Scott Braden

Nov. 2,2017 | Software, Office365, SaaS, Microsoft

Microsoft is coming to the close of its first half earnings in Q4.  If you know what to look for, the timing represents a strategic opportunity to review and optimize your spend.  

Did you know:

When renewing a Microsoft EA or Office365 subscription, most clients experience a net increase in costs of at least 20-25% for the same services, licenses and subscriptions.  These increases result from several sources:

1. The low, “teaser” prices offered by Microsoft to get enterprises onto Office365 are not being offered at renewal – despite that there has been no change at all in the services used, and that in general the promise of cloud computing includes continuing economies of scale and cost reduction. Instead, Microsoft has been demanding full list price for the exact same bill of materials that was previously discounted by 20% or more.
2. Microsoft continues to make licensing rule changes that have the effect of a massive cost increase for the exact same infrastructure.  For examples see the SQL Server and Windows Server “per core conversions” of the past few years.
3. Product substitutions and “re-bundling” are other sneaky ways to increase costs. For example by using the online version of Microsoft Project, instead of the on-premise version, for what is essentially the same product, costs increase. 
4. Bundling is when Microsoft offers a suite of services under a single line item.  For example the “SPE”, now re-labeled to “Microsoft 365” is a series of bundles within bundles. The idea is that there are enough needed, required items in the bundle to justify buying the full suite instead of the individual components. Re-bundling is when Microsoft takes important pieces of the bundle, removes them and offers them as a separate, added cost item – therefore requiring the client to pay more for the exact same services.

We advise clients to take advantage of our free, no obligation assessment services or our Price Benchmark Reports immediately.  Ideally these should be done at least 1 year before the expiration of their current EA or Office365 subscriptions. 

This gives you enough time to plan for any unavoidable cost increases, and to develop strategies to mitigate and replace where possible.

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