Monthly Archives: February 2010

Be Current or Not Current on the Microsoft Annual Enhancement Plan

Since Microsoft announced the new Business Ready Enhancement Plan Renewal Policy, talks about whether the customer should stay current has increased significantly.

At 16% of your total software list price, it’s potentially a sizable recurring investment for companies using the software. Not just specifically to Microsoft, almost all ERP, CRM, business software out there requires users to pay an annual enhancement of some sort.

Other than the obvious questions of “what do I get for staying current?”, the benefits are numerous and I encourage you to get with your partner to learn what these benefits are. But the primary reason with the new policy is that you need to be current in order to purchase additional granules and users.

This may sound very scary at first, but hopefully this blog post will put in perspective on what this means should you decide to stay current or not.

1. How many years of Enhancement will I pay to pay for the software again?
Assuming your system list price is $100.00. At 16%, you’d be paying $16.00 per year. So $100.00 / $16.00 = 6.25 years. You would need to be current on the Microsoft Enhancement Plan for 6.25 to pay for the software again.

In another words, the bet you placed by staying current on the enhancement plan is that Microsoft will release new versions of NAV that you will upgrade to (full or executable only) during 6.25 years. In addition, with the new enhancement plan policy, you’re also betting that you’re business will grow and change, therefore, requiring additional modules and user licenses in the 6.25 year time span. So if you’ve purchased additional modules, upgraded, etc during the 6.25 year time frame, you’ve won.

2. How many years can I not pay the enhancement plan for the cost to accumulate to pay for the software again?
Again, assuming your system list price is $100.00. Assuming that you decided to skip the enhancement after the first year, the penalty you’ll pay is around 20% (you may have to check the exact percentage in your area). So $100.00 / $20.00 = 5 years. You can skip the enhancement for 5 years and pay for the software again in 5 years.

In another words, the bet you placed by NOT staying current on the enhancement plan is that Microsoft will not release anything of interest worthy of upgrading your system in the next 5 years. You do not expect your business to see growth or changes to purchase additional modules or user licenses. If you have not purchased any modules or done any upgrade to newer version in the 5 years since you skipped the enhancement, you’ve won.

Conclusion:
In a down economy, it may pay not to be current if you do not expect the cycle of your business to turn up again within the next 5 year period. Then again, it’s pretty tough to gage what will happen in the next 5 years.

Whether or not to stay current really depends on the business and the people that runs the business. For the enhancement plan, I always view this as an insurance and the same type of mentality as an insurance. Most of the time you pay for the insurance premiums complaining about it’s hefty price, but when problems occur, you’re glad you paid the premium. In Navision’s case, the time is 6.25 years.