Scott Braden

Feb. 1,2016

Microsoft’s Enterprise customers should already realize that “Team Redmond” is in a desperate rear-guard battle to defend its incumbent monopoly positions in infrastructure software, against the increasingly successful insurgent attacks from Amazon, Google, and an ever-growing list of startups and disruptors.

The ‘softies’, with great fanfare, are using every trick in their huge, complex, ever changing book of tyrannical licensing rules, to push their customers away from traditional licenses for on premise software, towards cloud subscriptions.

Why would one of the richest companies of all time intentionally cannibalize its incredibly profitable licensing business, in favor of a much higher cost cloud hosting business model that is rapidly reaching commodity status?  Because they have no choice; if customers are not on Microsoft’s cloud, they will be on Amazon’s or Google’s or someone else’s.  And, as the common wisdom goes, once a customer moves their operations to a provider’s cloud stack, it will be very difficult to dislodge for a competitor (more on that topic later).

One example of the pressures being applied to customers:  At NET(net), we’ve long been advising our clients that they should expect and plan for regular and frequent software license compliance audits.  For the past several years, Microsoft has been building out a ‘Software Asset Management’ (SAM) ‘partner ecosystem’, and clients are now receiving letters from Microsoft, “asking” for their cooperation and participation in a ‘SAM review’.   The wordsmithing is top-notch; we must give due credit to Microsoft’s marketing department… the letters leave a typical IT manager with the impression that an audit is anything but voluntary… Microsoft fails to mention that particular detail, but let’s be sure to emphasize the point right here:

Microsoft SAM Reviews are not audits; they are a voluntary exercise.

So, being a good corporate citizen, our beleaguered IT manager client reluctantly consents to an invasive and disruptive ‘SAM Review’ which, coincidentally, is timed to complete just before the renewal of existing but expiring Enterprise Agreement, or other volume licensing agreement.

Then what happens?  In the many cases where NET(net) has been involved, we have witnessed a consistent pattern of ill-planned, poorly executed, confusing, and sadly just plain incompetent efforts by the ‘Partners’ contracted by Microsoft to perform these audits.  The litany of problems is too tedious to recount, but some low points include:

• No accountability chain: any problems or disputes disappear into a black hole of finger pointing and unreturned emails. Who’s in charge here, the ‘Partner’ or Microsoft?

• Incredibly poor service quality, from absolute basics such as timely acknowledgement and responses to communications, to constantly shifting project teams with no notice (causing constant re-starts and slowing everything down).

• A clear bias toward extremely liberal interpretations of every possible bit of client data against the most aggressive possible licensing methods with the most potential liability.  This is to be expected, we suppose, but the aggressiveness and pig-headedness exhibited makes it clear that the ‘Partners’ are strongly compensated toward maximizing the license revenues resulting from the audit.

• Rampant incompetence in understanding and applying Microsoft’s own licensing terms.  This one boggles the mind. One would hope and expect that a ‘SAM Partner’ would at least exhibit basic understanding of the rules they are engaged to enforce… one would be disappointed.

• The list goes on – suffice it to say that any IT manager entering this mess should be ready for any and all shenanigans.

Motives are a tricky thing to assign to a large corporation; but we are left with the lingering feeling that Microsoft has intentionally engineered this malignant incompetence into the ecosystem, with the end goal of both maximizing immediate revenue from compliance settlements, and using the shock value of huge (claimed) compliance gaps, to force customers into high-cost subscription deals they would otherwise laugh off of the table.

So, our dear overworked IT manager, please don’t go in there alone; bring a guide who has traversed this path many times and will help you avoid the pitfalls and overcome the boogeymen lurking there.

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