01/10/2002 - 22:00

IT budget squeeze

01/10/2002 - 22:00

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THE July 31 deadline for Microsoft’s new bulk licensing scheme has well and truly passed. SMEs that failed to consider the impact of these changes are likely to feel the squeeze on their already bursting IT budgets.

IT budget squeeze
THE July 31 deadline for Microsoft’s new bulk licensing scheme has well and truly passed. SMEs that failed to consider the impact of these changes are likely to feel the squeeze on their already bursting IT budgets.

The new scheme, called Software Assurance, is intended to simplify the bulk licensing process and allow customers to always have the latest versions of the software applications they use. It’s part of Microsoft’s subscription-based approach that treats software as a service rather than a product.

With Software Assurance, customers pay for the software licences they require plus 25 per cent or 29 per cent of the licence value per annum over the course of a contract period of two to three years.

The additional annual premium entitles customers to all new versions of software applications released within the contract period.

The changes have sparked a negative reaction worldwide, with affected user groups and industry analysts seeing few benefits and many drawbacks in the new scheme.

In a recent APC magazine article, William Maher cited Gartner research suggesting that user organisations upgrading frequently may pay between 35 per cent and 77 per cent more for software than under the old scheme. Less frequent upgraders may be looking at 68 per cent to 107 per cent more.

Those using legacy software such as Office 97 had until July 31 to upgrade to Office 2000 to pay only the annual fee for the stipulated contract period.

However, for many companies this would have involved an expensive hardware upgrade. Those who failed to do so will now have to pay the full licence price of the software they require, as well as Software Assurance the next time they upgrade. Those companies choosing not to opt into the Software Assurance scheme will have to pay full licence prices each time they upgrade.

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