Rightsizing Your Spend with Microsoft
Published on 27 Feb 2021
Microsoft products are deeply entrenched in most orgs and customers are unlikely to switch to another solution. Planning demand becomes crucial when purchasing from a supplier like Microsoft. Once you buy from them, its very difficult to stop. Microsoft reps are skilled at manipulating licensing volume to drive up costs in an agreement. Organizations must ask themselves, “do we need the licenses we’re purchasing?”
Some common pitfalls to avoid with Microsoft sales reps:
- Why Customers Over-Purchase: Microsoft sales reps are experts at inflating demand forecasts, leading customers to buy more than they need.
- Lost Leverage From Under-Purchase: Fear of over-purchasing causes many customers to avoid long-term license commitments, and to purchase licenses as needed. This leads to multiple small purchases at sub-optimal pricing.
- How to Forecast: Accurately Creating a demand model is key to establishing an accurate baseline for deal negotiations.
- Deal Structure Pros & Cons: Microsoft offers different licensing models that can be used to purchase products. Organizations must identify which of Microsoft’s most popular deal structures are most appropriate given their requirements.
Microsoft deal structures:
Organizations have several licensing options with Microsoft and need to inspect the risks of each agreement within their specific environment. Understanding the licensing obligations is key to deciding what type of agreement is best. Microsoft negotiates discounts based upon the type of agreement, so cost savings alone rarely justifies one type of agreement over another. Customers are often pressured by Microsoft to agree to one deal structure over another, under the guise that it will drive cost savings over time. Understanding the dynamics of each deal structure can help businesses determine if the associated benefits are required. Below are the four types of deal structures businesses can choose from:
- Enterprise Agreement (EA)
- Enterprise Agreement Subscription (EAS)
- Server and Cloud Enrollment (SCE)
- Microsoft Product and Service Agreement (MPSA)
Forecast your demand:
Understanding how much product you need and when you need it is central to your ability to obtain the best deals. But because this exercise is very
complicated and time-consuming, many (if not most) customers defer to Microsoft’s projections, which often includes inflated demand that drives up cost.
Download this whitepaper from ClearEdge to learn more about Microsoft's deal structures, what you should keep in mind when forecasting demand for your business and how you can avoid over or under purchasing. Microsoft's sales teams are formidable, but by giving yourself enough time and planning ahead you can get a good deal and save your organization significant amounts of money.