Microsoft Gives Excellent Support; But At a Price

by Hinesh Jethwani    Apr 23, 2004

Himalaya Drug Company is one of Microsoft India’s countless customers, but like many of its counterparts, it is fighting to come to terms with the software giant’s licensing philosophy.

In an extremely candid conversation with CXOtoday, Shabir Shariff, CFO & CIO, Himalaya Drug Company, said, “I am satisfied with Microsoft’s service and support, as it underlines our basic principle here at Himalaya. We are a pharmaceutical company, with a core emphasis on our line of business, and do not want to get into the complexities of Open Source. We believe in using only licensed and supported products. Microsoft gives us exactly that, and supports us with latest patch releases and fixes.”

Himalaya has deployed MS Exchange Server 2000 on an IBM xSeries server. “We selected Microsoft’s Exchange mail server as it has a more wider base. We also closely evaluated Lotus Notes, but it didn’t have the capability for supporting multiple mailboxes for users on the same system, a feature that Exchange provided three years back. Our two offices outside India are also running mailboxes on the same domain, and are supported by the same mail server,” explained Shariff.

With MS Exchange Server 2003 now in the market, Himalaya has found itself in a peculiar situation. “We have 200 licenses of MS Exchange 2000, and we plan to increase the number of users. As Exchange 2000 licenses are no longer available, we have decided to upgrade the existing version and purchase additional Exchange 2003 licenses.”

Due to Microsoft’s licensing strategy - which pegs the Exchange 2003 at a cost for non-Software Assurance users (rather than a minimal upgrade price) - the purchase of additional 2003 licenses has been stalled temporarily at the company.

Shariff reasoned, “How can a previous license be no longer valid? Microsoft’s philosophy is that as soon as a new version is released, customers have to upgrade to avail of the new features and services. However, a version change should involve only a differential amount to be paid by a customer, and it is unreasonable to demand a new price, as we have already purchased the earlier version of the same product.”

Explaining Microsoft’s elaborate licensing structure, Deepak Shagrithaya, program manager for licensing, Microsoft India, said, “Purchasing additional MS Exchange 2003 licenses is definitely not a problem, as we provide downgrade rights with our products - that will allow Himalaya to run the new 2003 licenses in conjunction with its existing 2000 server. However, as the customer had not opted for our Software Assurance (SA) program, seamless upgrades to the newer version will not be possible.”

The SA program comes at a cost of 25% of the license price, and provides free version upgrades to customers over a period of two years. Since Himalaya did not opt for SA, they will have to purchase MS Exchange 2003 at a cost - which pegged at approximately Rs 2,500 per user (street price), is roughly identical to the cost of Exchange 2000.

“Currently a majority of our top 1500 Indian customers have opted for the SA program,” added Shagrithaya. However, the overall figure remains substantially lower than similar global estimates.

Himalaya runs a centralized IBM AS 400 data server with DB2 database, which was selected because it does not involve per seat licensing, unlike Oracle. In house customized applications have eliminated the need for purchasing an ERP, and the company’s finance, salary, sales and production have all been modulated internally. An online payroll module - again developed internally - facilitates automatic generation of statistics for 400 employees.

“We are working on arriving at a midway solution with Microsoft, and hopefully a decision will be made soon,” concluded Shariff.

Himalaya has also planned to develop newer versions of its applications, to keep pace with changing environments. Six months down the line, the company plans to finalize a decision of purchasing VSAT connectivity for linking its 16 sales points across the country. The decision has been under evaluation for the last four years, but hasn’t materialized yet, due to the high cost involved.

Tags: MS