Microsoft Pitching New Volume Licensing Program As Customers' On-Ramp To The Cloud

Last December, Microsoft unveiled a plan to make its software licensing simpler for customers to work with and understand. The first step in this plan -- known officially as "Next General Volume Licensing" -- was something called the Microsoft Products and Services Agreement, or the MPSA.

Microsoft, perhaps more than other vendors, has acronyms for everything, which tends to dilute their significance in the eyes of the channel. But the MPSA has caught the attention of many customers and partners because it promises to make it easier than ever to buy Microsoft software by putting all the licensing language into a single agreement.

The MPSA saves time by eliminating time-consuming steps from the licensing process, and this is helping Microsoft partners generate quotes faster for their customers, Richard Smith, general manager of Microsoft's World Wide Licensing & Pricing (WWLP), told CRN in a recent interview.

Perhaps the biggest advantage of the MPSA is that it lets customers buy on-premise and cloud software under a single agreement. Customers can get cloud and on-premise software today through Enterprise Agreements, which are three-year volume licensing contracts for organizations with 250 or more PCs.

But the MPSA is for customers that want to do transactional business and don't want to sign an EA contract.

Microsoft's EA -- and other licensing plans such as Select Plus and Open -- were built to meet needs of different customers and distribution models, Smith said. But these agreements weren't built in a "holistic, connected way," which resulted in a lot of duplication.

"With the MPSA, we had a chance to eliminate that and simplify the language we used," Smith said.

The WWLP group reports in to Microsoft COO Kevin Turner, and Smith said he's a "major sponsor" of the MPSA. Other members of Microsoft's senior leadership team also are on board.

"This is a project that has visibility at the highest levels. It's a major investment for us," Smith said.

Turner has been on a mission to simplify Microsoft's licensing since he joined the company in 2005. At Microsoft's 2007 partner conference in Denver, he said Microsoft had cut its number of licensing programs from 107 to 26 in the space of the previous year.

However, Turner also made it clear that Microsoft would have to keep chipping away at licensing complexity. "We have to make it simpler, and we have to work on it every day, every week, every month, every year," he said at the partner conference.

NEXT: Chipping Away At Licensing Complexity

With the MPSA, Microsoft has fresh figures with which to dazzle licensing-weary customers. While Microsoft's Select Plus agreement is 37 pages long, the MSPA -- which is replacing it -- is just seven pages. This is because Microsoft used simpler language and cut out duplication in the wording of the agreement, Smith said.

The MPSA reduces the number of steps needed to complete an agreement by 70 percent, which comes from eliminating manual decisions that used to be required, Smith said.

Customers can save time by consolidating their agreements using the MPSA. Smith said one early beta customer was able to save an entire day out of their week by switching to the MPSA, and he said Microsoft expects other customers to see similar time-savings.

Microsoft also studied competitors' licensing agreements when developing the MPSA. Smith said Microsoft was inspired by one rival in the desktop market whose licensing agreement is only 10 pages long.

Microsoft, Redmond, Wash., started mapping out its MPSA plans more than two years ago in conjunction with its licensing partners. Insight, a $5 billion global Microsoft partner listed at No. 483 on the 2014 Fortune 500, has been involved with the MPSA since the get-go.

Caroline Hinton, a vice president who oversees Microsoft licensing at Insight, Tempe, Ariz., sees the MPSA as a better way for its customers to buy licensing from Microsoft. Insight's clients typically have numerous lines of business, and the MPSA lets them take advantage of volume discounts across their organization, she said.

While EAs are more standardized across organizations, the MPSA lets clients pick and choose what products they want, according to Hinton. "With the shift to hybrid environments with cloud and on-premise, the MPSA is a great bridge for that," she told CRN.

It's important to note that only Microsoft large account resellers -- which Microsoft calls Licensing Solution Providers, or LSPs -- are authorized to sell the MPSA. There are about 400 Microsoft LSPs around the world, with 120 of them in the 13 markets where the MPSA is currently available, according to Microsoft.

Amy Konary, an IDC research vice president focused on software pricing and licensing, told CRN the main advantage of the MPSA is that it replaces multiple agreements that customers used to have to manage separately.

Konary, who has spoken with Microsoft partners about the MPSA, said it's helping them generate quotes for customers more quickly than they've been able to do in the past.

"Microsoft is really pushing for customers to have the flexibility to buy on-premise or cloud software," Konary said. "Everything you buy -- whether it's an online service or on-premise software, through a transactional or volume purchase, all ties to that single agreement."

NEXT: The Microsoft Volume Licensing Center

Along with the MPSA, Microsoft debuted a new licensing portal that consolidates 16 pre-existing licensing tools into one location, Smith said. The portal, called the Microsoft Volume Licensing Center, replaces the old Volume Licensing Service Center, which has had its share of glitches and downtime over the years and has long been a source of irritation in the channel.

With the new portal, Smith said Microsoft customers and partners are getting 65 percent faster agreement submission times, and a 40 percent reduction in manual steps needed for activating software.

"What we're really trying to achieve is to make volume licensing friction-free, so no one's blood pressure rises," Smith said of Microsoft's new licensing portal.

Insight's Hinton said the portal is making the licensing process smoother for partners. "The tools let us see all purchasing activities for the client. It's a simpler set of tools to manage the experience and the license for the client. We spend less time doing reconciliation," she told CRN.

While the MPSA sounds great on paper, it's not a slam-dunk that Microsoft customers will flock to it right away. Customers that have discounts from previous volume license agreements might be hesitant to change, for example.

"Whenever any vendor moves to simplify their licensing, something is sacrificed in terms of flexibility," IDC's Konary said. Some customers may prefer to use multiple Microsoft licensing agreements for specific regions or departments, for example. Others may prefer to use Select Plus, which is one of the agreements the MPSA replaces, said Konary.

Paul DeGroot, principal analyst at Pica Communications, a Camano Island, Wash.-based Microsoft licensing consultancy, said it's still not clear how customers will benefit from having on-premise and cloud software in a single licensing agreement.

"Microsoft keeps telling everyone that all the good stuff will be in the cloud, but very few enterprise customers see any significant benefit to the cloud right now," DeGroot told CRN.

While it remains to be seen whether the MPSA delivers on its promises, it's clearly one of Microsoft's most aggressive attempts so far to simplify its licensing. And if it's successful, the MPSA will help Microsoft achieve its goal of getting its huge base of on-premise customers transacting comfortably in the cloud.

"Removing friction from selling and provisioning Microsoft products and services is good for partners," Konary told CRN. "MPSA is about turning the battleship to the cloud, and also allowing customers to migrate at their own pace."