Microsoft charity crackdown spurs boycott
- 21 May, 2009 12:19
Microsoft faces a backlash from thousands of aged care providers and charities that are set to dump its software to avoid some $50 million in price hikes.
The Redmond giant is pressing ahead with new global software licensing agreements, some imposing a whopping 500 percent price increase, to stamp-out what it initially claimed were illegal uses of its discounted offerings by not-for-profit agencies.
Australian aged care and charity organisations have sworn to dump the vendor if it enforces the policy change and are prepared to tear out established Microsoft infrastructure to implement open source alternatives.
They argue the price hike will eat into revenue generated by taxpayers and donations for charitable activities like homeless shelters and free healthcare services.
While the new software licence model, Charity Open, is commensurate with the 80 percent discount of its predecessor Academic Open, the clincher for many not-for-profits is the introduction of eligibilty guidelines which could force more than 2800 aged care facilities alone and still more charities onto full commericial licences.
Paula Carleton, CIO of the not-for-profit Baptist Community Services, told Computerworld she is investigating how to move its 850 Windows desktops to open source following Microsoft's decision to force it to a full commercial licence.
"Every dollar we are forced to spend on software is a dollar less spent on the charitable services like homeless and crisis care that we deliver," Carleton said, adding that it is a public benevolent organisation according to the tax office.
"We have to understand the implications of implementing open source... based on the figures we are looking at, we would be crazy not to roll it out. We've been looking at the major players like Red Hat and Novell.
"It is difficult to understand software assurance or enterprise payment models because it varies depending on the software we use," she said.
Baptist Community Services has been whacked with an 200 percent price hike through a 12 month transitory licence, starting at the end of this month, after which it must strike up an enterprise agreement or pay full commercial rates to use Microsoft products.
Its predictament is not unqiue, according to the Aged Care Association Australia which represents some 2800 aged care providers or about 98 percent of those operating in the country. CEO Rod Young suggests about 85 percent of its members have or will be forced onto commercial licences by failure to meet the eligibility guidelines, at a estimated cost of between $50 million to $70 million.
"They have targeted the biggest providers and none of them have qualified in any way shape or form. We are fearful that the small community providers will be cut off if Microsoft interprets the criteria in black and white which it has so far," Young said.
"Half the industry doesn't know about the licence changes... those well down the path of IT enablement — at the behest of organisations like us and the government — are intensely considering open source.
"The exclusions are a punch in the guts for us and a drop in the ocean for Microsoft in the context of its international business."
Young said any charity that provide multiple services is at a "substantial risk" of being excluded from the discounted software licence scheme.
St Vincent de Paul Society, National Council of Australia research officer Jonathan Campton said the price increase could not be accomodated into the organisation's budget.
"We've not been impacted by it yet, but it is something that I think will hurt us next year," Campton said.
Mission Australia CIO Ross Hawkey said the assumption by government and vendors that not-for-profits make money is the "scurge of the sector".
"They apply American principals to Australian charities, but there is uniqueness here where we can build in the organisation a part of business like employment services and training, that can compete with the for-profits in order to build revenue streams for parts of the buisiness that we do not get funding for," Hawkey said.
"A lot of vendors don't get it; They miss the point that what we do is help people, and that requires funding from multiple streams."
He said not-for-profits previously found it appropriate to used discounted licence schemes like Academic Open and others offered through government programs like the New South Wales Agreement for Microsoft Software (NAMS) scheme because any money they raise goes to chairtable works.
The organisation inked a three year enterprise agreement with Microsoft about 12 months ago prior to the introduction of CharityOpen, after it was then excluded from available educational discounts following a similar "tightening" on licence misuse.
However, Hawkey said the agreement has made management of its 3500 licences easier and more effecient: "we were previously using a miriade of licences and ordering off the shelf in non-consistent ways, but now we are 100 percent licenced which is good from a governance perpective".
One prominent charity group requesting anonymity said it faces hundreds of thousands of dollars in software licence fees because, according to the eligibility guidelines, it will be excluded for owning a non-profitable nursing home for the homeless, which it says could not be viably sold.
A Microsoft spokesperson told Computerworld those charities and aged care providers previously accessing Academic Open were not doing so illegally, but said Charity Open will make it "easier" for them to handle software agreements.
"A key goal of Charity Open is to enable a wider cross section of the charity sector to share in the benefits. For example, we have broadened the categories of charitable activities that are permitted — meaning a greater cross-section of charities now qualify," the spokesperson said in a written statement.
"Furthermore, in order to underpin the sustainability of our charity pricing, the program has been designed to help those organisations that have access to the least resources."
Some had seen the writing on the wall more than a year ago. Anglican Church CIO George Lymbers began phasing in open source across his organisation more than a year ago and has slashed more than $250,000 in software costs in combination with a collective bargining agreement.
"Charities need to always save money, and it doesn't make sense to run more expensive kit when you can run a low cost alternative," Lymbers said.
IBM, Red Hat and Lotus Notes run alongside Microsoft products in what Lymbers now describes as a good balance that keeps Windows power users happy and cuts unnecessary spend on commercial software where open source can be used.
All IT purchasing for the organisation's schools, parishes, and retirement villages among others is done centrally under AngliConnect, which has led to a 50 percent reduction in the purchase cost of Microsoft software and a 50 percent bonus in service agreements.
Lymbers said Microsoft is struggling to understand the difference between how American and Australian not-for-profits contribute to charity.
"The non-profit sector outside of government is the largest contributor of charity in the county, whereas in America large companies give mega-millions to charities. They are getting screwed here in Australia by being tarred with the American brush," he said.
"It couldn't have come at a worse time - during the credit crunch where charities are going to need support more unemployed. It is going to drive users away in droves into the arms of IBM and the like, and the anger will mount."
Lymbers advises organisations moving to open source to do a staged roll out, running dual boot systems and slowly phasing out the commercial software base. He said organisations may find a break-even sweet spot between commercial software and open source, or may be compelled to run an entire open source architecture, and noted that training is becoming less of a pain for transitions.
Previous calls for collective bargining in the aged-care sector and with Microsoft have failed. Casting aside arguments of the whether Microsoft should have imposed the licence changes on not-for-profits, some admit parts of the industry may have "made hay while the sun shines" by recieving government grants and payments for services while using Microsoft discounts like Academic Open.
The aged care council's Young said even the smallest aged care facilities are at risk of exclusion because "almost all" operate some flavour of community-funded work that could gereate revenue streams.
The Microsoft spokesperson said the licence conditions are designed to assist smaller standalone facilities: "as there are organisations in this sector that form part of larger affiliates and, in many respects, act in a similar manner to commercial organisations, Charity Open has been designed to provide targeted assistance to smaller, standalone aged care facilities and hospices that have access to fewer resources. This is to underpin the sustainability of the program for a wider cross-section of the Australian charity sector."