Microsoft to audit 30,000 companies by 2014 – in the US alone

This is slightly older news before the new management at Microsoft took over. But still worth a read.

Have you received your audit letter from Microsoft yet? It may not be called that—it will go by a much friendlier name, such as a free Software Asset Management (SAM) engagement, cloud-readiness assessment, True-Up tech-check or similar innocuously-named, friendly-sounding assistance.

But make no mistake. You’re on track for an audit, and over the course of that audit you may be asked to pay money to comply with licensing rules that are made up on-the-fly as we’ve experienced recently.

An internal memo from Microsoft management to sales teams shows that, whatever they are called, the objective is to pry more money from customers.

It states:

“Software Asset Management [SAM] is a critical lever in this year’s revenue growth goals. Each of you [in sales] should focus your efforts on identifying areas where Microsoft’s Intellectual Property is not properly licensed and build this into your account development plans. It’s important to note that:

  • Microsoft is planning to have SAM conversations with their 30,000 managed accounts in the US in the next two years.
  • SAM is good for customers because it is a sales-led business-led conversation that promotes best-practices for the customer, ensures proper licensing and often uncovers large gaps — and that means revenue for Microsoft.
  • Customers can opt out of SAM if they want, but if their licensing looks even the little bit strange, our Legal group will take it from there, pending an ROI review.
  • So, one way or another, we’re going to get a gauge on what our customer’s license entitlements are, and what they have deployed. We need to communicate this in a positive and collaborative way to our customers and help them understand the value of SAM.
  • If our customers choose not to participate, the alternative is that they pass on a business-based conversation – legal will step in, and they will engage. We want customers to go through SAM – keep it on the business conversation, and keep the tone friendly.”

Noted PC Magazine columnist John C. Dvorak states,

“…while Microsoft officially touts its SAM Engagement service as being completely voluntary, clients are given the impression to the contrary by veiled threats that the “matter will be escalated to legal if they begin asking too many questions.” (See an Audit by Another Name: An Insiders Look at Microsoft’s SAM Engagement Program)

Clint Boulton of the Wall Street Journal’s CIO Journal writes,

“One CIO, who earlier this year received such a letter from a Microsoft partner inviting him to one of these engagements, said the subtext of the letter was “we’d really like you to do this.”

If a CIO declines the voluntary audit, Microsoft could serve the customer with a more formal audit demand said the CIO, who declined to go on record because he is negotiating a licensing renewal with Microsoft. “What is troubling as a CIO is that the main reason for having an enterprise agreement with Microsoft is to simplify a true-up process so you don’t have the time and expense of conducting audits with Microsoft,” said the CIO” (See Microsoft Software Licensing, Audits Confound CIOs)

Software Licensing Advisors has obtained a representative audit letter and provided the subtext for you. For our dissection of this letter, Check out Martin Thompson’s ITAM Review coverage: See: Dissecting the Microsoft Audit Letter

In Gartner Research’s paper, ‘Exploring Microsoft’s Updated Enterprise Agreement‘, Gartner cautions

“…what is concerning for some is the insertion of new contract language in the true-up clause which reaffirms Microsoft’s desire for compliance. Specifically, the true-up clause now says…

“Microsoft, at its discretion, may validate the customers true-up data submitted through a formal product deployment assessment using an approved Software Asset Management (SAM) Partner.”

This means that each and every time you submit a true-up order, you could be subject to a Compliance review.” Gartner

We’ve talked to numerous insiders, who confirm that Microsoft Chief Operating Officer, Kevin Turner, continues to require enormous growth goals for sales teams, whatever it takes.

We have encountered numerous cases where this pressure has led to desperate behaviors that challenge integrity at all levels. Microsoft will demand compliance payments for alleged breaches of user rights or contract language that, on deeper examination, is unfounded, in order to achieve untenable sales goals.

Unfortunately, Microsoft’s complex and opaque licensing rules make it difficult for most customers to tell fact from fiction, and they don’t expect Microsoft to be shaking them down with fabricated non-compliance claims. But we encountered three situations in one recent month where Microsoft did just that. In one case, Microsoft insisted that a customer get compliant and that they must do so through the costliest of licensing options; and further…they asserted…it wasn’t really optional.

Fortunately, these customers sought a second opinion and asked Software Licensing Advisors for help. We spotted the licensing errors in Microsoft’s demands, pointed to their contractual rights, and turned back nearly $1 million in compliance claims by arming our clients with facts. Additionally, via our partner SoftWatch, we are able to identify users with installed applications that are rarely or never used, and optimize licensing and against installed software before the licensing police (**AHEM** I mean, friendly SAM Engagement folks at Microsoft) are knocking at your door.

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