and comparing it to other licensing programs.

The Amherst Way

Belynda Talbott, senior licensing specialist at Amherst Technologies in Merrimack, N.H., makes her living explaining, justifying and ultimately selling programs such as Software Assurance (SA). Amherst sells direct to customers and also helps its partners to position Microsoft licensing.

Talbott begins by looking at the overall environment. "You start by involving the people in the different roles within the customer [organization] to get a total view of their needs. You have to know their environment," Talbott explains. She asks the customer to look at "What you own, what you are using and what your plans are."

Belynda Talboott, Amherst Technologies
Amherst Technologies' Belynda Talbott

The key here is to lay out the benefits of being on the leading edge of Microsoft software. "Technology is number one, second is the economics," she says.

Next, she moves on to pure dollars and cents. Before jumping into SA, she walks through licensing at a higher level. "Customers need to understand the financial implications of the different Microsoft licensing options," Talbott explains. "Don't sell SA. Give the customer the financial impact of the different options. SA then sells itself. They can cover their entire environment for less than making ad hoc purchases. SA frees up dollars for other initiatives."

The key is the level of depth and detail the partner can provide. "By the time we are done with them, they have a 6-year road map for licensing," Talbott says. "We don't walk away till they know why they made a decision."

That doesn't mean SA is always an easy sell. "Many customers do not upgrade frequently, and a lot are just now looking at Active Directory. You have to justify the new technology first," Talbott cautions.

—Doug Barney

Case Studies
Another great way to position SA is through case studies. The Yankee Group, for instance, profiled three organizations, Warner Music Group, Brown University, and law firm Hughes Hubbard & Reed. The overall findings point to significant savings in total cost of ownership (TCO) due not only to discounted upgrades, but perhaps more so from the aggressive exploitation of training, support and other benefits.

If costs are reduced and benefits accrue, the customer sees a positive ROI, which is exactly what happened with these three concerns.

The Yankee Group report is a follow-up to a survey done last year of 1,000 IT administrators. Sixty-two percent of SA customers saw costs stay the same or go down. Yankee estimates companies with 100 or so users can save from $8,000 to $10,000 with SA, and organizations with over 100,000 employees can save millions.

Customers that upgrade every two to four years will save from 20 percent to 30 percent because they don't have to pay full price for software upgrades, Yankee says.

SA can also cut training costs in half, according to Yankee. Warner Music estimates training and other savings of some $100,000 a year, while Hughes Hubbard & Reed saves some $20,000 a year on training alone.

Be the Benefits Administrator
Keeping track of all the benefits calls for a dedicated SA benefits administrator. Usually this is a customer staff member. But did you know that you can be the SA benefit administrator for your clients? Multiple benefits administrators are allowed and Microsoft Volume License Services (MVLS) can help track and give partners access to the benefits information.

There's a nice upside to all of this—it gives you, the partner, direct insight into the customer environment and allows you to make insightful suggestions for additions to the computing infrastructure.

As a benefits advisor, you can track the wealth of offerings, what customers are eligible for and what has been used. When you fill this role, it eliminates the need for IT to add head count, and train someone to handle these complex programs.

You can also be a hero by helping customers maximize benefits. This involves building an infrastructure to use all these benefits and help out with upgrades.

Maximize Support
Assisting with the support benefits is another area where you can help customers take maximum advantage of SA. As a partner, you can make the support contacts and access SA resources on behalf of customers, once they sign you up as an authorized support caller (this applies to EA/Select with Enterprise Edition Server software). Partners can also be the go-between for hotfixes.

To act as support liaison, you need the SA ID number, the Enterprise Edition license type and version, configuration details and details of the problem. If your customer has SA with EA or Select, and uses Enterprise Edition Software, you can call as much as you need at no additional charge.

Ask Microsoft for Help
It should be no surprise that Microsoft wants to help you sell SA, and it has a number of resources to help. Thelicensing group runs a regular NetMeeting webcast, and in February, presented the Microsoft Volume Licensing Quarterly Information Session: The Value of Software Assurance.

"We are doing a lot of work to empower our partners. They communicate with 96 percent of our customers. To say they are important is an understatement. We value them tremendously," Microsoft's Charlebois says.

Microsoft's SA Web site has lots of detail for customers and partners, while the Microsoft Partner Program site drills into positioning, selling and profiting from SA. It also offers a detailed licensing handbook (see "Get More Online," this page).

And don't be afraid to ask for help. "I would ask partners to communicate with their Microsoft reps and make sure they have all the resources they need, from training to marketing collateral—all those resources help them communicate the value to the customer and increase their revenue," Charlebois suggests.

Learn What It Takes
Not just any partner can sell or even promote SA, however. You must be qualified by Microsoft on one of two levels. Software Advisors can pre-sell SA to small and midsize businesses (SMBs), and they are supported by in-house Microsoft licensing specialists, called Microsoft Authorized License Providers, who actually close the deals. License providers are equipped with all kinds of tools—from billing and collecting, to configuring and ordering—and they pass along a cut of the deal to the Software Advisor. Advisors may also have customers referred to them by Microsoft.

Higher-level Enterprise Software Advisors (ESAs) can actually sell SA, and tend to focus on larger customers. Many Large Account Resellers (LARs), for instance, are also ESAs.

Only the most successful partners gain ESA status, and if you don't have it, it's something to which you can aspire.

Pass the Test
One way to boost your SA selling prowess is to pass a test or two. Late last year, Microsoft introduced three exams focused on licensing. One is aimed at selling licenses to SMBs, another to large organizations and the third focuses on creating a software asset management program.

"One of the things we are doing is helping to certify partners. They not only have the training and learning, but they can test that knowledge and use certification to reinforce their knowledge of customers and prove credibility," Charlebois explains.

Studying for the exams is as simple as reading documents and poring through resources on the Microsoft licensing Web site.

You can become a certified Microsoft licensing specialist, where you act as a consultant for the customer, explaining programs and their impact, or you can be a certified Microsoft licensing administrator and be a liaison between the customer and Microsoft.

Microsoft also has Licensing Solutions on the list of Microsoft Competencies for which partners can qualify. Although enrollment had not yet begun as of press time, it is scheduled to begin sometime this year.

Delivering More
Selling SA delivers much more than direct fees—it builds a deep relationship that makes partners indispensable to their clients. It can also help customers improve modernization efforts, simplify budgeting, boost training and support, and keep on the leading edge.

SA can also deliver a huge intangible benefit: a powerful customer relationship with Microsoft that improves the flow of information, access to technology, high-level advice and leads to better deals for all down the line.

Do a good enough job selling SA and Charlebois says you might become a star in Microsoft's eyes. "We try to showcase partners who are having some success and capture what is working for them."

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