MS license deadline looms

With only weeks to go until Microsoft's much-criticised licensing changes take effect Australian customers still refuse to adopt the new model, with more than half not even bothering to review their contracts.

Despite the looming July 31 deadline, Australian Institute of Management (AIM) CIO Suresh Padmanabhan said moving to Microsoft's volume licensing regime, License 6.0, will force upgrades and the Software Assurance (SA) program will only increase costs.

"[The changes] will put enormous pressure on us to monitor and get details from Microsoft, on a regular basis, [on] any changes or upgrades. This will be a massive job for every corporate IT department," Padmanabhan said.

While Microsoft is touting the overhaul to its licensing plan as a way of simplifying choice for the customer, analysts like Gartner's Alex Bona said the vendor was seeking new licensing models to "maintain revenue growth in the face of growing customer indifference to version upgrades".

An IT manager from a large publishing company, who requested anonymity said Microsoft is forcing customers to go their way or pay the price.

"The cost will be around 10 to 20 per cent [greater]," he said.

The company has more than 1500 desktops worldwide and also runs SQL, NT and Windows 2000 servers in its back office.

"We are not planning to join 6.0 so we will be paying more when we come to upgrading our software. [We] may be looking for alternative options at that time," he said, adding that there aren't many alternatives around and he has yet to test StarOffice.

More than half of Australian enterprises have not even looked at getting ready, said Greta James, research director at Gartner Australasia.

Based on local research, she said this a "conservative estimate" and greatly impacts larger enterprises because they need more licences.

"They are going to find it harder [than smaller companies] to use alternative vendor products because they have the larger issue of retraining their staff," James said.

South Australian enterprises have voiced more concerns than any other state, she added.

"Large enterprises are feeling pressured to sign up for Software Assurance," James said "It's more difficult for large enterprises to change and Microsoft is aware of that".

In the worst-case scenario, Gartner said enterprises could pay up to 107 per cent more. That figure applies to customers who upgrade every three to four years, according to Gartner.

Yet Robert Vogler, national licensing manager for Microsoft Australia, said 80 per cent of the purchases made through the volume licensing programs would cost the same or less as under the previous 5.0 program.

Vogler said that customers who used the one-time upgrade facility (version upgrade, product upgrade or competitive upgrade) infrequently, that is every three or more years, may find upgrading costs higher in the new program, but these purchases represent only 6 per cent of the total licences sold.

When asked how many enterprises are ready for the July 31 deadline, Vogler said: "I'm extremely confident our enterprise customers are well informed of the alternatives open to them and will be making their choices based on the value they place on keeping their Microsoft product current."

Originally Microsoft gave customers only four months to prepare for the changes when it announced the initiative in May last year. But customer complaints drove the vendor to extend the deadline by an additional 10 months, form October 2001, to July 31 2002.

( Lauren Thomsen-Moore contributed to this article.)

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