Channel Marker

Jan 26 2011   4:58PM GMT

Microsoft EA changes put LARs in the hot seat

badarrow Barbara Darrow Profile: badarrow

Paul DeGroot knows more about Microsoft licensing than nearly anyone, including most people at Microsoft itself.

DeGroot formerly an analyst with Directions on Microsoft and now off on his own at PIca Communications, details in SearchITChannel.com how Microsoft is taking more of its volume licensing deals direct, It is certainly not alone in that. Every major software company from Oracle to Symantec is in the same boat. They’re locking down volume licenses directly and most of them are taking all the revenue from renewals and maintenance on licenses direct as well. Two new online services, Microsoft InTune and  Office 365, DeGroot writes, replicate much EA functionality and will also be sold/billed directly by Microsoft.

Of course all of this is worrisome to a cadre of Large Account Resellers (LARs.) These were companies like the old Corporate Software, Software Spectrum, Egghead Corporate & Government, Softmart, Software House International etc. which used to handle volume licensing for all the major vendors for big customers.

 Many of these LARs have merged and combined with each other or simply went away as more customers started downloading their software direct. Software House International is still fighting the good fight. Direct marketer CDW remains a LAR as does Insight (which bought Software Spectrum which had already merged with Corporate Software or something like that.)  Dell is a LAR by virtue of its purchase of ASAP Software. You get the picture.

Since the advent of near-ubiquitous broadband and easy downloads, it was natural that customers get their software delivered that way–straight from the vendor. Of course that imperils the traditional business model of LARs. In the case of MIcrosoft, LARs were a subset of Microsoft partners able to sell volume licenses. When software was delivered in shrink-wrap boxes (or even by disks) there was a model. Not so much anymore.

LARs were able to sell the fact that they could help customers manage multiple volume licenses from multiple vendors. And given the complexity of software licensing, many companies see the attraction in that. A friend of mine has a full time job tracking and monitoring software licensing and pricing for his bank. He attests that 95% of his time is now spent on watching one vendor alone–Oracle. He clearly would welcome trustworthy help keeping vendors honest.

The vendors are always trying to sell him more licenses than he need or are auditing the bank to make sure it’s not using more software than it has the rights for. Monitoring licenses is a full time responsibility, he said. He would also welcome expert advice on when to forego vs. sign on to new Enterprise Agreements. It’s not immediately clear why, with Windows 7 still not fully deployed and now compelling software releases on the horizon for the next two years, why his bank should even sign up for a new EA, other than to stay legal, that is.

So, while some might argue that LARs are outmoded, a LAR that works for the customer’s best interest (vs. pushing as much software as the customer can stand) represents a real value-add.

Let us know what you think about the story; email Barbara Darrow, Senior News Director at bdarrow@techtarget.com, or follow us on twitter.

Check out more IT channel news on SearchITChannel.com.

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