Summary
At SAMexpert, we're in a unique position to observe the evolving Microsoft ecosystem. As a completely independent consulting firm staffed by former Microsoft employees, we help mid-sized and enterprise organisations extract the most value from their Microsoft licensing and cloud strategies. We don't resell licenses; our focus is purely on optimisation. This gives us an objective perspective on the trends shaping enterprise IT.
The Azure Growth Engine
Azure expenses are surging by 30–35% year-over-year, outpacing traditional licensing costs.
One trend dominates our conversations in 2024: the relentless rise of Azure spending. Cloud budgets are growing rapidly, outpacing traditional licensing costs. Across our client base, we see Azure expenses surging by 30-35% year-over-year.
This growth persists despite earlier intentions to repatriate workloads to on-premises or private cloud environments. Those plans haven't gained traction, and the "lift and shift" migration of entire data centres to Azure continues to be the primary driver of cloud adoption. We expect this momentum to carry through 2025.
Negotiating in the New Reality
While we can negotiate 7–12% off, the starting point is higher—negotiating is harder than it used to be.
This Azure-centric shift impacts how we approach Microsoft negotiations. We're seeing typical renewal spending increases of 20-30% pre-negotiation, up from 15-20% in recent years. This is driven by two main factors: Microsoft's own price increases (like the 15% uplift on certain Dynamics SKUs) and an evolving bill of materials as clients adopt new cloud services.
While our team can typically negotiate 7-12% off the final number, the starting point for these discussions is higher. Frankly, "negotiating is harder than it used to be."
AI: Cautious Steps and Open Questions
Despite the AI hype, we observe a cautious approach: there is no strong internal push to build AI systems.
Despite the hype, we observe a cautious approach to AI among our clients. AI isn't driving significant spending growth yet, and there's a palpable sense of disillusionment. Across the board, "there is no strong internal push to build AI systems." Some companies have developers exploring AI's potential beyond chat agents, but none of our clients are truly AI-dependent.
While early adopters are undoubtedly influencing Microsoft's results, and AI is undeniably becoming part of our lives, we're "not bullish on AI right now." Too many questions remain unanswered. Crucially, we have yet to identify the "killer app" – the indispensable AI application that enterprises can't live without.
Our confidence in seeing meaningful AI adoption among our clients in 2025 is only 20-25%. This will rise to 40-50% by 2026, and we will hold that 50% figure for 2027 due to the many unknowns. While there's some enthusiasm for agentic AI, there are no enterprise-scale deployments yet. We don't view agentic AI as a separate trend; it's part of the broader AI evolution.
This cautious sentiment extends to M365 Copilot. Our clients are less enthusiastic than earlier this year, and only one in thirty has fully embraced it.
Teams Unbundling and the Future of M365
Teams remains strong after unbundling—adoption is high and cost-effective.
The unbundling of Teams hasn't caused significant disruption. Adoption remains strong, and new enterprise subscribers simply pay an additional $2-3/user/month. Few organisations are opting out of Teams, and it remains price-competitive against Slack and Zoom.
Microsoft is moving towards a basic-and-premium tier structure on Microsoft 365. We anticipate an expansion of premium product tiers and add-ons rather than a new E7 license, primarily because "the E5 license remains robust and relevant."
What’s in It for You
Organisations’ Microsoft budgets will continue to grow in 2025 due to multiple price increases in 2024 and the ones planned for 2025, the continued adoption of Azure, and - maybe less so - the investment in AI.
Microsoft is expected to introduce more AI products and Office add-ons in 2025, primarily in the premium spectrum, which may further affect your spending on Microsoft technologies.
Your choice is clear: either accept the almost inevitable or invest in optimising licensing and reducing the Cloud costs. AI investments should continue to be cautious: low-key start, proof-of-concept, and only then an organisation-wide deployment when the ROI of AI is known and predictable.