Thanksgiving is right around the corner. So are the holidays. Not to mention: software renewals.
Every time, the deadline sneaks up on your business more and more quickly: Microsoft Enterprise Agreement (EA) renewals. Businesses – large and small – rely on outside software products and services to keep things running smoothly every day. And when it’s time to renew those products and services, vendors don’t make it easy. In fact, it’s not uncommon for licensing, pricing, and packaging to become more and more complex as Microsoft sales representatives grow more and more aggressive.
CIO Update puts it simply: “While software purchase contracts are explicit in terms of fees, they require a level of knowledge and understanding of vendor rules and regulations that requires cross-functional expertise.” That’s why Microsoft licensing and negotiations professionals are not only recommended, they’re essential.
Here are 8 things to take into consideration when negotiating your Microsoft licenses:
- The end of Microsoft’s fiscal year is June 30.
Many people mistakenly assume that the best time to negotiate licensing agreements is at the end of the fiscal year to lock in the lowest prices. However, that’s not always true. Microsoft sales representatives may be offering steep discounts…but on a complete stack of Office365 and cloud products and services, including all the new products, features, added functionality, bells and whistles. Your business may not need these add-ons and while the price appears to be lower, you’ll be paying for all kinds of unused licenses, extra features, and excess products.
- Most software vendors will offer 10 to 20 percent discounts no matter what time of year.
10 to 20 percent is the discount baseline. But this usually accompanies a fixed package, which may include products your business doesn’t want or need and it will all be centered around Microsoft cloud offerings. The solution? Determine what Microsoft technologies your business needs before you start the negotiation conversation. You’ll find the discount is trivial compared to the fat that can often be cut out.
- Microsoft is more flexible about tailoring Terms and Conditions to buyer needs.
Every software vendor has its own set of rules and limits. Some are more flexible than others. But to negotiate Terms and Conditions, you have to know what you need and more importantly, what you don’t need. Terms and Conditions (T&C) include: transferability (the ability to transfer licenses to alternate users), future price increases, renewal contingencies and excluded qualified user and devices that aren’t part of true-ups. Enterprise Agreement Amendments are often as important as pricing.
- The larger your enterprise agreement, the further in advance you should negotiate.
Large businesses have more to assess regarding their IT environments and roadmaps. This includes, but is not limited to: overall business strategy, short-term and long-term software needs, company growth, mergers and/ or acquisitions, servers, geography (where offices are located), system migrations, and more.
- Pricing is arbitrary and changes constantly.
Like anything else, pricing for software licensing increases over time, sometimes dramatically. We’ve seen customers get an unwelcome surprise when Office365 Dynamics CRM has increased 300% at renewal (ouch!) It’s also dependent upon many other variables including: new product offerings, dropped products, new versions, dropped and discontinued editions, license renewals, etc.
- Microsoft sales reps and enterprise account teams are selling licenses, not value.
They’re offering licenses. You’re seeking value. Sales representatives often work within restrictive pricing models. Microsoft sales is now predominantly incented based upon activated Office365 user seats. They want you in the cloud where you’ll never own a license again and will be renting from them under a subscription indefinitely. There is currently no standardization in pricing models for on-site licenses versus cloud (or SaaS) licensing but there is knowing the right components and rarely mentioned workload-only SKUs for select cloud workloads instead of all-in costly cloud bundles.
- Most companies are either over-licensed or under-licensed.
If you are over-licensed, you’re likely wasting money on licenses your company doesn’t want or need.If you are under-licensed, your company could be violating copyright laws. Intellectual Property infringement can lead to undesirable consequences such as hefty fines.
- Use a professional.
Software Licensing Advisors (SLA) was founded by a team of Ex-Microsoft sales and licensing executives with the belief that Microsoft customers needed un-influenced advocacy, rule clarity, and a fully impartial advisor to help them optimize and align their technology and business goals to the proper Microsoft product licensing and purchase programs without introducing unnecessary compliance risk. We’re uniquely qualified to help you navigate the complex Microsoft licensing environment through proven pricing and optimization models. Negotiating Microsoft Software Contracts is all that we do — and we’re never paid by Microsoft or its channel in any way.And while you should know the Golden Rules of negotiating, why not let procurement professionals take the negotiations off your plate, so you have more room for Thanksgiving turkey and stuffing?