February 10, 2016
I love Costa Coffee shops. Not only do they keep my caffeine levels sustained but their ambience always seems to get my creative juices flowing. Here’s one of my more recent ruminations: wouldn’t it be great if software companies always did the right thing for their customers?
Imagine this world for a moment:
- Software vendors only ever selling you what you need.
- Software vendors offering pricing and discounting that is always fair, logical, and transparent.
- Software vendor sales people who openly admit that a competitive product may actually be a better fit for their customer as opposed to trying to shoehorn in their own products at every opportunity.
Unfortunately that’s not the way the software world works — at least not for the mega vendors.
And speaking of mega vendors, Microsoft’s fiscal year wraps up at the end of June so I thought it would be timely to share with you some insight into what you might soon be facing. Here are five things that your Microsoft sales person doesn’t want you to know:
- Enterprise Agreement price hikes: If you have an Enterprise Agreement (EA) renewal coming up then Microsoft will be expecting to dump a price hike on you of at least 10%. This is because your EA price-locked your Microsoft products when you signed it, and it has protected you from all the various product price rises that have occurred in the last three years. But when you renew your EA, all those lovely price rises catch up and form the basis of how your next EA is priced. Hence the hike.
- The push to a subscription environment: Microsoft wants to move you to a subscription environment and away from buying good old fashioned perpetual licenses. Ideally they want you to subscribe to their cloud products. But they would be equally happy, at least in the short term, for you to subscribe to their on premise products. The reason being that if you have a perpetual license you own the right to continue using it forever without necessarily paying Microsoft any more money. Microsoft doesn’t like you doing this as it dramatically cuts their revenues. So if they can convince you that subscription is the way to go then your option to continue using the product without paying any more money to Microsoft is gone forever. Think twice before you subscribe. Consider what you are giving up.
- Product bundles are all the rage (to increase revenues): Microsoft loves pushing their product bundles. Enterprise Cloud Suite (ECS) and Enterprise Mobility Suite (EMS) are getting a lot of focus and promotion in the Microsoft world. It’s a canny way for them to increase revenues from those clients who moved to Office 365 three years ago. If one or both bundles are right for some of your users then great, go grab a handful. But don’t feel coerced into having to cover your whole user estate if that doesn’t make sense to you.
- Trying to make a communications comeback: Microsoft is playing catch-up in the world of Communications (voice and video), and with their Skype for Business bundle, Office 365 E4 and the new Office 365 E5, Microsoft is out to regain that lost revenue. For example, if you are happily running Cisco softphone or WebEx, then your Microsoft sales rep will have an eye on chopping them out in favor of their own products. Of course, if Microsoft’s solution is a better technical fit for your company, and they can make it an attractive commercial fit too in comparison to what you may be paying for its competitor today, then why not consider it? But always start with the question: what product best suits my business and the way my users want to communicate? No one vendor has all the ‘best of breed’ products.
- Lack of transparency around itemized pricing: Here’s an interesting thing I’ve noticed in recent years – Microsoft now seems to obfuscate and delay giving itemized pricing information for as long as possible. I assume it’s an attempt to reduce the time the client then has to review, react and negotiate. I’ve seen clients pleading with Microsoft for pricing information so that annual budgets can be allocated, but because the EA renewal is still three or more months out, then Microsoft refused to give detailed pricing and only offered vague high level ballpark numbers as a stop gap. Come on Microsoft, don’t be shy. Get detailed pricing out early, and we can all get on with things in a timely manner. Oh, and one more thing; Dear Microsoft, can you please publish your list prices on your website (like Oracle does!). Not just retail prices, but also your Level A, B, C and D list prices. That would save almost all your clients having to ask for it as part of their cost review and analysis process.
These are not the only things Microsoft would prefer you not to know. If you’d like to hear more negotiations ideas and tactics relating to Microsoft, please register for our on-demand webinar Microsoft Cloud – Now, later or never?. You’ll hear more from me, my Consulting colleague Joe Galuszka and Duncan Jones, Vice President and Principal Analyst at Forrester.
BTW: Guess where I was when I wrote this Blog? That’s right; Costa Coffee. Hasta la Barista, baby!