The Microsoft sales team has been having its way with healthcare providers of late, surprising these customers at their most vulnerable with steep uplifts, low discounts and zero flexibility. We believe this is an unfair fight because the end users in this market – primarily nurses and doctors – are focused on delivering healthcare, not on leverage building, deal preparation or unravelling Microsoft’s bundled proposals. They are feeling very much outplayed.
In response to this disturbing trend, ClearEdge has examined some of the unique challenges faced by healthcare providers and developed recommendations to neutralize Microsoft’s playbook and help hospitals optimize their technology investments.
Challenge #1: Healthcare providers are a de-centralized group. The primary stakeholders in hospitals and healthcare facilities are doctors and nurses, but there is no one-size-fits-all technology solution for these constituents, unlike, for instance, financial services customers or human resource management. Nor are these groups IT or purchasing experts, and Microsoft sales teams are trained to exploit these situations.
Challenge #2: In the wake of the Covid-19 crisis, Microsoft has come on strong with solutions to facilitate work from home: demand has exploded for the Teams video conferencing systems, phone systems and security products to enable telehealth delivery and remote collaboration. It’s already difficult to imagine healthcare functioning without these strategic systems in place and equally difficult for hospitals to push back on Microsoft as they become so quickly reliant on these offerings.
Challenge #3: Microsoft sales reps are compensated not only on what new cloud technology you buy but what you consume. They want you to use more and more Microsoft products, and have devised (and force customers to buy) an array of bundles for each engagement. The result is a win-win for the vendor: the bundles increase Microsoft’s revenue and its footprint and boosts the customer’s chances of buying shelf-ware as well as the risk of noncompliance (i.e., audit exposure). Further, once customers start using the various applications in the bundles, it is more difficult to break away from them later.
There are just two ways to address these obstacles. The first is to sign longer term deals to achieve deeper levels of discount. The second – and better way -- is to gain a clear understanding of your organization’s needs and use this information to build a tight narrative that is relevant to Microsoft. Without a compelling and credible story, your sales rep will be unable to persuade Microsoft sales management to grant any meaningful concessions and Microsoft will continue to dictate your terms.
The following slide shows the tried-and-true Microsoft playbook.
To compete against the highly successful Microsoft sales methodology, buyers must take the time to implement a series of best practices that will enable them to construct a viable story that conveys both their IT needs and their leverage position. The following slide provides a step-by-step guide to prepare and execute competitive deals with Microsoft.
Microsoft’s playbook is designed to prevent buyers from completing the tasks in the first three columns of this slide. The vendors’ product bundling and complex licensing make it very hard for users to gather the needed information about their environments and vetting other options to Microsoft solutions requires more time and effort than many stakeholders are willing or able to commit. However, failure to complete the first steps make the next ones nearly impossible.
This past year, Microsoft reached out to one of our hospital clients five months in advance of a major renewal, offering three unattractive deal options:
Renew “as is” with 18% price increase over prior Enterprise Agreement (EA) with no new product
Move to E5, increase cost by 35%, and exceed user’s budget requirements
Buy a mixed profile of E5 and E3 with some improvements and a 25% price hike
Unhappy with these choices, the client contacted ClearEdge and asked for help with data collection, determining what product sets were needed, and figuring out when they could realistically deploy those products. We created a deal timeline and roadmap to address these issues, looked for competitive products in the customer environment that could be displaced by Microsoft offerings to sweeten the deal, and developed a series of user profiles to limit the number of licenses being purchased. The two slides below show some of the tools we used.
The outcome: the client achieved a 25% discount and a 15% cost reduction on top of that, bought only what they needed, and eliminated their shelf-ware.
The following slide summarizes how you can turn the tables on Microsoft and become a more competitive deal maker.
For more information about neutralizing Microsoft’s – or any vendor’s – sales tactics, download the 30-minute webinar on which this blog is based, titled Hospitals: Optimize Your Microsoft Spend, visit our website to view more content about Microsoft tactics and leverage creation, or contact your ClearEdge representative.
- ClearEdge Managing Partner Robin Kostin, along with Principal Licensing Specialist Steve Paradis and the Manager of Software Asset Management Services Scott Sewing contributed to this article.