Introduction to the “Select” Family of License Plans
The “Select” family of volume licensing plans is designed for organizations that have a minimum of 250 PCs. Through these plans organizations can receive a discount of up to 35% off of the retail price of Microsoft’s Office Suite products.

There are two sub-plans within the Select family: Select Classic and Select Plus. The biggest difference between these two sub-plans is that the discount for Select Classic is based on forecasted purchases, while the discount for Select Plus is based on the first year’s actual purchasing volume. Another significant difference relates to how Software Assurance (SA) works within each plan.

• Features Common to all Select Plans
• There are a number of things that are common to all Select plans:
• Agreement Scope: Select agreements are all worldwide in their scope. An organization can have a single Select “umbrella” agreement, with a separate enrollment for each of its affiliates (an “affiliate” is generally either a division of the larger organization or a wholly owned subsidiary). In this case…
  • Points earned through each affiliate’s purchases can be combined to earn a higher discount level for the entire organization.
  • Local company managers can be held responsible for their own purchases.
  • Each affiliate can receive their own media in their own local language.
• Agreement Tracking Assistance: Select agreements come with access to Microsoft Volume Licensing Services (MVLS), an online system that enables organizations to track their Select license agreements, including graphs and information about actual purchasing volume versus forecast. This can be very useful, as an organization can have multiple Select agreements in effect at the same time, each with a different expiration date.
• Purchase Method: All Select licenses and purchases are handled by Large Account Resellers (LARs). Each affiliate has the option of choosing their own LAR for their enrollment, so that they can work with a reseller in their own time zone and language. For example, a North American division can choose a LAR located in the U.S. that conducts business in English and sells English-language products, while the same organization’s German division can choose a local LAR that conducts business in German and sells German-language products. In order to change LARs an enrollee must give both Microsoft and the LAR 30 days notice.
• Payment: Customers normally pay in full for software licenses within 30 days of installation. This is in contrast to some of the Open license plans we discussed last month, in which payments can be spread out over the agreement term.
• Software Assurance: SA, a subscription for Microsoft’s maintenance program, is optional on all Select plans.
• “Points” and “Pools” Discount System: The Select discounts, which can be complicated to calculate, are all based on a “points” and “pools” system. Microsoft has grouped its products into three “pools”: Applications, Systems, and Servers. Each product within each pool has a specific point value assigned to it (and yes, this is the same point value that the product has in the Open License “Open Level C” volume licensing plan). A company can have a Select agreement in place in 1, 2 or all 3 pools. Depending on which plan is chosen, the purchase discount for that pool is based either on the organization’s purchase history in that pool or on its purchase forecast for that pool.
• 4 Discount Levels: Each Select sub-plan has four available levels of discounts, Level A through Level D. The discount amount increases by 7% with each higher level. Qualification for each discount level is based on the points system:
  • Level A requires 500 points per year within that pool
  • Level B requires 5,000 points per year within that pool
  • Level C requires 10,000 points per year within that pool
  • Level D requires 25,000 points per year within that pool
• Full Software Kits: Select customers are provided with software kits that contain media for all of the software in any pool for which they have a Select agreement – whether or not they have purchased licenses for each of these programs. For example, if a company has a Select agreement for the application pool that includes Office, that media kit will also include OneNote, Project, and Visio. The company is allowed to use these unlicensed products for the following purposes:
  • Production: Software can be installed at any time, as long as a license is ordered from the LAR by the end of the calendar month in which it was installed.
  • Evaluation: Software can be installed for evaluation purposes for up to 60 days; each affiliate can have up to 10 copies of a program installed for evaluation purposes at any one time.
  • Training: Up to 20 copies of a program can be installed at each affiliate’s training center.

The “Select Classic” Sub-Plan: Discounts Based on Forecasted Purchases
There are three main things that set the Select Classic plan apart from the Select Plus plan:

• No purchase is necessary to get started. With the Select Classic plan, a customer’s initial discount level is based on their good-faith forecast of the purchases they will make over the three-year agreement term. In each subsequent year the discount level is adjusted based on the prior year’s actual purchasing volume.
• There’s no penalty for making a bad forecast. Because the discount level adjustments are not made retroactively, there is no financial penalty for making a bad forecast. Unfortunately, this also means that if your forecast turns out to be an underestimate, Microsoft will not retroactively give you a refund if your purchases would have otherwise qualified for a higher discount. Of course, Microsoft has checks and balances in place to keep organizations from making wildly optimistic forecasts.
  • Example: If you forecast that your organization will purchase 30,000 points worth of licenses from the Application pool over the next three years (i.e. 10,000 points per year), this will qualify your organization for the Level C discount. However, if your actual Year 1 purchases are only 7,000 points, Microsoft will reset the discount for the next year down to Level B.
• Timing of Software Assurance purchases is very important. When an organization purchases SA as part of a Select Classic licensing agreement, it must buy SA for the entire remaining term of its Select Classic agreement. However, because the SA purchase must be made in full calendar year increments, timing is very important. The purchase will be for all of the current calendar year (regardless of the current month), plus all of the remaining calendar years in the Select Classic agreement (regardless of the expiration month).
  • Example: If you choose to purchase SA in the 11th month of the second year, you’ll have to pay for 2 full years of SA: all 12 months of the current year, plus all 12 months of the third year. An interesting side effect of this policy is that Select Classic is the only volume licensing agreement through which an organization can purchase just one year’s worth of SA – which can be done by purchasing SA before the start of the last year of a three-year license!

The “Select Plus” Sub-Plan: Discounts Based on Actual Purchases
The Select Plus plan includes a number of features that set it apart:

• There’s no need to forecast purchases. With the Select Plus plan an organization’s discount level is based on its actual purchase volume. The initial discount is based on the initial purchase; the discount in subsequent years is based on the total of all purchases made in the prior year.
• Reset discounts can only drop down one level at a time. If an organization’s prior year’s purchases were too low to maintain its current discount level, the discount level will be reset to the next level down. For example, if your initial purchase was 30,000 points (thus qualifying you for the Level D discount during the first two years of your agreement), but your second year purchase was only 1,000 points, in year three your discount will reset to Level C – not Level A.
• All of an organization’s Select Plus purchases are tracked on one global ID. This makes it much easier for the customer, the reseller, and Microsoft to track an organization’s global licenses.
• Select Plus Agreements do not expire. This eliminates the need to negotiate a new agreement every few years.
• The minimum Software Assurance purchase is for three years. This is a major departure from the basic notion governing Microsoft’s SA program, as SA usually ends when the license agreement ends. However, because Select Plus agreements do not expire, customers receive the full three years of SA, regardless of when the SA purchase is made. The down side of this is that although organizations do not have to worry about renewing their Select Plus agreements, they may have many different SA contracts, each with a different renewal date. An organization might end up receiving renewal notifications every other month – and for some these renewals can easily come with $50,000 or $100,000 invoices!
  
  Luckily, a SA co-termination program is available. Microsoft will let you align multiple SA renewals to a single anniversary date (generally the one that is the farthest out), using pro-rated pricing and extensions of between 25 and 35 months.

Some Important Issues to Keep in Mind
If you’re considering purchasing a Select Classic or Select Plus license plan, we recommend that you:

• Choose your point of contact wisely. When you first purchase a Select agreement, Microsoft will ask you for one or two points of contact. These are the emails to which Microsoft will send notifications of expirations and renewals, licensing and usage information, and so on. Be sure to choose reliable contacts, or risk not receiving these important automated alerts.
• Create a three-year road map of your anticipated purchases. This will help you determine which plan is right for you – and is required for purchasing the Select Classic plan.
• Think about Software Assurance. Do you want it, will you use it, and if yes, how would you like to manage your SA terms? SA is handled differently with Select Classic vs. Select Plus, and each has its pros and cons.
• Carefully consider your timing. With the Select volume licensing agreements, timing is everything. This includes timing of both your license purchases and your SA purchases. Do you want to make a large purchase up front to drive you to a higher initial discount level, or would you be better off deferring some of your purchases to a subsequent year to help you maintain a discount level?
• Take a close look at Open. Having looked at all of this, don’t forget to think about if Select is right for you or if you’re better off with the Open family of volume licensing agreements. For organizations with around 1,000 PCs, the Open discount level is almost equal to the Select Level A discount. You need to decide if the overhead of tracking the Select agreement for Level A is worth it.

Conclusion
As we pointed out last month, trying to make sense of Microsoft’s volume licensing program can be extremely frustrating. Our recommendation: Talk to a qualified advisor – such as Coyote Creek Consulting or your reseller – that understands the ins and outs of all the programs and can steer you in the right direction.

As always, we’re here for you.

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