Get the best deal from your 2024 Microsoft Enterprise

Introduction:

If you've ever been in the hot seat of negotiating with Microsoft, particularly when your organisation is deeply integrated with Microsoft 365 applications, you know the challenge of facing seemingly non-negotiable terms. The depth of their integration – security, crucial tools – positions you, seemingly, as a captive customer, bound to their renewal terms. Yet, that perception need not define your outcome.

Understanding Microsoft's motivations and your organisation's dependencies allows you to transform a perceived 'lock-in' situation into a negotiation opportunity. The aim? Terms that are not merely agreeable but genuinely beneficial for your organisation's growth and success.

Microsoft's Declining Discount Policy and Its Implications

Microsoft is reducing discounts

In recent years, Microsoft has introduced a declining discount policy influenced by the market dominance of M365E5, revenue pressures on Sales Managers, and fluctuating foreign exchange rates. The result? A noticeable reduction in the discount levels offered on Microsoft's products and services. This change affects how customers approach negotiations and plan their Microsoft-related expenditures.

Impact of M365E5’s Market Dominance

Microsoft 365 E5’s growing market dominance has strengthened Microsoft's negotiating position. As more customers adopt this premium, higher-tier offering, Microsoft gradually reduces discounts, particularly on lower-tier licenses like E3. This strategy, along with increasing prices on the lower tiers while keeping E5 intact, clearly aims to encourage you to upgrade to the more expensive E5 licenses.

Revenue Pressures on Sales Managers

Another contributing factor to the declining discount trend is the increased pressure on Microsoft’s sales managers. With corporate goals focusing on maximising revenue and profitability, they face heightened expectations to meet ambitious sales targets.

Influence of Foreign Exchange Rates

The fluctuating nature of foreign exchange rates further complicates Microsoft's pricing strategy. Exchange rate variations can affect the company's costs and overall profitability, prompting adjustments in pricing and discount rates. To mitigate the risks, Microsoft offers variable discount levels across different regions and markets.

Microsoft 365 Utilisation Analysis and Planning Considerations

What should your up-to-date negotiation approach be in the new conditions?

Usage data is your leverage

Gathering and Analysing Utilisation Data

Begin your Microsoft 365 negotiation strategy by conducting a detailed analysis of your current usage. Granularly review how each Microsoft 365 application is utilised within your organisation. Assess the numbers representing your employees’ engagement with each feature.

Compare the results against the expected use and promises made during the sales pitch. Focus specifically on underutilisation to pinpoint areas where you're not getting the full value for the cost.

Evaluating Microsoft 365 E3 to E5 Upgrade

Carefully consider the implications of upgrading from Microsoft 365 E3 to E5. You decision must only be driven by a clear understanding of the additional features E5 offers, particularly in areas like advanced security and compliance.

Do they align with your organisation’s needs? If not, why upgrade?

Downgrading from E5 to E3 as a Negotiation Tactic

Always consider an alternative. Evaluate the option of downgrading from Microsoft 365 E5 back to E3.

E5 isn’t always worth it

Bringing this option to the negotiation table puts Microsoft on the defensive and forces their team to justify the higher value and cost of E5. Demonstrate a commitment to cost-effectiveness and a willingness to align your subscription with your actual usage and needs.

Exploring Alternative Microsoft Product Offerings

Expand your strategy to include alternative, less expensive Microsoft product offerings. Evaluate lower-cost combinations like Office E1 plus Enterprise Mobility + Security (EMS), which combines essential Office applications with enhanced security features. Also, consider Frontline Worker options like the F1 and F3 plans, which are designed for frontline staff and offer core functionalities at a more budget-friendly price point.

Challenging Stakeholders and Reviewing Requirements

Engage with your organisation's stakeholders to understand their actual needs versus perceived requirements. Scrutinise past decisions that led to the current state of your Microsoft 365 deployment and review all security requirements.

Look at alternatives. Identify any overlap with competitive products and consider cost-cutting measures on similar or redundant products.

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Leveraging Utilisation Data in Negotiations

Armed with comprehensive utilisation data and a clear understanding of the various Microsoft 365 plans and alternative options, you will be well-equipped for the negotiations.

Utilise this information to question Microsoft's proposals, particularly those that suggest introducing new products or transitioning to more expensive plans without clear justification rooted in your usage patterns and needs.

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Incorporating Strategic New Products into Your Microsoft Portfolio

Microsoft's focus for 2024 centers on building and selling top-tier platforms and products aligned with the digital transformation needs of various organisations.

The company has set ambitious product adoption targets, with its share price partially influenced by its success in selling more products and solutions to both existing and new customers.

In the cloud sector, they aim to increase their annual run rate through a 'land and expand' approach.

New products should be evaluated

Strategic New Products for Consideration

When considering adding new products to your portfolio, it's important to evaluate those that align with Microsoft's strategic goals.

For 2024, key focus areas include Co-Pilot, Viva Suite, Sentinel, and Microsoft Dynamics. These products represent Microsoft's commitment to cloud technology and digital workplace solutions, making them critical to the company's future growth.

Impact of Considering Strategic Products

Your interest in adopting these products, especially if competitive alternatives exist, provides leverage in discussions. However, it's crucial to ensure that these products align with your organisational needs and are not merely acquired for the sake of a potential deal.

Negotiating a Tiered Approach for New Product Adoption

A tiered approach to adoption can be highly beneficial when integrating new products such as Co-Pilot, Viva Suite, Sentinel, and Microsoft Dynamics into your portfolio. Adopt the strategy of gradually rolling out these products across your organisation rather than committing to a full-scale implementation upfront. A phased approach allows you to evaluate the product's impact and effectiveness within your organisation, ensuring a more calculated and risk-mitigated integration.

Leveraging Tiered Adoption in Negotiations

The tiered adoption strategy can be a strong negotiation point with Microsoft. You can negotiate discounts based on the growth and eventual full adoption of these products. The idea is to secure initial lower pricing that scales with increased usage and deployment across your organisation. It aligns the investment with actual usage, providing financial flexibility and reducing the risk of overspending on unproven or underutilised technologies.

Negotiating Discounts Based on Growth and Quantity for 365

Incorporate the concept of discounts tied to growth metrics and additional quantities into your negotiations. For example, you can negotiate for substantial discounts on your Microsoft 365 suite as your usage of the new strategic products increases. This creates a win-win situation: Microsoft benefits from the gradual increase in product adoption while your organisation enjoys scaled cost benefits.

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The Importance of Time: A Six-Month Renewal Plan for Microsoft Negotiations

Phased adoption reduces risk

Time management is a crucial element in navigating Microsoft negotiations. A well-structured six-month renewal plan ensures you address all critical aspects of the negotiation process systematically and effectively. This plan should encompass several key steps:

1. Internal Budget Alignment

   Start your plan by aligning your organisation's budget with the anticipated costs of the Microsoft agreement. Assess your current financial situation and forecast the potential effects of the new agreement on your budget. Aligning your budget early helps establish realistic expectations and economic boundaries for the negotiation.

2. Stakeholder Objectives Alignment

   It's essential to align the objectives of all key stakeholders within your organisation. This step ensures that everyone's goals and expectations regarding Microsoft products and services are understood and taken into account. It aids in forming a unified front during negotiations.

3. Internal Requirements Assessment

   Conduct a thorough assessment of your organisation's requirements for Microsoft products and services. Study the needs of different departments and how Microsoft's offerings can meet these needs.

4. Internal Utilisation Analysis and Plan Analyse your organisation's use of Microsoft products. Identify areas of underutilisation or overutilisation and plan to address these in the new agreement. This analysis is crucial for arguing for or against certain aspects of the licensing agreement based on actual usage.

5. Negotiation Plan

   Develop a comprehensive negotiation plan that includes your negotiation goals, strategies, key talking points, and the concessions you are willing to seek or offer. A well-prepared negotiation plan increases the chances of a successful outcome.

6. Internal and External Communication Plan

   Establish a communication plan detailing how negotiation updates will be communicated internally within your organisation and externally with Microsoft. Effective communication is key to ensuring all parties are on the same page throughout the negotiation process.

7. Closing and Rollout Plan

   Finally, have a plan for closing the negotiation and rolling out the new agreement. Your plan must include steps for finalising the agreement, communicating the outcome to stakeholders, and implementing the updated terms and conditions within your organisation.

Q&A

Q: What factors have led to Microsoft's declining discount policy?

A: Microsoft's declining discount policy is due to the market dominance of M365E5, increased revenue pressure on Sales Managers, and fluctuating foreign exchange rates, leading to reduced discounts, especially on lower-tier licenses.

Q: How can a tiered approach to adopting new Microsoft products benefit an organisation in negotiations?

A: It helps assess product impact, provides financial flexibility, and can be used as leverage in negotiations for scaled pricing and discounts based on increased usage.

Q: What key strategic products is Microsoft focusing on for 2024?

A: For 2024, Microsoft's key strategic products include Copilot, the Viva Suite, Sentinel, and Microsoft Dynamics, which are central to its cloud technology and digital workplace solutions.

Q: Why is it essential to conduct an internal utilisation analysis of Microsoft products?

A: Conducting an internal utilisation analysis helps identify underutilised or redundant features, enabling you to negotiate better terms, cut costs, and align your subscription with actual usage needs.

Q: What should be the focus of a six-month renewal plan for Microsoft negotiations?

A: A six-month renewal plan should focus on aligning internal budgets and stakeholder objectives, assessing internal requirements, analysing utilisation, developing a negotiation plan, and establishing internal and external communication plans, culminating in a closing and rollout plan.

Q: What role does analysing current and past utilisation of Microsoft 365 products play in negotiations?

A: Analyzing current and past utilisation of Microsoft 365 products helps organisations understand their actual use versus expectations, allowing them to negotiate based on the value received versus fees paid and identify potential areas for cost reduction.

Q: What is the importance of considering downgrading from Microsoft 365 E5 to E3 in negotiations?

A: Downgrading from E5 to E3 puts Microsoft on the defensive, compelling them to justify the higher value of E5. It can be a tactic to achieve better terms or concessions in negotiations.

Q: Why is stakeholder objectives alignment crucial in Microsoft negotiations?

A: Aligning stakeholder objectives ensures that the organisation's goals and expectations regarding Microsoft products are unified, leading to a cohesive strategy and stronger negotiating position.

Overview of Microsoft’s key product lineup for 2024