Microsoft's May 2001 announcement of wholesale changes to its volume-licensing programs generated significant gnashing of teeth among enterprise customers -- so much gnashing that the Redmond, Wash.-based company twice extended the launch date of the new licensing programs.

Among the more controversial changes is a program known as Software Assurance, where enterprise customers pay an annual fee in exchange for the right to upgrade a particular application, such as Microsoft Office, if a new version is released during the coverage period.

Critics say Software Assurance essentially forces enterprise customers to purchase upgrades for desktop and server applications on Microsoft's schedule, instead of making those upgrades whenever they want. Of course, organizations can choose not to buy Software Assurance, but they may lose out on software discounts and other benefits, forcing them to pay a higher price when they do decide to upgrade.

"A lot of the objections that people have are the ability of the individual IT manager to make [upgrade] judgments has been somewhat constrained by the changes," said Terry Savage, CIO of Nevada and chairman the Microsoft Licensing Committee for the National Association of State Chief Information Officers (NASCIO).

Although some government agencies already have decided which way to go on the Software Assurance issue, others are still sweating over the spreadsheet, crunching numbers as they try to make their choice.

There is potentially good news for jurisdictions that haven't yet taken the plunge. A NASCIO subcommittee has been meeting with Microsoft representatives to discuss some public-sector concerns, and NASCIO said the company has been receptive.

What's It All About?

Microsoft bills Software Assurance as a "simpler way for volume licensing customers to keep current with the latest and most innovative Microsoft products." The subscription program, which was introduced with Microsoft's Licensing 6.0, replaces several one-time upgrade options.

The company said Software Assurance helps enterprises standardize on up-to-date versions and spreads out software spending, avoiding the spikes that coincide with the releases of new versions.

Software Assurance's approach is a good idea in theory, Savage said. It saves money for jurisdictions that already have software upgrade cycles of three years or less. For those that don't, Software Assurance offers a means for standardizing on the latest releases -- but at a potentially higher cost up front.

"From a financial standpoint, if you used to upgrade regularly every time there was a change, [Software Assurance] saves you money," he said. "If you're somebody who, as most people did, would skip an upgrade here or there or delay doing it, this ends up costing you more money."

Aside from the software expense, agencies may see higher hardware costs because they need more powerful PCs to run the newer programs, Savage said.

Failing to keep current has its set of drawbacks, however. Skipping upgrades may save money in the short term, but there is a price to pay down the line when organizations begin facing compatibility issues caused by the lack of uniform software across the enterprise, he said.

"If I put together a Word file or Excel file and send it to a wide distribution list, and I'm on the current version and some agency is two versions behind, they won't be able to read it," Savage said. "Either I have to take the time to send it out in a degraded version, that might not even have some of the functionality that I wanted to use in the document, or I send it out as the full version, I get told people can't read it, then I have to fix it ... those things take time, and time is money."

But the current fiscal crisis may prevent jurisdictions from considering Software Assurance, regardless of its potential benefits.

Shane Peterson  |  Associate Editor