Microsoft: COVID-19 Indifference, New Pricing, and Great News (for Microsoft)

The initial outreach and helping hand that many IT suppliers gave at the onset of the pandemic has already faded.  Most offers were not only insufficient to have a real impact, but instead locked companies into less favorable deals long-term in exchange for that short-term assistance.  We recently wrote another article on this called ‘Look That Gift Horse in the Mouth’.

Microsoft has thus far, in our opinion, followed this same path.  Despite COVID-19 issues, Microsoft thus far is holding firm on pricing for its Office365 Enterprise Agreement renewals.  Further, we see them in many cases offering ‘list price’ and no discounts at all.  Breaking down Microsoft’s post COVID-19 response:

  • Microsoft responded early with some public special offers (e.g. Teams / E1 free trials)​, which had short-term expiration dates and were intended / restricted to only COVID-19 specific needs.
  • Privately, we have ‘some’ evidence that Microsoft pricing and terms flexibility has increased, but only slightly and almost exclusively in the context of normal deal renewal negotiations
  • We have not yet seen any clients receive substantial relief from Microsoft for existing, signed deals, although we remain hopeful pending some current negotiations.

Despite this lack of flexibility (or maybe because of it), we have seen a general uptick of Microsoft customers increasing their adoption of some products such as security and compliance services, often displacing 3rd party solutions.  Increasingly, the Security and Compliance is one of the most competitive markets.  Below is a summary of how we see Microsoft’s place in it:

  • Microsoft has been widely considered a non-leader; so other point solutions continue to win many services​
  • In April, Microsoft released new security and compliance bundles to better compete with other players​
  • These bundles have met with immediate success and the price points are compelling to many clients
  • Those price points along with the available services such as they are, meet the “good enough” threshold for requirements​
  • Competitors, thus far, have not substantially reacted to these developments but we expect that prices and terms will adapt soon

Microsoft knows (as most suppliers do) that many of their customers are short staffed in IT, and the time required to research vendors, review solutions, assess competitive or alternative options, engage in demos or proof of concepts with the goal of leveraging a viable negotiation posture – are non-existent.   So, what is the cumulative effect?  Microsoft customers are, and will be, paying more (much more) than in previous years. 

Instead of providing relief, Microsoft in our view is demanding and receiving, cost increases of 30% plus, and in some cases – more than double.  Most companies we work with don’t allow for that kind of increase in budget, especially at a time when they are frantically working to reduce cost.

If your budget can’t support that either, we can help.  Our vendor subject matter experts average 25 years’ experience executing deals with Microsoft.  For most companies, that alone would drive exponential savings.  However, in addition to that SME experience we have eighteen years of FMI (Federated Market Intelligence) data gathered from thousands of deals executed around the world.

Given the end of this month is Microsoft’s fiscal year-end, there are opportunities – but only if you know where and how to get them.  Drop us an email or call to see how we can help.

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