Part 2: The Wrong Time to Make a Big Choice
Customers are often forced to make a choice about Software Assurance at the worst possible time
By Paul DeGroot, Senior Consultant
Imagine that you have just purchased a new-model car. You’ve signed the contract, figured you could afford the monthly payments and are thinking Point B looks a lot better from Point A than it ever did.
Sales guy goes into the office, comes out with the keys, but says “before I give you these, I have a great deal for you.”
“What’s that?” you ask, thinking he’s going to throw in leather seats for another $50.
“How would you like to buy the 2015 model of this car, at a discount?”
“Why is that a great deal? Is there something special about this 2014 car? Maybe I shouldn’t be buying this one.”
“Oh, no, you’ve just purchased a great car. In fact I have no idea what the 2015 car will be like.”
“Well, if I like this car, maybe I’ll come back in 2015 and take you up on that discount.”
“Sorry, but you only get the discount if you buy the 2015 car today. We’ll let you make payments over three years.”
“How big is the discount?”
“About 15% to 25%.”
“And what if I don’t like the 2015 model?”
“Our shareholders thank you for your money.”
“Can I have my keys, please?”
For some reason, Microsoft doesn’t expect customers to walk away from a “deal” like that one. I suppose if you paid $6 billion for aQuantive (now in pieces); $5 billion for an investment in AT&T broadband (whatever happened to that?); and made a $40-billion-plus bid for Yahoo (still circling the drain), you might go for it.
For most people who aren’t suckers, however, pitching a customer on a bird in the bush at the same time they have one in hand seems likely to fail most of the time.
That’s the way Software Assurance works, though. If you don’t buy it at the same time (in some cases, with 90 days grace period) as you buy a new license, you can’t ever add it to your new license, even if the payoff is years down the road and you risk losing all the money you put into Software Assurance.
Not surprisingly, that deal attracted very little action in the Software Assurance early days, and Microsoft has had to sweeten the pot to get more customers interested with various Software Assurance benefits. But you gotta wonder: who thinks hitting the customer with a big bill for an uncertain payoff at the point of sale is a good sales tactic?
Switch and Bait
Another way that Software Assurance’s timing is spectacularly bad is when Microsoft makes significant changes to a product’s version line-up and gives Software Assurance customers preferential access to a new, premium version.
The change is usually made just months before the upgrade is released, too late for customers who purchased the product a couple of years earlier. Had they known about the change in the product line-up at that time, they might have been willing to add Software Assurance to their purchase. All they can do now is rue their choice, not repair it. And while they lost a chance to upgrade, Microsoft lost money as well, on Software Assurance not purchased.
For example, Visio 2007 came in Standard and Professional editions, so customers who wanted the version with the richest features bought the Pro edition. They may or may not have elected to add Software Assurance to that license.
But Visio 2010 came out with a different edition lineup: Standard, Professional, and a new Premium version that, for about twice the price of Professional, incorporated several cool new features. Many Pro customers were no doubt thinking “if they had only told me that they were doing this, I would have added Software Assurance to my Visio Pro license.” But it was too late to add SA. Lose/lose.
The moral: if Microsoft wants to maximize its Software Assurance revenue it needs to give customers a better heads-up about significant changes to the product lineup that could prompt them to take the gamble, rather than waiting until it’s too late for them to get into the game.
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