MICROSOFT will rip an estimated $70 million out of the aged care sector's IT budget over the next 18 months as it forces users to pay full commercial rates for previously discounted software.

Aged care providers are shocked by Microsoft's decision to revoke their not-for-profit status

Aged care providers are shocked by Microsoft's decision to revoke their not-for-profit status, which gave them access to its products at a heavily discounted rate. As a result, Microsoft's Office, Sharepoint and SQL server products are firmly entrenched in the sector's IT infrastructure.

The Aged Care Industry IT Council says full commercial rates would hike annual licensing fees paid by users by about 400 per cent - and swallow half of the sector's annual technology budget.

"Like many other industry sectors, aged care has probably a 90 per cent-plus reliance on Microsoft infrastructure, so it's not difficult for the company to say the rules have changed, the fees will now be $X," IT Council spokesman Mark Barnett said.

"The difficulty for aged care providers is that they've bet the farm on a Microsoft strategy that they believed was consistent and reliable in price."

The providers are saying they've spent millions on Microsoft products, and if they now need to pay additional fees their "whole strategy is pretty wobbly", he said.

Mr Barnett said the IT Council had been talking to Microsoft over the past six weeks to reach a resolution.

The software giant granted "a stay of execution" late last week ahead of an IT Council meeting. Mr Barnett said Microsoft had agreed to take no further action on the changes before Christmas.

At least three technology projects were put on hold last Friday pending the outcome of discussions.

A Microsoft spokesman said a recent review had uncovered "a number of ineligible entities, including a range of commercial organisations, that were using Academic Volume Licensing programs" under the belief they qualified.

"As such, we are beginning the process of transitioning these customers to an appropriate licensing program," the spokesman said.

"Also, we are developing a charity-specific volume licensing program in an effort to support the important work undertaken by not-for-profit organisations.

"However, we are not yet in a position to announce final details around this program."

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