Consultant offers checklist for Microsoft license negotiations

(Second of two parts. Click here to read part one.)

Negotiating a software license agreement with Microsoft is a complicated process, and not one for the faint of heart. But armed with some critical knowledge, enterprises can get a good deal, according to a self-professed "licensing geek" who has sat on both sides of the table.

Scott Braden, an independent consultant based in the Dallas area, recently released the e-book "Microsoft License Secrets." From 1994 to 2002, he worked for a major Microsoft large account reseller (LAR), received formal licensing training from Redmond and had a hand in "hundreds" of enterprise license deals.

In the second of a two-part interview, Braden talked about software audits, who should be on your negotiating team and his checklist for a successful negotiation.

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Scott Braden
Scott Braden
Who should be on the team that negotiates a software license deal with Microsoft? Should it include administrators and developers who will actually have to work with the products?
I'd look for a senior contract person. Someone who knows the tech-vendor negotiating game. And somebody high enough up in IT who is familiar with the road maps and is familiar with the plans for the different departments. A lot of corporations have a problem with silos. You want somebody high enough up [in IT] who knows what the app developer guys are doing, who knows what the server guys are doing and what the desktop guys are doing. So IT people should be consulted but not directly involved in the negotiations?
Correct. Probably the one who'll spend the most time on [negotiations] is a relatively experienced IT person. Which department is he going to come from? It's either going to be desktops or servers, [or] maybe [from] an IT procurement group. [That person] will have to spend a lot of time getting corporate road map questions answered. What kind of homework should they do before going into the negotiations?
There's four questions they need to answer, and it's basically like this: 'What do we own [for licenses]'? And that means, 'What can we prove we own?'

The second question is, 'What do we have installed?' There's usually a delta there: 'Are we out of compliance?' 'Are we over-licensed?' You have to look at that product by product, version by version. It's commonplace to be over-licensed on one product and out of compliance on another.

… there's very few companies that have good history of licenses from an asset-tracking perspective. 

Scott Braden, consultant

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The third question is, 'What's our road map?' 'How does our technology plan -- if we even have one -- align with what we're hearing from Microsoft on the road map front?'

And the last one is, 'What can we afford?' 'What's the CFO going to sign off on?'

Those are the four questions. And there are very few companies that [have] director-level guys who can answer all of those questions, sadly enough. That's the high-level view.

The hardest ones to answer are the first two: 'What do we own?' and 'What's installed?' Asset-discovery tools have gotten better. A lot of people have stuff for that. 'What do we own?' is a tedious process because there's very few companies that have good history of licenses from an asset-tracking perspective. Does Microsoft do software audits before a negotiation to strengthen its position?
No, they don't. I think they've actually toned that down lately. What they do is, they ask a lot of questions and they sniff around and see if anything looks fishy. And if there is, they'll start talking about compliance. The hints will be dropped. There'll be subtleties. But to actually do an audit is very rare, for a Microsoft-initiated audit. More frequent audits come from the BSA (Business Software Alliance). And that's where, typically, a disgruntled worker will drop a dime on an employer. The thing is, Microsoft isn't necessarily connected with those, or aware of the results, but they still happen. Does playing the Linux card help or hurt your cause?
Oh, it helps, especially if you do it right. But it has to be real. The Microsoft folks have been slapped in the face with this enough by now to know what's real and what's not. If you start saying 'Linux,' they're going to start asking questions: 'Do you have test servers? What are you doing with Linux? Tell me what your pilot projects look like.'

I put Linux in a category of just another competitor to Microsoft, just like [IBM Lotus] Notes for e-mail and Unix for servers.

For more information

Read about Microsoft's reported licensing revamp plans for 2005

 

Learn more about software-license pros -- an emerging IT breed
Can an SMB get as good a deal from Microsoft as an enterprise customer?
In rare circumstances. In fact, sometimes an SMB that [knows how] to negotiate can get a better deal than an enterprise that can't negotiate -- put it that way. So unless you're an SMB with fantastic negotiators, you don't have much of a chance at a good deal?
If you go off list price, the enterprise will get a better deal. But an interesting side note to that is, two years ago, I would have said to SMBs, don't even bother negotiating. Just structure the standard terms to your best advantage. These days, I'm hearing about 250-seat companies that are actually negotiating and getting contract terms changed, which was unheard of a few years ago. Besides products, what else can you get in a negotiation with Microsoft? More support? Training?
All of those things. In fact, one of the 'bleeding edge' things that I've seen -- and this is a good sweetener for Software Assurance deals -- is bundling in a really good deal on support, premier support or whatever specific support you need for your company, especially if you're really large. If you're the kind of company that's paying for a full-time technical account manager, and you're about to write a check for Software Assurance, you should be negotiating that [special support] as part of the deal.

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