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.
- By Doug Barney
- July 01, 2005
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 SA—and gaining all those benefits—can 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
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
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
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
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
|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."
|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.
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
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.
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
"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
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
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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