Hosted by Microsoft Licensing 6.0 Updates Laura DiDio Senior Analyst The Yankee Group
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Microsoft Licensing 6.0 Updates
Laura DiDioSenior AnalystThe Yankee Group
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Agenda
Overview
Latest Survey Data
Updated Licensing 6.0 Terms and Conditions
Preparing to Negotiate
Negotiating to Win
Conclusions and Recommendations
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OverviewMicrosoft Licensing 6.0 launched August 1, 2002
It includes a subscription license 3-year lease
option
Licensing 6.0 cancelled many economical software
“bundles” in favor of expensive a la carte single
package items
Enterprises that upgrade frequently – every two to
three years get the best deals
Upgrade Advantage is now Software Assurance: a
20% to 30% pricing premium
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Has your business yet migrated to the Microsoft Licensing 6.0 Plan?
28
72
0
10
20
30
40
50
60
70
80
Yes No
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Licensing 6.0 Cost Increases
11
1
28
22
17
7 7 6 0
0
5
10
15
20
25
30
Decreasedby 5 to 20%
Decreasedby more than
20%
Remainedthe same
Increased by5 to 20%
Increased by20 to 30%
Increased by30 to 50%
Increased bymore than
50%
Costsdoubled
Costs tripled
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If your business has not yet upgraded to the Licensing 6.0 plan, please indicate the reason
25
42
28
60
5
10
15
20
25
30
35
40
45
Our business lacksthe necessary fund...
We just recently re-signed our existi...
We do not sufficientlyunderstand the...
We have significantissues of softwar...
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Microsoft Licensing 6.0 Changes
Microsoft has made sweeping contractual changes to Volume License and Services
Intellectual Property Indemnity now covers trade secret and trademark
Liability cap removed for gorss negligence & willful acts
Product Warranty lengthened to 1 year from 90 days
Audit notification increased from 15 to 30 days
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Preparing to Negotiate
Know what’s on your network!!!
Perform a detailed asset management
and inventory
Address licensing non-compliance issues
Review existing contracts
Prepare a Vendor “Report Card”
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Negotiating to Win Understand ALL Terms and Conditions
Set specific goals (I.e., discounts and extras)
Assemble the right team
Negotiate on Neutral Territory
Get competitive bids
Take your time
Report suspicious or unethical sales tactics
Be Prepared to walk away
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Conclusions & Recommendations
Economy+inertia=buyers market!
Software vendors are targeting small and
mid-sized enterprises – leverage this.
Multinational enterprise customers
should use Master Business Agreements
and determine which country offers most
favorable licensing conditions.
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Delivering an Effective End-user Environment
Steve KleynhansVice President, End-User Platforms
© 2003 META Group, Inc., Stamford, CT-USA, +1 (203) 973-6700, metagroup.com.
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Business and Technology Scenario Hyper-collaborative environment
puts new emphasis on end-user platforms
Constituencies are changing
Technology no longer driven by corporations
Pervasive technologies challenge traditional IT management tactics
Ongoing economic turmoil forces renewed focus on cost effectiveness
The relationship between IT and the businesses it serves is being reshaped. ITO’s must embrace change. Servicing end users
effectively is a key requirement.
PC market turmoil
Performanceneeds? Device
chaosWireless
Licensingchanges
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Critical IssuesUnderstanding market
pressures and technology advances as well as their impacts on planning and management processes
Establishing best practices for end-user management, including vendor selection and configuration policies
Adapting for mobility and pervasive computing
End-user computing will continue to fund more than its share of IT budget cuts through 2003 — falling PC prices will help,
but better process is required
Cos
t E
ffec
tiven
ess
Adaptability
Current Environment
Typical CorporateDirection
Pure Technology
Focus
ManagedEnd-user
Infrastructure
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Limitless HardwareMoore’s law continues
unimpeded
• But that doesn’t
necessarily mean
“performance”
Processors are becoming more tuned to particular needs
Shifting away from
processors to platforms
0
1981 2001199619911986
10
100
1,000
10,000
1
100,000
Price Performance
IBM PC
386
486
Pentium
P2
P3
P4
2,000
5,000
4,000
3,000
6,000
1,000
Price Performance
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The 64-bit Desktop QuestionProvides access to larger
memory (>4GB)
• Improves performance of some
applications
Provides greater bandwidth
to and from memory
• Impacts the most serious
bottleneck in processors today
Provides more complexity
for instructions
However…
Intel has yet to weigh in on mainstream large memory issue
Other techniques exist for extending addressing
Code (and memory requirements) can bloat
64 bit can be wasteful and actually reduce perf with some loads
Mainstream desktops will not shift to 64-bit before 2007, however for niche applications it is worth exploring
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Persistent Security No longer just a network issue
• The entry points are in continual flux
Security will be layered throughout all
systems
• Encryption/authentication at every transition
point
Security takes on new importance in
an era of corporate accountability
“Palladium” and Intel’s LaGrande
target this issue but are a long way
from production
Security certification will become more important for establishing business relationships than operational certification was in the
1990s
Client Security Points
1011010110
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Understanding “Productivity”User productivity requires new
means to handle information.
Corporate productivity is not the same as user productivity but they are related.
Making users more productive isn’t enough. New technology enables new processes but requires understanding the entire end-user environment.
The real productivity improvements necessary for continued economic growth will require more than “baby step” refinements in
technology
Productivity Enablers• Continuous learning• Information access• Interaction models• Integration (data,
platforms, process, apps)
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Office XP and Office 2003Continued refinement of user
interface, functions, and intelligence along with improved reliability
Office XP as a development platform• Office Web Components
• Workflow Designer
• Smart Tags
Redefining the role of Office from document creation to document collaboration
Office XP is an incremental step that foreshadows future capabilities, but upgrades are tied to timing
Next Up … Office 2003
Focus on XML
Broadens links to Web services
Increased support for new knowledge worker initiatives
Bridges gap between creation and consumption
Focus on XML
Broadens links to Web services
Increased support for new knowledge worker initiatives
Bridges gap between creation and consumption
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The Tablet PC: The Next Big Thing? Most distinct change since notebook
Strong concept but questionable implementation — heavy push by Microsoft
Traditional and new vendor entries
Focus is on new interaction/usage models
Need 2-3 years to achieve optimized user ergonomics
Eventually, rich ink features will make it into all computers
Eventually, tablets will be commonplace, but they are currently niche products; they will appeal mostly to non-PC users
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How to Manage TCOMany factors are out of ITO control
Reducing costs is easy if value isn’t a concern
TCO is a balancing act and needs to be regularly reviewed in light of corporate priorities
The Cost Levers
Service level
Standardization
Automation
Application architecture
Centralization
Procurement practices
Service level
Standardization
Automation
Application architecture
Centralization
Procurement practices
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The Well Managed UserStandardized common
operating environments are
the most powerful tools
Improves all aspects of TCO,
but does require discipline
Works best with a predictable
refresh
Lock-down vs. supporting the
build
Core BuildCore Build
Non-Build ItemsNon-Build Items
Hot Fix LayerHot Fix Layer
LayeredLayeredBuildsBuilds
LayeredLayeredBuildsBuilds
LocalizedLocalizedBuildsBuilds
LocalizedLocalizedBuildsBuilds
Client support ratios have improved from 1 FTE per 100 clients to 1 FTE per 125 clients — a $200 annual savings!
HardwareHardware
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Three vs. Four Year Cost Comparison3 Year Desktop w/Monitor
Time Estimate $/hour Cost Lifecycle
Depreciated Cost
PC Purchase NA NA $950.00 3 $316.67PC Install 0.65 $65 $42.25 3 $14.08PC HW Break/Fix Contract 0 $0 $180.00 3 $60.00PC Software Support (e.g. Drivers, ) 1.5 $65 $97.50 3 $32.50PC Disposal Labor 0.75 $65 $48.75 3 $16.25PC Disposal Fees NA NA $25.00 3 $8.33Annual Hard Cost per PC $447.83Lost End User Productivity (Soft Costs)3.67 $65 $238.55 1 $238.55Total Soft and Hard Costs $686.38
4 Year Desktop w/Monitor Time
Estimate $/hour Cost LifecycleDepreciated
Cost
PC Purchase NA NA $950.00 4 $237.50PC Install 0.65 $65 $42.25 4 $10.56PC HW Break/Fix Contract 0 $0 $180.00 4 $45.00PC HW Break Fix Labor (e.g. Failures,) 0.45 $65 $29.25 4 $7.31PC Software Support (e.g. Drivers, ) 2.5 $65 $162.50 4 $40.63PC Disposal Labor 0.75 $65 $48.75 4 $12.19PC Disposal Fees NA NA $25.00 4 $6.25Annual Cost per PC $359.44Lost End User Productivity (Soft Costs) 5.5 $65 $357.50 1 $357.50Total Soft and Hard Costs $716.94
IT should plan for a 3-4 year lifecycle but allow for flexibility to accommodate unplanned upgrades.
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Is Thin Client Really Cheaper?
Thin-client architecture (e.g., WTS/Citrix Metaframe) should augment, not replace, the fat-client environment
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
WTS FatClient
WTS FatClient
WTS FatClient
Thin Client vs. Fat Client Cost Comparison
Server HW Server Admin Client HW Client Administration
Heavy Applications
ModerateApplications
LightweightApplications
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Going MobileMore workers are increasingly
mobile in their jobs• Occasional vs. constant
• Local vs. wide area• 75% of info workers will be mobile at
least 25% of the time (2005)
• 40%-50% of corporate users will use notebooks (2006)
Corporate impact: Content, application architectures, infrastructure, operational support
“Mobilizing” is much more than just outfitting a user with a notebook
HomePNA
Ethernet
WLAN802.11
IrDA
WAP
CDPD
GSM
TDMA
Ardis
Metricom
Mobitex
Dial-Up
DSL
Cable
GPRS
3G
PersonalArea
Local Area
Wide Area
Pervasive Area
“Everywhere”
Remote Office
Office
PersonalWorkspace
ISDNBluetooth
Companies must support “anytime, anywhere” computing
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Business Impact: Rapid technology change and vendor immaturity will force continued investment in mobile applications
during the next 2-3 years
Making Mobile Work Enterprises must support multiple
device types for enterprise users, and even more for consumers
Hardware standardization is imperative, but a single standard is not enough
Manage user expectations on mobility carefully
Leverage best practices in managing laptops for other pervasive devices as well
Personal Information Manager
Apps
Man
agem
ent
Picking the Right Starting Point
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How Much Will It Cost/Save?Typical project investment• Quick start: $25K-$50K
• Beyond pilot: $250K-$500K
• Full scale: $1M+
ROI• Small project should be “learning”
investment
• Midsize should have 18- to 24-month ROI
• Large project may have 3+ year ROI
• Expect 15%-100%+ paybacks
Tactical vs. strategic• Targeted LOB vs. enterprise
Evolving and rapidly changing technology means continuous evaluation and investment for the next 5-7 years
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6 Steps to Pervasive Deployment Identify key
opportunities/projects
Assess apps for mobile potential
Leverage existing expertise
Define realistic goals — set realistic expectations
Get business case approval from mgmt.
Make security a central theme
Deploying a pervasive app to a mobile workforce requires a lot of effort and buy-in from the organization
Realistic Expectations Are Key
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Business Impact: Central project coordination and oversight are critical success factors for mobile/wireless success
Integration Approach and Strategy
Mobile deployments must be evaluated for their ROI, not their “coolness” factor
Functionality should be highly targeted to mobile user functions/needs
Keep it simple and focused on user context
Deploy tactically, but look toward strategic needs
Bottom Line
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An Effective End-user Environment
New platform technologies provide the opportunity to improve user and corporate productivity if appropriately managed and implemented.
Pushing PC life cycles from three to four years provides some benefit (~$50-$100), but that must be balanced against added costs of a four-year life cycle (e.g., extra break fix, slower performance, image management, migration headaches).
Pervasive technology will grow to affect all parts of the business in the next 3-5 years. Pervasive deployments must be evaluated for their ROI, not their “coolness” factor.
Business Impact: End-user computing will continue to fund more than its share of IT budget cuts — falling PC prices will
help, but better process is required
Transformation Steps