Microsoft 365 – LOOK OUT FOR DISCOUNT AMNESIA … COMING TO A MICROSOFT REP NEAR YOU!
We wanted to share some important Microsoft licensing and contracting trends we’re seeing in our contract negotiations engagements here at Software Licensing Advisors. Too many firms are approaching the renewal of their Enterprise Agreements with substantial Software Assurance coverage, entitling them to the latest versions of the software on their Customer Price Sheets (CPS). With the majority of 2019 version releases in the Fall of 2018 (Redmond Channel Partner), renewing an EA into Microsoft’s cloud desktop subscription to Office365 or Microsoft365 “E” plans is ill-advised in most situations. It’s signing up to rent a product you just bought through the last three years of SA. When a move to the cloud is warranted, initial “honeymoon” discounting lures companies into a short-term reduction in their Microsoft spend. Once migrated to cloud workloads, companies forfeit a lot of negotiating leverage and when that EA is up for renewal, Microsoft’s “discount amnesia” sets in.
Software Licensing Advisors offers some tips when beginning down the cloud subscription path:
1) Consider alternatives to the Enterprise Agreement, where you are programmatically required to sign up for all Qualified Users (all employees!) for Enterprise cloud subscription products, even if it takes you many months to actually deploy and receive value from these subscriptions.
2) Model out a pay-as-you-go approach through the Cloud Solution Partner (CSP) program. (Learn about the CSP program through our September 2018 webinar here). Modeling your cloud adoption using this program can provide you discount leverage in an EA, if that’s the direction you ultimately decide to go. But, the CSP is still a very viable purchase program option for most firms.
3) Get amended terms and conditions that set caps on price increases over your negotiated subscription rates, or allow you an option to renew for +1 or +2 years at the initial negotiated rate. It may be beneficial to slowly ramp into a rate at renewal rather than having a hefty discount merely “disappear”, resulting in a 20%+ increase (whatever discount you initially negotiated) to just disappear.
4) Always be considering alternatives and assessing the value received from Microsoft technologies. Having ongoing competitive pressure applied minimizes the lock-in strength of Microsoft’s renewal pricing.
But, SLA warns that certain other products and servers will also need to be scrutinized for SA continuation due to versioning, license mobility, SA benefit needs, and other situational licensing requirements. Don’t do this alone and relying on Microsoft to tell you what you need is like asking the car dealership whether you need the paint protection or warranty program (of course you do.) Get an independent, impartial perspective from the world’s authority in Microsoft Licensing and contract Negotiation by contacting Brian Stumpf (firstname.lastname@example.org) and Software Licensing Advisors.