One year after HP began investigating the illegal transfer of licenses for HP 3000 operating systems, its reforms are letting some customers sell systems in a reasonable amount of time. But at least one sale in 10 is taking more than two weeks to clear HP’s new checkpoints, which include more rigorous documentation.

The changes in HP’s processes impact every customer who wants to sell an HP 3000, from large companies like State Farm Insurance to owners of the smallest HP 3000s. Reports on the efficiency of the process vary widely, but all hinge on one element: how complete the paperwork is which documents the purchase of your 3000.

Once its legal actions began to wrap up in mid-1999, the 3000 Commercial Systems Division (CSY) sent notices to brokers and hardware dealers clarifying new paperwork standards required for a valid transfer of software licenses. On August 16, brokers got a notice from CSY Software License Transfer Manager Linda Lea that reiterated which documents would be accepted as valid proof of ownership.

Lea’s memo said if the system is being resold for the first time, HP needs an HP invoice, either from HP or from the authorized reseller which sold the equipment. The invoice “must contain the Serial Number or the machine in question, the Model number, the User License Level and complete list of software.” HP accepts faxed copies of these documents, but only if the equipment has been purchased new.

Customers or brokers trying to sell previously resold systems must provide “an executed Software License Transfer Authorization letter. The letter must be an original document. HP will not accept a copy of this document or a fax of this document.” HP issues these letters once it receives the proper paperwork noted above on the first sale.

If a site has neither an invoice or the above letter, it can supply a current HP support agreement. This support document must have been in effect during the 12 months prior to requesting the license transfer. But the support agreement must contain the HP 3000’s serial number, model number, user license level and installed software data. HP will accept a faxed copy of the support agreement.

CSY general manager Winston Prather said the new process, which HP established in the same month of 1999 it filed lawsuits against three brokers in the US, is resulting in 70 percent of all transfer requests being processed in a week. “We say our goal is to process a transfer in 10 to 14 business days, and about 10 percent are taking longer than two weeks,” he said.

Prather explained the delayed requests “come down to proof of ownership.” He said HP needs a transfer request form and one of the above proofs of ownership, and an E-36 form that certifies that the buyer accepts HP’s terms and conditions of ownership. In addition, HP also needs an F-00 document the seller signs to release the software license.

“If they don’t have any of that, but the system has been on support for a year, we assume that it’s yours, and we’ll let you transfer it that way,” Prather added.

He admitted that some customers have a hard time finding this documentation. But “the bigger issue isn’t the end users, but a small number of resellers that don’t pay attention to any of this. They buy systems and don’t ask for any of this stuff. They end up with systems they can’t prove to us they own. They sell it to a customer, and the customer gets upset when we can’t do the license transfer.”

At least one HP broker says that the needed user license level information doesn’t always appear on HP’s invoices. Many customers who this broker said he contacts don’t have the invoice or authorization letter documents either, and some use third party support — so the “current HP support agreement” clause won’t help them prove their ownership.

“For all the people who have third party support, they’re out of luck,” said Bill Conley of US Computer. Conley said he’s never seen a hardware support contract that had software user license level information.

“Maybe they’re changing that now, but what about all those agreements that are already out there?” he said. “We’re seeing a tremendous number of machines that can’t be transferred.”

The delays while waiting for the proper paperwork can get in the way of sales, Conley added. “If HP takes six weeks, the market value has gone down and the customer has certainly gone away,” he said.

One customer who’s not impressed with the new transfer process said he believes HP is being too rigorous in its paperwork checking. Bob Lewandowski, MIS manager at ASAP Software Express, said the process seemed punitive, not protective.

“The process was a pain,” he said referring to a purchase and a sale he processed through a broker. “I think that HP is overreacting to the situation, and they’re very sensitive now. I can appreciate it, but let’s not make all the customers suffer some pain for it. They are making it difficult by dragging out the process. I had to sign the same form three times before they got it right. The last time I had to overnight it to someone, because they kept losing the form.”

Lewandowski also sees a connection between the license transfers and support contracts. He doesn’t believe HP is valuing support dollars enough as it executes new controls over sales of used systems.

“I don’t think that HP realizes how much money they are getting in support dollars after the sale of used equipment,” he said. “I run my business on the HP 3000 and now have two used large systems, a 987/150 and a 969/400. I could not afford to buy them new. Both of those machines are on full support with HP.”

HP says the delays vary from broker to broker. “The bad news is that our customers are experiencing a little bit of broker cleanout,” said Prather. “There’s a very small number of resellers who potentially weren’t doing things legit. They don’t have legitimate systems, they don’t have a way to transfer them. Eventually, it will be a positive for the customers, and it will be a win for the legitimate brokers. Feedback I’m getting from the legitimate brokers is that this is a good thing — but it is causing some hiccups.”

Other customers report that the Series 927 systems are running into problems on the transfer because HP’s documentation often doesn’t list a user license level for these 3000s. The irony is that the Series 927, and its successor the Series 928, are only sold as 20-user systems. Conley said HP has informed brokers in writing that it won’t help the brokers verify customer user license levels.

Some resellers say the process has gotten more complex, but they are succeeding in moving used HP 3000s. Support for the current process came from those who work as Support Channel Partners.

“Plenty of licenses get transferred without a world war,” said one authorized HP Support Channel Partner. “The HP license transfer process is simple and well documented for those who take the time to work it through. Most people with license difficulties know the rules and choose to ignore them.

“HP could be more cooperative in this area with customers, both transferee and transferor,” the channel partner said. “It is their choice to sell transferrable licenses, and they should meet the responsibility to provide a satisfactory level of customer service in executing the transfers.”

Another reseller reported anonymously that the need for original documents is holding up sales of systems from businesses which have closed.

“One of my customers went out of business. I helped them by putting them in contact with a broker, and they sold the equipment last February. HP did not approve the sale because they want the original documents. The customer does not have any records any more because they have been out of business for two years. I do have all the records (photocopies of the lease agreement, HP payment to me for the commission with the correct serial numbers and everything), but HP is saying that they need the originals.”

Another reseller, John Lee of Vaske Computer Solutions, said, “It has been taking one to two weeks, which I don’t think is unreasonable. HP is dotting all the i’s and crossing all the t’s, so you have to have all your details tended to. But overall, I have no complaints.”

Documentation issues come to the desk of HP’s Lea, the Software License Transfer Manager who works for CSY controller Betty Yee. Lea said that documentation needs to be an invoice, not a quote, since “a quote doesn’t really show that any purchase was ever made. Many times quotes are not followed through on, or are changed prior to final purchase. The system that a customer actually has often doesn’t reflect the original quote. Therefore, we can’t accept a quote as proof of purchase.

“However, we try very hard to be flexible and accept several different forms of documentation; for example, an HP invoice or invoice from an authorized reseller, an executed Software License Transfer Authorization, or even an HP Support Agreement.”

Documentation on user license levels for the Series 927 and 928 systems is accepted in some cases where the levels are specifically stated on the invoice. “Sometimes user license numbers are not on the support agreement because the system is listed as a ‘preconfigured system,’ ” Lea said. “In this case we automatically grant the preconfigured user license level. If the customer believes they have purchased upgrades to this, then we ask for some documentation of that.”

Lea said that “10 to 15 percent of [transfer] requests require additional time, usually due to lack of documentation.”

Another broker said that the systems to be sold should not leave the seller’s site before the transfer papers are requested from HP. Speaking anonymously, he said that the lawsuits and indictments of 1999 began the process of cleaning up license transfers. HP’s actions against Abtech, Hardware and Diablo Technologies last year sent notice that 3000 licenses were going to be monitored more closely.

“They were writing their own paper,” the broker said of those three companies. “Nobody in our market had sold a used 3000 except them for years. How could we compete with them? They had tools we did not have.