6 Common Microsoft Enterprise Agreement (EA) Negotiation Mistakes
At the time of publication (October), many organisations are entering into the renewal phase of their Microsoft Enterprise Agreement. This ‘once in a three-year’ opportunity provides a platform to define a negotiation strategy that can significantly reduce the total cost of ownership for Microsoft technology.
Unfortunately, many organisations roll over and renew their EA with very little forensic analysis of what they are signing up for contractually and what products they actually need. A robust negotiation strategy should be at the heart of all EA renewals if your organisation wants to maximise cost savings, drive adoption of new technology and manage risk.
Discount for discount sake is becoming less likely as many organisations commit to predictable revenue streams in the form of online services that are difficult to migrate from. Therefore, organisations need to take a more holistic view when it comes to formulating an EA negotiation strategy. In the article below I have outlined six common Microsoft EA negotiation mistakes frequently made and advice on how to start working towards a resolution.
1. Not using data driven insights at the foundation of your negotiation
Having a timeline and accurate understanding of your deployment, license and usage position is essential when defining an accurate EA renewal bill of materials. Not only is it important to understand your current state, you should also understand your future state by defining an internal roadmap for Microsoft technology. Failure to accurately understand your current and future state will create waste through the creation of shelf-ware.
2. Starting commercial conversations late in the EA renewal cycle
Effectively planning for and engaging in meaningful commercial conversations early will enable greater control of the renewal process. Leaving commercial conversations until late in the renewal cycle can result in confusion and a lack of clarity when it comes to effective deal making.
3. Failure to engage at the right level within Microsoft
Microsoft will go to great lengths to engage with multiple stakeholders within your organisation to secure business. As a business you should look to emulate this approach to ensure proposed concessions are being presented to the correct audience with sufficient empowerment within Microsoft.
4. Influenced by heavy discounts on non-strategic products
Attaining high levels of discounts on new products can be beneficial. However, if there is no clearly defined strategy to implement new technology within a specific time period, this will ultimately result in shelf-ware that will eventually increase the TCO of your Microsoft EA as the benefits of discounts become eroded due to a lack of use.
5. Not having a clearly defined negotiation strategy that includes relevant KPIs
Many organisations lack a clearly defined negotiation strategy when renewing their Microsoft EA. Regularly, I will see organisations measure their success against the total % discount attained. On average we find an estimated 70 financial and contractual negotiation KPIs that should be considered as a part of a renewal strategy. Take the time to study your Microsoft contracts, use rights and pricing patterns to develop a negotiation strategy that will drive down TCO and manage risk.
6. Failure to maximise concession requests
Regardless of the size of your organisation you should consider all options open when it comes to negotiating with Microsoft. Admittedly large-scale organisations will possibly attain higher levels of concessions due to economies of scale. However, this is not always the case therefore don’t leave concession requests with strong justification behind.
Key Takeaways
If you fail to plan you plan to fail when it comes to reducing the TCO of your Microsoft EA. For that reason, organisations should start planning for their renewal anywhere between 6 to 12 months from their EA anniversary. Start by building a roadmap of activities that allow for a controlled on-time renewal of your agreement. When building this roadmap of activities take the time to understand what a successful negotiation looks like. If there is a lack of internal capability, consider using an independent 3rd party for support during the renewal phase.
Version 1 has considerable experience in helping multi-national enterprises proactively manage the lifecycle of their Enterprise Agreement. Watch our webinar to learn more about some of the common pitfalls and opportunities or go to our EA Assist Service web page for more information on how this service can help your organisation effectively manage Enterprise Agreement True Ups and Renewals.
About the Author
Karl is a Principal Licensing Consultant at Version 1, providing Microsoft license expertise to organisations globally and ensuring customers get the best value from their Microsoft assets.
