Many Microsoft customers are invited to participate in a "friendly" software asset management engagement conducted by a third-party firm. Unfortunately, the goals of such engagements are frequently less benign than the invitations suggest. Pica has learned that Microsoft has made such SAM engagements a major part of its financial planning, because they are critical to achieving continued revenue growth in the face of lower PC sales and softness in Enterprise Agreement renewals. The company plans to have "conversations" with every U.S. corporate account about these SAM engagements in 2012 and 2013.

Customers should consider and treat such letters the same as they would treat a formal audit request, since the difference is more a matter of tone than real intention. These are audits. We have found that even customers who have hitherto been below the radar for audits--smaller customers with Enterprise Agreements, for example--are being hit by these requests.

(For an analysis of a typical SAM engagement letter, see Sample SAM Engagement Letter and Comment.)

Pica has assisted several customers from whom Microsoft has sought additional compliance payments and has found that in many cases Microsoft's demands are unfounded. In the summer of 2012, for example, we encountered situations like these.

• Demands for $300,000 in additional Windows licenses for a customer using online services licenses
• Enterprise Agreement (EA) true-up demands totally $450,000 for a company without an EA but associated with a company with an EA
• Demands that a customer make up a compliance shortfall (discovered during a "non-punitive" SAM assessment) the most expensive way possible, costing $170,000.

In each of these cases we were able to substantially reduce or eliminate the customer's liability, based on an invalid interpretations of Microsoft's licensing rules or, in one case, an invalid EA. As a result, our customers saved nearly $1 million.

Customers who are confronted with such demands should check with an expert to determine their real liability here and should ensure that they deal with organizations that are truly independent of Microsoft. For example, many of these SAM engagements are conducted by Microsoft partners who are paid a portion of the revenue that Microsoft realizes through these engagements. This gives these partners an incentive to maximize the compliance payments from these engagements. Engaging truly independent organizations gives the customer an opportunity to pursue compliance proactively and to defend themselves against unreasonable demands.