MICROSOFT DEAL SIZING OVERVIEW
Total Microsoft cost is dependent on two variables: price and quantity. Too often customers believe price alone is what prevents them from reducing their Microsoft costs. The reality is that Microsoft product quantity is equally important in the total cost equation and Microsoft sales reps are skilled at manipulating volume to drive additional costs in negotiations. To justify any Microsoft deal, we need to ask ourselves “do we need the licenses we’re purchasing?”
This Microsoft rightsizing report focuses on key demand forecasting techniques to mitigate purchase risk and highlights key topics related to purchasing licensing effectively to reduce Microsoft cost:
1. Microsoft Deal Structures
Understanding the differences between Microsoft deal structures is essential in figuring out which one is appropriate for your business. We examine each of the following common Microsoft deal structures:
Enterprise Agreement (EA) Microsoft Deal Structure: Microsoft’s standard deal structure that requires product licensing to be applied to all qualified users in an organization, commonly resulting in over-purchasing of Microsoft licensing without careful review and user-profiling.
Enterprise Agreement Subscription (EAS) Microsoft Deal Structure: The Enterprise Agreement Subscription is similar to the EA in its requirements, but products are procured on a subscription basis. This requires the software to be priced on an annual recurring basis. In this report, we detail the Microsoft risks clients can face in an annual recurring licensing structure.
Server and Cloud Enrollment (SCE) Microsoft Deal Structure: The SCE is a subset agreement of the EA that offers higher discounts for additional license commitment. Highlighted in this section, we emphasize how additional Microsoft licensing rules related to the SCE opens up customer exposure to audit activity.
Microsoft Products and Services Agreement (MPSA) Deal Structure: The MPSA (formerly Select Plus) is the most transactional of Microsoft Volume Agreements. With no requirement to cover all qualified users/desktops, the MPSA allows for the most flexible purchase of licenses, although unit costs are higher than those in an EA, EAS, or SCE. We detail the pros and cons of this deal structure and when it is appropriate to use as an enterprise customer.
2. Microsoft Purchase User Profiling Checklist
Fear of over-purchasing causes many customers to not commit to long-term licensing needs, and only purchase Microsoft licenses when needed. This leads to multiple small purchases at sub-optimal Microsoft pricing. Without forecasting for Microsoft license growth, you are eliminating a main negotiating lever. This section details the risk of under-purchasing with Microsoft, specific Microsoft products that are consistently under-purchased, and how the impact this can have on long-term Microsoft costs.
3. Microsoft License Under-Purchase Risk
To help clients mitigate over- and under-purchasing, ClearEdge developed a checklist for building more accurate demand models when engaging in a Microsoft purchase. Building your own demand model prevents Microsoft from doing it for you, which often leads to inflated proposals and costs. Understanding how much Microsoft product you need and when you need it is central to your ability to obtain the best Microsoft deal for your enterprise.
4. Microsoft License Over-Purchase Risk
Microsoft sales reps are experts at inflating demand forecasts, leading customers to buy more than they need. This section details the Microsoft products that are commonly over-purchased, and the impact over-purchasing has in a recurring SaaS pricing model. We detail how to identify and plan for situations where over-purchasing is a potential risk and mitigate long-term shelf-ware Microsoft costs.
Microsoft beats customers in negotiations not only through price, but through inflation of demand profiles. Over-buying and under-buying cause long term cost risk, so creating an accurate demand forecast is essential for achieving a successful Microsoft deal. For additional assistance on your Microsoft purchase, review some of the other ClearEdge resources listed below to help plan your strategy and mitigate risk.