Microsoft Case Study: Saving $18M+ Over 3 years on a Global Subscription EA Renewal.

Author: Scott Braden

NET(net) completed a successful engagement for a global client that has over 70,000 employees and operations in 17 countries. With NET(net)’s guidance and expertise, the client was able to save $18M+ over 3 years on a global subscription EA renewal.  This client engagement combined several factors which are increasingly common in today’s Microsoft licensing deals and can provide valuable lessons for other Microsoft customers:

  • A global footprint including diverse and, in some cases, quasi-independent local IT decision making
  • This leads to numerous challenges including communication, coordination of plans, information sharing, contract and legal requirements, and currency issues.
  • A history of merger / acquisition activity. This client corporation was created in 2009 by a private equity “carve-out” from a larger company and the expiring Microsoft deal resulted from that imperfect process.  In the following years, other acquired companies had been aggregated into the client organization but the Microsoft contracts had not kept up with the diverse needs of the combined organization.
  • Over a 5 year span these factors led to some significant license compliance issues as well as huge over-spends as the legacy Microsoft contract structure did not match the evolving needs of the new company.
  • The client had taken a subscription-based approach to licensing Microsoft products, which meant they had very limited ability to cancel all or part of the ongoing Microsoft revenue stream.
  • As expected, Microsoft’s initial renewal offers were hugely inflated, approximately double the previous run-rate for the same license set.
  • Senior management mandated a certain not to exceed annual cost ceiling which was considerably below the costs initially proposed by Microsoft.  At the same time, senior management desired to adopt many of Microsoft’s newer technologies such as Office365.

Thanks to early engagement by the client, NET(net) was able to develop and validate several alternative approaches to this renewal.  Due to the large and diverse global organization, the development and validation process required extended in-depth conversations and analysis with several regional and country managers, as well as external support from a number of competing Microsoft resellers.

In the final deal, the client effectively got everything they wanted:

  • Renewal of the EA structure in a format that ensured immediate and ongoing compliance at fixed costs
  • Access to Office365 services
  • Total cost well below their targeted budget
  • Unit pricing far below (27%) Microsoft’s standard rates – for a savings of $18 million USD.

Lessons:

  • Start early:  This client agreed to begin the preliminary engagement work more than 12 months prior to the expiration of the EA.  This time was critical to the eventual success of the project as it allowed NET(net) to fully understand the organization, scope and requirements for the business going forward and to collaborate with the client to develop and assess alternative approaches to the renewal negotiations. Simply, this sort of work takes time and resources; clients who wait until 60 – 90 days before renewal are giving up enormous potential value.
  • Engage all levels of the organization:  NET(net) was introduced to the organization at the board level.  With that high degree of executive sponsorship,  everyone in the client organization responded to information requests and benefited from the improved communications regarding plans and alternatives.  In effect, our engagement helped to drive a new and more robust internal planning and communications culture for the client.
  • Explore all alternatives, especially the crazy or impractical.  We were able to brainstorm numerous approaches to the licensing requirements with the various IT managers. With NET(net)’s guidance, the client solicited competing quotes from resellers to validate and offer alternatives.  This process of exploring “what if” was key to developing a negotiation plan that resulted in the huge price and terms concessions ultimately won.
  • Seek expert advice that’s aligned with your interests.  NET(net) was not the only adviser involved in this EA renewal.  The client as a global corporation had input from numerous large consulting firms, as well as several global resellers who were competing for the business.  But only NET(net) combined a deep subject matter expertise with a singular focus on the client’s needs.

About NET(net)
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 info@netnetweb.com, 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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