In the fall of last year, our clients started being offered a new tier of Unified Support from Microsoft called “Unified Enterprise Support” which features some key differences from the previous tiers. This new tier was released with little fanfare: there was no press release, and if you search “Unified Enterprise Support” on Google, then you will find no articles. In light of this lack of information, we’ve summarized the new tier’s features and discuss best practices to help you negotiate support with Microsoft.
Microsoft started pushing customers from its “Premier Support” onto “Unified Support” back in 2017. Unified Support is priced as a percent of your overall spend, while Premier Support was based on Problem Resolution Hours. The change to Unified translated to a heavy cost increase for most clients: it typically cost 1.5X to 3X more.
Until the fall 2021 Microsoft, the vendor offered three levels of Unified Support: Core, Advanced, and Performance. Core has since been phased out, leaving Advanced and Performance. The difference between these two tiers is the level of support, with Performance providing faster response times. This higher level of support also featured a higher price: list price for server product spends was 12% of net product spend for Performance, and 10% for Advanced. With each of these categories there was a level of base pricing that was negotiable. The chart below shows the percentage of what could be negotiated in base pricing for each support level:
For example, if you have Performance level support in the server category, and you're spending $1M, about $900K of those dollars are already beyond the sales rep's control, and there’s only a 10% band of negotiation for this line-item.
Then along came the new type of support late in 2021, Unified Enterprise Support. This tier closely resembles Advanced Support in terms of pricing and features. Clients are reporting that Microsoft is pushing them to this offering, and in some cases, no longer allowing them to purchase the Advanced or Performance tiers.
There are a few changes to how support is now being priced, the level of support provided, and some changes to the Add-on Services and Credits available to clients:
The most significant change with Unified Enterprise Support is how pricing is calculated: no longer is there any room for negotiation in the cost of your base spend. Pricing is 100% formulaic and we have not seen any clients able to negotiate these costs. Microsoft is very open about how pricing is calculated: each category is based on graduated tiers, and these tiers are posted on Microsoft’s website.
So, if you have an Azure spend of $11M, the base cost would be calculated as 10% of $1.8M, 7% of the next $4.2M, and 5% of the last $5M. While this can limit your ability to negotiate the main price driver in Unified Support, we have seen pricing deviation in several other Add-On Services and Credits which we will discuss later on.
2. Level of Service
The key differences in the level of service offered in Unified Enterprise Support when compared to Advanced Support revolve around the response times for Azure. Azure is one of the main products Microsoft is focusing on as they compete in the public cloud space against Amazon and Google, so it makes sense to see the vendor focus on improving support for this offering, to keep clients away from the competition. The chart below highlights how Advanced Support compares to Unified Enterprise:
One frequently asked question we get is whether purchasing Unified Enterprise Support negates the need for Azure Rapid Response (ARR), an add-on service that brought response times for Azure related issues down to 15 minutes from the standard 1-hour critical response time offered with Advanced Support. Now that Unified Enterprise Support offers 15-minute response times for Azure Critical Service Level 1 tickets within their base package, many clients question the need for ARR.
The answer: there are other benefits to purchasing ARR. The first is ARR also improves the response time of Azure related Service Level A tickets to 15 minutes, which is not available on Unified Enterprise. Also, purchasing ARR provides you with an Azure-specific point of contact who will have regular interactions with your team and a view into your environment to handle service requests in a timely manner. (Please note, while having a Microsoft team member so close to your environment will help make service requests easier, it will also give them a direct line to gather internal information. Having the vendor so intertwined limits your ability to control information and build viable messaging options for renewal negotiations.)
3. Add-On Services and Credits
There are several add-on services we commonly see included on Unified Support agreements which include:
Designated Support Engineers (DSE) Hours
Azure Rapid Response (ARR)
Designated Support Engineers offer specific support for core Microsoft technologies. Pricing for DSEs is based on hourly rates and vary, depending on the type of services. We have seen rates range from $300/hour to $450/hour. Proactive credits can be used to have Microsoft troubleshoot and evaluate potential vulnerabilities to fix before they occur. Competitive rates for these services range from $130/hour to $135/hour.
ARR is priced similarly to Unified Enterprise Support. Pricing is formulaic and based on your total Azure spend. Price tiers can be found in the chart below:
$0 to $1.8M
$1.8M to $4.2M
$4.2M to $6M
Along with add-on services, Microsoft also offers two types of credits. The first is Microsoft Investment Credits. These one-time discounts were previously offered with Advanced and Performance Support tiers and have continued with Unified Enterprise Support. For clients who were first moving over from Premier to Unified, Microsoft was typically lenient with discounts, offering incentives that covered 20% to 40% of a client’s base spend to help cover the increased cost of moving from Premier to Unified. Once a client was on Unified, incentives dropped to 10% to 20% of a client’s base spend. These trends have continued on Unified Enterprise, which means buyers need to be in a strong leverage position with Microsoft when negotiating Unified Support or they may miss out on an additional savings.
The other type of credit we have seen are Flexible Allowance Credits, which are new to Unified Enterprise Support. These credits are a pool of dollars that can be used to pay for Microsoft’s entire catalog of Proactive Services and Enhanced Solutions, including the add-on services mentioned above. Flexible Allowance Credits typically cover 15% to 20% of a client’s base spend.
What Can You Do?
The best way to drive better pricing on your Unified Support deal is to bid the deal out to third-party competitors. Not only will this put pressure on Microsoft to offer better terms and flexible allowance credits in order to win the deal, but the third-party vendors will present comparable services at a fraction of the Microsoft cost. US Cloud is the strongest alternative that we have seen for Microsoft Unified Support; it offers high-quality support at a price that is ~30-45% less than Microsoft’s price. Several clients have moved to US Cloud and are happy with the level of services. Tata Consulting and Wipro offer similar services, but we do not know if any of our clients have yet moved to these vendors.
In addition to third-party competitors, resellers are another option for support. In particular, we have seen multiple clients explore moving to SHI for their Microsoft support, which offers both an hourly based model (similar to the old Premier Support) that typically comes in 30-45% below Microsoft, and an unlimited purchasing model equivalent to Unified Support that is priced ~15% cheaper than Microsoft.
Another successful strategy to use with Microsoft is to convey a budgetary message when negotiating with your sales reps. A common problem we see with many clients is that they when they grow their EA and Azure spend, they get punished for it by paying more for Unified Support (which is based on the total spend). We urge clients not to allow sales reps to silo your EA, Azure and support purchases, and instead communicate that you have one Microsoft budget for all Microsoft deals. You must message that by lowering your Unified Support costs, you could grow your environment with Microsoft’s other offerings, which the reps are more incentivized to sell (such as Azure, M365 E5, Security & Compliance products, Power Apps/Power Automate, Dynamics, and Viva Workplace Analytics).
For more information on how to best negotiate your Unified Support Agreement. download our webinar on the topic or contact one of our Microsoft experts.
- Joe DeVirgilio is an SC&M Procurement Advisory Senior Analyst at Accenture.