A quarter of businesses will not be renewing their Microsoft Software Assurance (SA) maintenance programme subscriptions, according to a survey conducted by analyst Forrester Research.
Of the 63 IT procurement managers surveyed, 86 per cent said their licensing arrangements with Microsoft under the SA, which guarantees free upgrades and updates to new product along with support and training tools, were due to expire this year.
But just over a quarter (26 per cent) said they would not sign three-year renewal contracts because the scheme is not saving them as much as they had hoped.
Forrester said this is because the long-term costs of SA may be less cost effective than buying additional licences on an ad-hoc basis, particularly when Microsoft's track record of updating its products is inconsistent. The latest Windows Vista operating system was the first to be released in more than five years, while Microsoft has also not yet published a road map for products released since November 2006, including Vista, Exchange 2007, Office 2007 and SharePoint 2007.
A further 31 per cent of survey respondents were still undecided as to whether to renew, while 18 per cent said they would renew for some products. The remainder said they would either 'probably' or 'definitely' renew.
Almost three-quarters (74 per cent) of those questioned who said they would not buy the same amount of SA maintenance cited cost-effectiveness as a reason for downscaling their commitment to the programme and 59 per cent said they did not expect to get a new product release.
"The uncertainty regarding product releases makes it difficult for IT procurement and sourcing professionals to justify a three-year SA renewal," said Julie Giera, the report's author and Forrester vice president.
The report also points out that SA accounts for 29 per cent of the total cost of an annual desktop licence. Given the gap between major releases, this works out at about 116 per cent the cost of a new licence. And SA makes up 25 per cent of the cost of a server licence.
But Forrester stops short of advocating customers should abandon SA altogether, instead urging procurement managers to drive a harder bargain during licence re-negotiations.
"This sounds like common sense, but we're continually surprised by the number of companies that don't take the time to conduct a financial analysis of the costs and benefits of SA," said the report.
However, Amanda Abel, head of licensing at Microsoft UK was keen to talk up the added benefits of the Software Assurance programme, saying that the UK enterprise agreement renewal rate was 89 per cent.
But given the gap between major releases, when pressed about the cost of the programme in terms of the breakdown by annual licensing expenditure, Abel said: "That is why Software Assurance is more cost effective if you are planning to upgrade within a four-year window."
