Building Sustainable Value with Microsoft
Author: Scott Braden
How do you ensure your Microsoft deal doesn’t end up costing way more than anticipated? After doing thousands of Microsoft deals over the last dozen or so years, we know all too well that the hard work starts after the deal is signed.
In many people’s minds, “the deal” is complete when negotiations are done, deal terms and pricing agreed and contracts and PO’s executed. But in fact, “the deal” can’t be complete until all promised goods and services are delivered, on time, at or below estimated cost, and with suitable quality and acceptance by the client. Unfortunately, in many cases, the supplier’s view of the deal is conversely focused on continuing to extract as much cash as possible while delivering the minimum amount of value allowed.
This is where many clients wrongly believe that an Enterprise Agreement ‘saves them’ from huge, unexpected costs resulting from an Audit. It does not. We know that, on average, clients will see a 22% increase of cost and risk and will fail to realize 34% of their expected value and benefits. As a result of these lessons, an increasing number of our clients are turning their attention towards managing the ongoing strategic and economic value of their Microsoft investments after the deal.
First, we should point out that all NET(net) clients receive the benefits of our Find Value and Get Value services in every engagement:
- Gather and Assess Information
- Perform and Federate Market Research
- Deliver Detailed Opportunity Analysis (OA)
- Conduct Customized Business Value Assessment
- Delivery of a Findings & Recommendations Report
- Perform Licensing Optimization
- Perform Configuration Optimization
- Provide Contractual Negotiations Assistance
- Provide Commercial Negotiations Assistance
- Develop a Relationship Optimization Plan
We too often have clients coming to us for help after a deal has exceeded budgeted costs due to unplanned true-up expenditures or after Microsoft has begun an audit, which results in a large unplanned expense requiring immediate resolution.
As a result, NET(net) has developed Keep Value Services, powered by WIN(win)™, our online platform designed to proactively manage supplier relationships and obligations.
Keep Value Services include:
- Loading the client’s deal documents into they WIN(win) system, as a repository
- Enter & Track Internal KPIs associated with the deal
- Enter, Monitor, & Report on SLAs associated with the deal
- Enter and Manage Watchlist Items
- Assist with Annual True-up Process
- Software Asset Management (SAM) guidance
- Audit Preparation, Defense, and Remediation
Three of the most important things we help our clients do after the deal are (i) manage the annual true-up process, (ii) provide Software Asset Management (SAM) Guidance, and (iii) provide Audit Preparation, Defense, and Remediation Assistance to help our clients reduce cost, mitigate risk, and maximize the realization of value and benefits.
Most clients are familiar with the annual EA “true-up” processes, but surprisingly few enterprises today have the maturity of systems, tools and processes to make this a painless and unsurprising process. As a result, each year becomes another “fire drill” of interrupting more important projects to gather data about installations, validate production vs non-production usage, figure out which devices / loads are missing or incorrect, and then manually interpret the licensing true-up implications of the data. NET(net) assists with reducing the workload, stress and uncertainty by recommending, at the beginning of the deal, the best ways to set up processes, monitoring and internal auditing so that the annual true-up becomes a simple reporting process instead of a tedious exercise in re-creating the wheel.
In addition to annual True-up’s, Microsoft is now asking enterprise customers to complete a “Software Asset Management” exercise each year. Although positioned as “voluntary” and funded by Microsoft for a 3rd party to complete the work (“free” to the end customer), clients should not be fooled. These are audits, and the results are subject to immediate remediation requirements. Why, you ask, would Microsoft audit us each year if we are required to True-up anyway? The reason is that Microsoft knows that few enterprises have the maturity to complete a True-Up with the degree of accuracy that Microsoft requires. Far too many enterprises have been caught out, self-reporting estimated numbers when the actual audit results demonstrate much larger gaps in usage vs entitlements. So, Microsoft protects its IP and revenue by auditing as frequently as possible.
The dirty little secret of these SAM engagement is that the results are frequently incorrect (overstated in Microsoft’s favor) and that few clients have the licensing expertise to effectively dispute the results. The resellers, for their part, are paid by Microsoft based on the size of the licensing requirement, and therefore have no incentive to aggressively negotiate on behalf of clients.
For all of these reasons, NET(net) has developed ongoing managed services to help you:
- Create the right deal structure, terms and pricing in the first place to match the client’s environment and requirements
- Build in to both the deal terms and the client’s internal policy and procedures, means to manage the deal going forward for accurate compliance and to achieve full value from the products and services purchased
- Manage routine activities going forward to keep compliance, understand cost impacts of IT decisions, correctly plan and forecast budgets, and make smart choices during the deal term to manage costs and reduce risk.
- In the event of an audit, a properly managed client environment should have no surprises to report; any true-ups required should be within expected budgets and in agreement with the client’s own view of their planned spend.
- Continually update the client’s IT plan in relation to the supplier, so that when the next renewal negotiation cycle arrives, the client has a strong strategy in place from which to negotiate.
In our view, the best part about managing a deal correctly is not only the savings and benefits that accrue, it’s that the client now has a stronger, clearer understanding of the relationship with the supplier. They can now answer questions such as: Has the supplier delivered what was promised, at or below the budgeted costs? Has the client’s IT team been able to extract full value that was planned from the deal? What continuous improvement opportunities exist? With this information in hand, clients can move from the “he said, she said” state of supplier relations, to a surprise free, true and accurate view based on actual metrics. When the supplier realizes that the facts are in the clients’ favor, the negotiation conversation can dramatically shift from adversarial to collaborative.
If you have a Microsoft licensed environment and would like to be ahead of the game, get us behind the deal, and get more power on your side of the table by getting the facts working in your favor. Through the end of June, 2015, we are offering a special deal on Microsoft engagements. Please view the details here: http://intheknow.winwinit.com/microsoft-2015-preview
NET(net) is the world’s only fully technology-enabled consultancy exclusively specializing in full service IT Investment Optimization and powered by WIN(win)™. We help clients Find, Get and Keep more economic and strategic value in their Agreements, Investments and Relationships. With clients around the world in nearly all industries and geographies, and with the experience of tens of thousands of field engagements with hundreds of suppliers, we have helped clients capture hundreds of billions of incremental value. NET(net) is a global disruptive industry force for good. We have the expertise you need, the experience you want, and deliver the performance you demand to help you save money, improve value, and enhance supplier relationships. Contact your NET(net) representative, email us at firstname.lastname@example.org, visit us online at www.netnetweb.com, or call us at +1-866-2-NET-net today to see if we can help you capture more value in your technology supply chain.
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