The Power of No

By Steve Gutzman

It is important to be comfortable saying “no” in a negotiation. Not all terms need to be agreed with, not all best and final prices are best and final, and not all deals need to be done. Unfortunately, many inexperienced negotiators think they must hang on at all costs until a deal is done. For them, saying no to a deal is like saying no to a free lottery ticket … it just might be the winner, and they can’t afford to pass up the jackpot.

From the buying side, preparing for a negotiation requires an understanding of the best “no deal.” The value put on the best no-deal option sets a limit that any agreement must not exceed in order for the buyer to agree. It becomes the point that the buyer will not go above. From the selling side, the best no deal becomes the level that the seller will not go below.

William Ury, in his best-selling book Getting to Yes, calls this the BATNA, or best alternative to a negotiated agreement. According to Ury, “The BATNA is the only standard which can protect you from both accepting terms that are too unfavorable and from rejecting terms it would be in your interest to accept.” In its simplest form, this concept means that if the proposed agreement is better than the BATNA, accept it. If the agreement is not better than the BATNA, continue negotiating. If the agreement cannot be improved, consider withdrawing from the negotiations and pursuing an alternative proposal or walking away from the negotiations altogether. Each side typically knows its own limits, which must continually be assessed and reassessed as new information unfolds. The problem is that many negotiators have only a hazy sense of their own no-deal options or how to value them. At a very basic level, buyers are taught that unless they hear no at least once, they are leaving money on the table. It’s part of the process and can be an important tactic. But let’s explore the use of no from a strategic standpoint as well.

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Steve Gutzman is a senior advisor at ICN and a 33-year veteran of the high-tech


Microsoft makes changes to Select Plus – Improves Discount and Software Assurance Rules

This is the 2nd of a two-part series (the first part was out on April 1st) :    The Select Plus volume licensing program received two updates that preserve discount levels and ease license tracking and management.

Two changes to Select Plus will benefit customers by helping to preserve discount levels and making license and Software Assurance purchases easier to manage

Part 2,  By John Cullen

Initial License and SA Purchase Term Alignment

The second Mar. 2011 change alters the rules for initial purchase of licenses with SA so that the SA renewal dates of multiple purchases fall on a single affiliate anniversary date. This helps organizations to keep track of their renewal dates.

In Select Plus, purchases are made by the affiliate, a business unit or department within the organization that signed the agreement and that is allowed to make independent purchases. An affiliate designates its affiliate anniversary as either the date that it first registered under a Select Plus Agreement or the date it began using a licensed product. Until now, for orders of licenses with SA (called L & SA purchases) in Select Plus, Microsoft ignored an affiliate’s anniversary date when setting the initial term for SA. Specifically, every order for L & SA was required to include a full 36 months of SA coverage. This resulted in multiple orders of L & SA purchases that ended on different dates, giving the affiliate a large number of renewal dates to track. Microsoft mitigated the problem by aligning all SA renewals after the initial 36 months to the affiliate anniversary. This meant that the term of the first SA renewal could be between 25 and 36 months. As a result, initial orders of L & SA had staggered end dates, but their corresponding renewals made within the same year were aligned.

Under the new policy, L & SA orders will be aligned to the next third-year affiliate anniversary from the date of purchase. Therefore, L & SA orders made at any point during a year will terminate simultaneously at the next third-year affiliate anniversary date, and thus they will run from 25 months (for purchases made just before the anniversary date) to 36 months (for purchases made just after). SA renewals are then aligned for a three-year period.

This change improves and simplifies the SA purchase process by avoiding L & SA orders with different end dates for renewal. L & SA orders will align at purchase instead of waiting for alignment upon SA renewal. Customers will still need to consider timing when buying SA for a particular product; however, internal recordkeeping and renewal date tracking should be simplified.

More Like Old Select

With these two incremental changes to how Select Plus operates, customers will have greater ability to retain their discount levels as well as simpler L & SA and SA renewal asset management and tracking. These changes also make Select Plus work more like the Select program that it replaces, which will give organizations currently on Select more reason to consider the newer program. Microsoft’s announcement of the changes is at


About the Author: John Cullen is a Research VP at Directions on Microsoft, an independent publisher of information about Microsoft technologies, product roadmaps and licensing rules and programs. For more information, visit

Microsoft makes changes to Select Plus – Improves Discount and Software Assurance Rules

This is a 2 Part Series:    The Select Plus volume licensing program received two updates that preserve discount levels and ease license tracking and management.

Two changes to Select Plus will benefit customers by helping to preserve discount levels and making license and Software Assurance purchases easier to manage

Part 1,  By John Cullen

The Select Plus volume licensing program has improved incrementally with two updates effective in Mar. 2011. One enables more companies to carry over earned discounts from year to year, and another provides more favorable terms for purchases of licenses with Software Assurance (SA) coverage, which offers version upgrade rights and other benefits. The updates make Select Plus more similar to the Select “classic” program that it replaces, and they will offer most customers better discounts that are less sensitive to purchase timing and that provide easier SA tracking and management.

What Is Select Plus?

Under the Select Plus program, customers license products at discount pricing based on the number and type of licenses purchased. License purchases yield points that determine price levels for each of three product pools: systems (mainly Windows), applications (Office and similar PC products), and servers. Of the four discount levels, A through D, level D offers the greatest discount.

Select Plus is aimed at midsize and large organizations with 250 or more PCs that want transactional, pay-as-you-go license purchasing. Select Plus offers the widest spectrum of business software of Microsoft’s volume licensing programs. Furthermore, the purchase of SA is not required with Select Plus license purchases, compared to other programs such as the Enterprise Agreement. (SA is Microsoft’s subscription-based software maintenance plan that provides version upgrades and other subscription services.)

Rollover Points for Discount Levels

The Select Plus rules for accumulating points from purchases have changed to enable customers to roll over points from year to year, which will lead to more favorable discounts and make customers less dependent on purchase timing.

At each Select Plus agreement anniversary, a compliance check is done by Microsoft to determine whether the annual points earned for each product pool still qualify the customer for their current price discount level. If the points are not sufficient, the discount level is adjusted downward by a maximum of one level (for instance, from Level B to Level A pricing).

Until now, points have not been carried over to the following year. Each customer’s agreement year began with zero points earned. For example, a Select Plus Level A customer who earned 600 points in year one (100 points more than the minimum threshold for Level A) would stay at Level A for year two and would need to earn another 500 points in year two to maintain Level A for year three. The excess 100 points earned in year one do not carry over to year two and are not applied against the 500-point minimum requirement for Level A pricing in that year.

Under the policy introduced in Mar. 2011, after an annual compliance check, points in excess of the minimum threshold for a specific price level (for example, Level A requires 500 annual points) are considered “rollover” points. These are carried over to the next agreement year. At each anniversary, the compliance check will account for any rollover points to determine whether the minimum threshold for the current price level of each product pool has been met. The Select Plus Level A customer cited above would need to earn only 400 points in the second year to maintain that price level, not 500, because the customer would benefit from 100 rollover points earned in the first year.

Unlike frequent flyer points, rollover points cannot be used whenever the customer chooses. Rollover points are always applied to the following year. Rollover points do not expire: If a customer does not select a year to use them, the points can carry over for a number of years. They will assist customers in retaining their current discount levels, thereby saving them money on license costs. This will also make discounts less sensitive to purchase timing. A customer who has already met a given discount level for the year will have no incentive to postpone additional purchases until the following year to help maintain the discount level for that year.

  Part 2 will be out early next week.

About the Author: John Cullen is a Research VP at Directions on Microsoft, an independent publisher of information about Microsoft technologies, product roadmaps and licensing rules and programs. For more information, visit

Did you know?…. Microsoft Licensing Gotcha’s

by Lisa Schick

Educating your architects and IT personnel on the proper use of licenses could help you avoid costly compliance issues.  For example on most server products it is within the license agreement to have an active back up server that is used only in case of a primary server failure but if you allow just one read only instance on that back up server you are required to pay a full server license for the back up server.

Servers and virtualization – Architects often think that when they virtualize servers they are saving money on the hardware but this can become very costly with software licensing.  For example, if you are using SQL server, you can run several instances of SQL on a single server but the minute you turn the server into a virtual machine, you are now are obligated to pay for a server license for each VM you are using.  So if you have 4 VMs running on a server you will need 4 SQL server licenses.  Sometimes it is more cost effective to “beef up” your hardware using higher powered processor, more RAM and faster buses to reduce the number of SQL licenses required. Here is an example: 

Single Server Example: License to allow 16 Windows Server VM’s to simultaneously run on a 2 processor server

            Buy 16 Standard edition licenses for the server

            Buy 4 Enterprise edition licenses for the server

            Buy 2 Datacenter licenses for the server (unlimited VM’s)

Multiple Server example: 16 VM’s that are moved between 4 servers (2 processors each)

            For maximum flexibility, buy one of the three options above TIMES FOUR

            Anything less will limit the number of VM’s that can be simultaneously run on one or more servers

Any Windows server touched by an external source needs to have an “external connector” license.  So if you have a web server running windows that accesses a SQL database, you will need to purchase an EC license for the SQL server and the web server.

When using the Sharepoint application, it is import to really evaluate all of the necessary functionality.  The Sharepoint foundations product is FREE when you purchase a windows server license.  You can often use the free version of this application and build the additional functionality using available tools or possibly purchase whatever added functionality you may need from another vendor at much lower costs.

You need to pay attention to scenarios where you have an application between the end user and the MS servers.  For example, if you are running an application that uses SQL server as the backend database, any person or device that access the initial application is required to have a CAL for SQL.

Lisa Schick is a Senior Consultant for ICN (, a Winter Park, Fla., consultancy that educates Professionals on IT Procurement, Sourcing, and Vendor Management. ICN sponsors CAUCUS: The Association of Technology Procurement Professionals. Contact her at

OOPS! Know What Your Licenses Say!

            Lots of activity on the legal front over the past several weeks.  Recent court decisions effect how you might look at use of licensed software by third parties.

            [First the disclaimers:  I’m not an attorney and these comments do not constitute legal advice.  Consult your attorneys; for your convenience and theirs, links to the court decisions are provided below.]

            Autodesk provides its AutoCAD software under a Software License Agreement that all customers must agree to before installing the software.  The SLA states that: 1) Autodesk retains title to all copies of the software; 2) the customer has a nonexclusive and nontransferable license to use the software; 3) customers are prohibited from renting, leasing or transferring the software without Autodesk’s prior consent. In addition, there are other significant license restrictions including requiring the destruction of all copies of previous versions after an upgrade.

            Timothy Vernor purchased several unopened used copies of AutoCAD from one of Autodesk’s direct customers and resold the copies on eBay.  The District Court held that the sales were lawful and did not infringe on Autodesk’s copyright, because two of the Copyright act’s affirmative defenses apply to owners of copies of copyrighted works, the first sale doctrine and the essential step defense. 

            The Ninth District Court of Appeals in Vernor v. Autodesk, Inc., No. 09-35969, 9/10/10 overturned the lower court decision finding that Autodesk’s direct customers are licensees of their copies of the software rather than owners.  Because Vernor did not purchase the copies of the software from an owner, the first sale doctrine cannot be invoked and an essential step defense cannot be asserted.

            Because Vernor purchased the software from a licensee and not an owner, the sale did not constitute a transfer of ownership.  As a result, copyright infringement liability may be imposed upon Vernor and subsequent users of the software, because its subsequent use is in contravention of the original software license agreement. 

            What’s the lesson here for us?  Know your seller. Understand the terms of the license agreement before you buy.  And, begin with the end in mind.  Determine up front what your likely plan will be at the end of your use of the software.  Don’t expect to be able to sell, donate or transfer it unless the license specifically allows it. 

            Compliance Source develops, licenses and sells mortgage-financing forms to residential lenders.  Digital Docs develops, licenses and supports computer software that prepares residential-mortgage loan documents.  Jointly they developed technology that allows mortgagees to merge their own transaction-specific information with Compliance Source and Digital Docs proprietary forms and prepare customized loan documents. 

            GreenPoint Mortgage Funding signed a licensing agreement to use the technology to streamline its loan packaging process.  The licensing agreement allowed GreenPoint and its Originating Lenders access to closing documents.  It specifically prohibited GreenPoint from copying, selling or sublicensing the forms database.  The licensing agreement also included a specific license to “use the Software Products in a Production Environment at the Customer Site Locations.”  It specifically prohibited sub-licensing to third parties.  GreenPoint allowed its attorneys access to the technology to prepare loan documents. 

            Compliance Source and Digital Docs sued GreenPoint for breach of the license agreement, and the District Court found in favor of GreenPoint on the basis that use of the licensed property by a third-party solely on behalf of and for the benefit of the licensee is not a transfer or sublicense.

            In Compliance Source, Inc. and Digital Docs, Inc. v. GreenPoint Mortgage Funding, Inc. No. 09-10726, 10/18/10, the Fifth District Court of Appeals stated that because the license agreement expressly prohibited any use not explicitly permitted by the agreement itself, and because the attorney’s use was not explicitly permitted in the agreement, the District Court’s decision was in error, reversed and remanded for reconsideration.

            What’s the lesson here for us?  Simply granting any third party access to licensed technology may be considered a breach of your license agreement. Seek permission first, or better yet, negotiate up front your ability to grant attorneys or service providers access to or use of the technology in the normal course of business.

            Bottom Line:  Know what your licenses say!

Our guest blogger is Dan Wallace, a staff member at ICN and Caucus-The Association of Technology Acquisition Professionals. For advice on software license agreements, contact ICN.