Sales: Software Assurance Sales -- Obstacles Dead Ahead
- By Keith Ward
- August 30, 2007
Partners who sell Microsoft Software Assurance (SA) may hit some big
hurdles this year, according to a recent survey by Cambridge, Mass.-based
Forrester Research Inc.
The survey results, released in July, indicate that many SA customers
are considering not renewing their SA contracts. In fact, only 11 percent
of the customers Forrester polled definitely planned to renew.
SA is a maintenance program that, for a yearly subscription fee, provides
24-hour phone support, training, home-use rights and other benefits. But
the primary reason most businesses opt for SA is to get new and upgraded
For channel partners, Forrester's findings could translate into a lot
more work. "I think the failures of SA from the channel perspective mean
sales cycles will take longer and be more challenging, and customer expectations
for discounts are likely to be higher," says report author and Forrester
Vice President Julie Giera.
This is an important year for the SA program, with many agreements up
for renewal. In fact, 86 percent of the 63 customers Forrester interviewed
have SA licenses that expire in 2007. Of those, 26 percent said they won't
renew. That's more than double the number of those who liked the agreement
enough to ante up again. Another 31 percent indicated that they were "not
sure" or "still deciding," 18 percent planned to renew "only for some
products," and 13 percent said they'll "probably" renew.
The Forrester report's conclusion isn't good news for Microsoft or its
partners: "The economics behind buying or renewing SA aren't nearly as
compelling for many companies as appeared to be the case a few years ago,
when the program was first introduced. Long upgrade cycles, lack of a
detailed product road map for new products, introduction of Enterprise
CALs [client access licenses], and costs of SA are prompting many more
organizations than before to reconsider their licensing strategies."
Forrester's report encourages customers to fight back against SA terms
and to hold out for discounts.
Microsoft, which has worked closely with Forrester on licensing-related
studies and tools, disputes Forrester's conclusion that customers feel
that they're not getting their money's worth from SA.
Stacie Sloane, director of marketing and communications for worldwide
licensing and pricing, calls Forrester's results misleading because they
were based on too small a sample. The report "only looks at a subset of
our customers and isn't consistent with the feedback we've received,"
she says. "In fact, Microsoft's renewal rates are on target and in line
with our expectations.
An estimated 75 percent of existing EA customers are renewing their
Enterprise Agreements, which demonstrates that customers find value in
all the benefits this type of agreement offers."
If that's true, Giera wonders, why is Microsoft so eager to cut deals
on SA? "Discounts have gotten deeper, concessions have gotten better and
customers have been able to get a much better deal. That says to me that
Microsoft understands that this audience is at risk," Giera says.
Besides pushing Microsoft for better deals, how should partners respond?
Giera recommends viewing SA not just as a product, but as a platform for
upselling and solution-selling their own wares.
For instance, if a customer is doing an Exchange migration, a partner
could point out SA's training and work-at-home benefits, then offer to
handle the rollout and implementation. Says Giera: "There's huge money
to be made there."
Keith Ward is the editor in chief of Virtualization & Cloud Review. Follow him on Twitter @VirtReviewKeith.