NZI up in arms at Microsoft licensing change

Insurance company NZI says new Microsoft licensing agreements which come into effect on October 1 have turned it into an "unhappy customer".

Insurance company NZI says new Microsoft licensing agreements which come into effect on October 1 have turned it into an “unhappy customer”.

IT services manager David Fletcher says the company is confronted with a six-figure bill for upgrades which it hadn’t budgeted for and he’s considering switching to other software.

Microsoft is replacing all existing licence upgrades with a new type of agreement called Software Assurance.

Fletcher says before he can buy Software Assurance, all NZI’s software has to be at the latest release as at the first of October 1, and most of it is a version behind. “Being an insurance company we are risk-averse. We don’t just jump into the latest versions, preferring to wait until the software is stable.”

He says the company can spread the cost over two payments but he takes exception to the short time Microsoft has allowed for the transition.

“If there was a two-year plan for rolling into it we wouldn’t have an argument. Microsoft products are good and we’ve been looked after well by its major resellers. But back in May they said it’s going to happen in the next five months and sorry if you don’t have the budget for it. I wasn’t anti-Microsoft, far from it, but I am a very unhappy customer.”

NZI has a Select Agreement, which is based on forecasting, and Fletcher agrees the situation would have been better if it had been on a more expensive Enterprise Agreement, which provides a licence for each PC. Now he is taking a serious look at alternative software such as Sun Microsystems’ Star Office and Linux.

NZI has 750 seats and Fletcher says its UK parent company, CGNU, which has 50,000 seats worldwide, is similarly upset.

Microsoft New Zealand licensing spokeswoman Jillian Goodman says NZI has until February 28 to make the upgrade to Software Assurance. She says the company is looking into its case.

The IT manager at Sky City Group, Damian Swaffield, says upgrading inevitably has a cost but, overall, the change will make the Microsoft pricing model more transparent.

“We’re growing quickly and we’re trying to price as a group over a couple of countries, so this makes it easier.”

He says Sky City upgrades at least every three years and so it is happy to move to the new pricing model. “Our business model is very complex. We run one network operating system but we run different systems for each of our businesses so upgrading licences is a major exercise.”

Auckland University of Technology’s desktop licences fall under a special category of campus licences so won’t be affected by the change, says IT manager Calum MacLeod.

However, the university’s servers don’t fall under the campus licence and will be subject to the changes. MacLeod says it is an unexpected cost given that the announcement of the changes and the necessity to change fall int the same financial year.

Lion Nathan IT manager Darryl Warren says the company is affected. But he won’t say more about the issue because he is negotiating with Microsoft about it.

Department of Conservation IT manager Ken Walker says most government departments aren’t adversely affected because they have enterprise agreements, which cushion them for another year at least.

Neil Miranda, information systems co-ordinator for the Ministry of Social Policy and CYFS (Children Youth and Family Services), says the changes will have no effect on the agencies under agreements they already have in place.

How the changes work

Starting next month customers wanting to upgrade will have to buy either a Software Assurance agreement or re-buy the software. Software Assurance replaces all current upgrade licences including Version Upgrade, Product Upgrade, Competitive Upgrade and Upgrade Advantage.

However, to ease the transition Microsoft has agreed to extend the availability of Upgrade Advantage licences until February 28, after which time Upgrade Advantage licences will automatically become Software Assurance.

For information on where you stand and how the changes affect you check out Microsoft's website.

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