How to save on Microsoft business software

Discounts of up to 50 percent are available to companies upgrading Windows and apps, but you have to know where to look

Many small businesses pay too much for Windows, Office, and other Microsoft products. They buy software off retail shelves or online, one-at-a-time, and miss significant discounts that are available to almost every company. If your company uses more than four Microsoft products, such as Project or Visio, there is a discount program available. You just have to know where to look.

How much can you save? Up to 50 percent in one current promotion, but more commonly 5 to 25 percent, depending on the product.

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Microsoft offers three volume licensing programs for small and medium-sized businesses with anywhere from five to 250 PCs.They are: Open License, Open Value, and Open Value Subscription.

The company also offers a program called Software Assurance that, for an annual payment of 29 percent of your Microsoft apps purchases and 25 percent of server purchases, provides ongoing "free" upgrades and other benefits.

Software Assurance (SA) is described in detail following the program descriptions.

These names appear in various forms in different places -- even at Microsoft. I have used the more easily-recognized form of each program name.

You would think the Microsoft Small Business site would make it easy to find out about each program, but it doesn't, instead referring customers to resellers for additional information.

It helps to know what to ask about, so here are program specifics:

Open License

"The easiest and simplest approach for small business is the Open License program," said Paul de Groot, licensing specialist with Directions on Microsoft, a newsletter and consulting firm that advises customers on how to best purchase Microsoft products.

"The program is very easy to get into--any five licenses gets you an authorization number--and takes somewhere between 5 and 25 percent off license prices," de Groot said.

"Open License is transactional, meaning there are no long term commitments, and Software Assurance is optional. An authorization lasts for two years, and once you get it, you can order additional licenses one at a time and still get the discounted price."

Open Licenses also allows customers to manage their software licenses online and to install software from copies stored on local servers.

Open Value

"If you want Software Assurances on every license and slightly better discounts, you can do that with Open Value," de Groot said.

"Open Value is a program that doesn't count software licenses, but the number of PCs in your organization. If you're looking to do an across-the-board upgrade -- say from WinXP and Office 2003 to Win7 Pro and Office 2007, with rights to Win 7 Enterprise and Office 2010 at no additional cost -- Open Value might be the better option."

Open Value customers commit to purchasing a customized set of Microsoft products for their desktops and are able to simplify license tracking, make upgrades more easily, and improve cost management for their software investment. Open Value requires a three-year commitment.

A key feature of the Open Value program is the ability to spread payments out over three years.

Open Value Subscription

Microsoft is offering potentially large discounts to customers who purchase time-limited software subscriptions, as opposed to the perpetual licenses that come with boxed software and other Microsoft purchasing programs.

Here's the difference: When the subscription ends, so does your company's license to use the software (although a buy-out option may be available). With a perpetual license, you can use your software theoretically forever.

Open Value Subscription the same offers benefits as Open Value, but in a subscription license. Customers see lower up-front costs with a subscription, and have flexibility to 'true-down' or pay for fewer desktops if they've seen reductions when they reach their anneversary.

Through June 30, Microsoft is running a promotion called the "Up-to-Date Discount," which allows customers to receive as much as a 50 percent off on their purchases by giving them credit for software they already own.

Microsoft is also offering financing to small business customers. Qualifying customers can receive 36-month loans for solutions that include Microsoft software and cost as little as $3,000, Sharpe added.

Software Assurance

Considered controversial by some business customers, Microsoft's Software Assurance program charges an annual premium of up to 29 percent of the value of the customer's Microsoft software purchases. In return, customers get the right to upgrade their software at no additional charge during the term of the agreement.

Companies that want to keep their software current can find Software Assurance a convenient way to upgrade without having to purchase expensive new software all at once. On the other hand, if Microsoft doesn't do a major upgrade every three or four years, the program could turn out to be too costly.

Here are some of the benefits of Software Assurance:

Windows 7 Enterprise is only available to Software Assurance customers, and while some of the features are targeted at large organizations, it brings key security features such as BitLocker, BitLocker To Go and AppLocker that offer benefits for organizations of any size. Learn more from Microsoft about Windows 7 Enterprise features.

Microsoft's Home Use Program offers copies of Microsoft Office Enterprise 2007 Enterprise for $9.95 to the employees of SA-member companies for their employees to use at home. Other products are also available.

The Home Use Program supports telecommuting and other flexible work options. Once the benefit is activated, companies provide the program code to eligible employees and they can order directly from the Home Use Program website.

E-learning programs are also available through SA, potentially lowering training costs and increasing employee efficiency.

With Spread Payments, small businesses can spread their total licensing costs (licenses plus SA) into 3 equal annual payments with no additional fees or interest charges, providing a predictable way to license Microsoft software.

Software Assurance customers also have access to the Microsoft Desktop Optimization Pack, a collection of IT-oriented tools and technologies available as a subscription.

Planning is key

Signing up for Open License is a no-brainer, provided you are willing to purchase five copies of Microsoft software at once to get started. The other programs require a bit of thought and probably a long discussion with a reseller, plus some number crunching, before a purchase decison is made.

Questions such as, "How many machines do we need to upgrade" and "Does our company like to stay current or do we delay software purchases as long as possible?" are the beginning.

Money also plays a role, with Microsoft offering financing and special offers to get customers into Software Assurance, which may not otherwise be the best choice for them.

Before making a decision, customers should price their needs using all three volume license programs, add in special offers and financing, and choose what's best for their specific circumstances.

Where to buy

Customers interested in Microsoft's volume license programs should contact one of the company's SMB specialist resellers: PC Connection, CDW, PC Mall, Best Buy for Business, Tech Depot, or Staples.

Discounted Microsoft products are also available through local "small business specialist" organizations, who can also provide other services to customers, such as migration and support.

The Microsoft Small Business site offers more details and contact information.

Regardless of the vendor chosen, if your company isn't buying Microsoft products through one of the three SMB volume licensing programs, you are paying too much.

David Coursey has been writing about technology products and companies for more than 25 years. He tweets as @techinciter and may be contacted via his Web site.

This story, "How to save on Microsoft business software" was originally published by PCWorld.