Assessing Project Licensing Changes

Microsoft has revealed new licensing provisions for the next version of Project. The changes, while beneficial to some customers, foreshadow other licensing changes many organizations should track carefully.

First the good news: Like Windows Server 2003, Microsoft is modifying client-access licenses (CALs) for Project 2003. The company is adding a per-user license in addition to the more-traditional per-device license. The new license option would benefit companies with employees that access a Project Server from multiple devices, such as a desktop PC and notebook. Rather than pay by device, companies would be able to pay by employees where beneficial.

Additionally, Microsoft will offer the Project External Connector, which would grant an unlimited number of non-employee partners or clients assess to a Project Server.

Other changes are more cumbersome and could lead to unnecessary customer confusion. As part of so-called product streamlining, Project Standard 2003 will not be capable of connecting to a Project Server. This change presents problems for companies using Project Standard 2002 to connect to a Project Server that plan on upgrading to the newer version. To compensate, Microsoft is offering a licensing promotion that would let companies with upgrade rights to Project Standard 2003 move to the professional version instead. While I commend this migration option, the functional changes between the Project Standard and Professional versions could lead to unnecessary customer confusion.

Project Standard customers taking the Professional 2003 version would not automatically receive upgrade rights to the next-version Pro release. So, a company running Project Standard 2002 and taking advantage of the Project Professional 2003 migration option would only have rights to the follow-on standard version. That situation creates a different customer problem for future upgrades.

To address this situation, Microsoft is offering a Step-Up program for customers looking to move from Project Standard to Project Professional. These customers would need to buy a discounted Project Professional Software Assurance license, which would get them on the right upgrade path. As I blogged on the earlier Office Step-Up promotion, I consider the program’s licensing provisions as unnecessarily complex. Also, it would appear that Microsoft is penalizing some customers for software design changes. Maybe a customer had signed up for, say, Project Standard Software Assurance with the expectation of upgrading to the next version and similiar features. In reality, Microsoft has eliminated some of those expected rights, unless the customer acquires a Step-Up license to Project Professional.

What these changes foreshadow: Project started as a desktop program to which Microsoft later added a server component. While customers do achieve some functional benefit from the client-server changes, cost conceivably increases. Project 2000, for example, offered collaborative features available to anyone running the software. With Project 2002, an additional server component added new features but also greater initial cost for some customers. Customers dopting the client-server model would spend more money, as they would be acquiring desktop and server software and also CALs. Microsoft did not eliminate stand-alone Project versions, which benefited customers that either didn’t need the extra features or the additional cost.

Right now, Microsoft is in the process of dramatically increasing products’ cross integration of features, or what CEO Steve Ballmer has called "integrated innovation." The strategy means there will be more interdependencies between Microsoft desktop and server software. Microsoft also plans to introduce more server-based components connecting to Office, some of which would require separate CALs. So, conceivably, a company could buy Office, several server packages and additionally pay CALs for messaging, rights management, e-mail and other functions. CALs aren’t exactly new, but Microsoft clearly will be accelerating the number of different types of CALs as the integration strategy matures.

This shift in Microsoft strategy means businesses will need to be much more careful about how they evaluate and buy Microsoft software. Microsoft makes trial versions available for most of its products. Businesses will need to more closely evaluate how the pieces fit together so as to avoid overpaying for functionality. At the same time, Microsoft customers need to watch for product function shifts that favor client-server software and the need for acquiring more server software and/or CALs. Project Standard and Professional 2003 versions are a good case study.

Posted by Joe Wilcox at August 11, 2003 10:19 AM