Formula of the Month for January, 2013
The formula for January shows how Microsoft’s Home Use Program for Office Pro Plus costs companies much more than even a full retail copy of Office. While billed as a $10 copy of Office for your workers to take home, it’s not $10 and you don’t own it.
Remember when Blockbuster offered you such a deal, like $3 for a 4 day movie rental off the shelf? Then, after about a week, you still hadn’t gotten around to watching it and the late fees now added up to $20, almost 7x the cost of the rental. And, what did you have to show for it? Nada. In fact, in the end, you could have owned the movie by the time those late fees were added up.
Microsoft isn’t that different; except the dollar differences are astronomically more. One of the most popular Software Assurance Benefits is the Home Use Program (HUP), a Software Assurance Benefit that companies get when they add Software Assurance on to Microsoft Office licenses. For an insanely low price ($9.95 for many U. S. customers), they can download Office Professional Plus for use on a home computer. We’re not surprised that the HUP is so popular. After all, for just $9.95 U. S. customers (prices vary by country) can download Office Professional Plus 2013 for use on a home computer.
Sounds like the cheapest copy of Office around, right?
Actually it’s the most expensive.
We’ll show you, in the January Formula of the Month, how to calculate how much this copy of Office actually costs your company. Prepare to be shocked.
Several factors need to be considered:
- You must have Software Assurance on Microsoft Office Pro Plus to take get access to the Home Use Program, so if you want to know the true cost of Office through the HUP, you need to add the cost of Software Assurance. Ask your reseller or check your Customer Price sheet if you have a Microsoft Enterprise Agreement (EA).
- Companies with EAs often purchase Office with Software Assurance for every PC in their organization, but rarely do more than a fraction of their employees take advantage of the HUP. When calculating the cost of the HUP for your organization, you count what you pay for SA on every copy of Office, not just for those employees who take advantage of the HUP.
- Office licenses purchased through the HUP are not perpetual, but may only be used as long as your organization continues to license Office with Software Assurance. In effect, you are renting Office. If you stop paying for SA on Office, your employees’ rights to use the Home Use copy expire.
Let’s do a calculation.
The formula looks like this:
(Actual annual HUP unit cost) = (Number of Office licenses with SA) x (Annual unit cost of SA) ÷ (Number of HUP participants)
I’ll fill this in with numbers from an actual recent customer:
(Actual annual HUP unit cost) = 2,654 x $130 ÷ 638
(Actual annual HUP unit cost) = $540.78
Note that this is the annual cost. In a three-year agreement, this customer pays three times this amount, or $1,622.35, to rent each copy of Office. If they want to keep using it after their agreement expires, they would renew for another three years, for another $1,622.35.
This isn’t the most expensive Office we’ve seen. One customer with 9,000 Office licenses in their EA had 381 HUP users, who each cost more than $2,700 per year.
How much does it cost to buy an Office Professional Plus license outright? The most a U.S. customer would pay is $508 for a perpetual license, but more likely, $436 and, once you recognize that Home Users rarely (if ever?) need the “Pro Plus” additional applications, the Office Standard version is fine at $320. (or even less, read on…)
In the example we used above, the customer is paying $345,020 (2,654 X $130) a year, or $1,035,060 over a three-year period for Software Assurance on Office. If they just bought Office Professional Plus for these same employee HUP participants who wanted a copy for use at home, they would spend no more than $324,104. If they bought the more appropriate home version, Office Standard, they would pay $203,649. In other words, they would spend less money in just one year buying perpetual Office licenses than they spend each year renting those Office licenses instead for the amazing one-time fee of $10!
Now some people, like your Microsoft rep or reseller, might say “you get many more benefits with SA on Office than just the HUP.”
First question: can you name an SA benefit for Office other than new version rights and HUP?
Most people can’t.
And the new version rights are not always valuable, since most customers skip at least every other edition of Office. If you’ve just upgraded to Office 2010 from Office 2003 (a common scenario), you skipped Office 2007 and you’ll probably skip Office 2013.
How much value do you assign to software you won’t use? (Hint: you don’t need a formula to figure that out… Zip. Zero. Zilch.)
At SLA, we find that the Home Use Program often drives customer decisions to renew Software Assurance on Office. It’s the only SA benefit on Office that most people are aware of, so customers will say “the Home Use Program is popular with our staff, so we need to renew Office.”
We reply, “That’s why knowing how much it really costs is so important.”
What’s the alternative? After all, if your staff are going to do work at home, the least you can do is get them a copy of Office. By all means, please do! Here’s some ways to achieve this in a LOT less expensive way.
- Give staff an allowance to purchase a retail version of Office, such as Office Home and Business, which is licensed for business use, has all the components of Office Standard, and costs as little as $150 for a perpetual license.
- If your staff are already using the Home Use Program, but you want to reduce the cost, don’t renew SA on Office in your EA, where you have to buy Software Assurance for every single desktop, but instead use Select Plus, where you can renew SA for just the HUP participants who need Office at home. You can use this solution to grandfather existing HUP users so they don’t need to uninstall their HUP acquired software and remain compliant. However, we would still recommend purchasing perpetual licenses through Open License or Select Plus for any new HUP users you add, to avoid these ongoing rental costs. (Make sure you plan ahead and the renewal in Select Plus is effective no later than the day after your EA expires. BUT REMEMBER! You cannot allow any lapse in SA coverage or you’ll need to repurchase the licenses. MS will stick you on this little technicality.)
- Purchase perpetual Office licenses through an alternative volume licensing program, such as Open License or Select Plus for anyone who meets whatever criteria you put in place (begging, crying, bigger than you, providing a reasonable argument for home use, etc.)
Note that if you purchase the licenses this way, the perpetual licenses are your company’s property, as it should be. When staff leaves, you can ask them to uninstall the software, and even if they don’t, you can restore them to your inventory if they have been activated with Microsoft’s Key Management Service. Since the departed staff should no longer have access to your network and therefore to your KMS server, the software will stop working on the home machines after 180 days and the license can then be redeployed elsewhere in your organization. Even under HUP this is still the case: when they leave, they are to uninstall their rented software, although the burden is not put on the company to confirm this. Even so, why not obtain one more perpetual, reusable license to your inventory rather than another several thousand dollar Office license rental.
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