Microsoft Negotiation: No Longer an Oxymoron


Wish that negotiating with Microsoft wasn’t an oxymoron? Follow this 6-month timeline to ensure that your organization, and not Microsoft, is in charge of your Enterprise Agreement (EA) renewal.

If your organization is a current or former client of Microsoft, you are probably familiar with the strict Enterprise Agreement (EA) renewal process they employ. While it is always in your best interest to maintain control of the renewal cycle with any IT vendor, Microsoft is particularly dogged about making this difficult for you. This shouldn’t surprise you. As long as Microsoft can dictate each step of the process, they can ensure they end up with a slam dunk that further entrenches your company’s reliance on their IT solutions.

As an IT/procurement professional, however, your job is not to ensure Microsoft can brag about its success at your company. You need to level the playing field and take back control to ensure your EA renewal process benefits your organization at least as much as it does Microsoft. This is essential if you wish to safeguard your company’s financial performance, improve your strategic relationship with Microsoft, optimize your Software Assurance (SA) benefits, and protect your IT infrastructure and license compliance management status quo.

In order to ensure you own the renewal process with Microsoft, you will need to follow this 6-month timeline:

  • 6 Months before the Renewal: Finalize your internal Microsoft IT Roadmap, including current product usage, license entitlements and SA benefits, and align this with Microsoft’s product release schedule.
  • 5 Months before the Renewal: Determine the value you have received from SA benefits to date and complete an internal alignment of final true-up quantities.
  • 4 Months before the Renewal: Meet with LAR/Microsoft to ensure you understand all new and updated products. Determine your best renewal options. Discuss your expected go-forward engagement process with Microsoft and communicate your optimal renewal options to them.
  • 3.5 Months before the Renewal: Receive pricing based on your optimal renewal options.
  • 3 Months before the Renewal: Conduct a top-to-top meeting with Microsoft to clarify your requirements. Request detailed proposals (pricing, commercial terms, flexibility, protections etc…)
  • 2 Months before the Renewal: Review proposal responses. Conduct another top-to-top meeting with Microsoft to confirm your expectations.
  • 1 Month before the Renewal: Finalize commercial terms and review the provided renewal documents.

Don’t let Microsoft dictate your EA renewal process. Before you execute the renewal documents, ensure that your organization has set itself up for a relationship with Microsoft that is in your best interests. If you do not take charge of this process, your organization will likely be condemned to an ever-growing dependence on Microsoft. Do you worry that this is the path your company is currently on? Stage an intervention and follow this 6-month plan to ensure that your organization regains control over its EA with Microsoft. YOU need to be in charge of how and when your EA renewal is negotiated.

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  1. Whyte Keane Pty Ltd

    May 3, 2012

    One of the keys to negotiating any deal, IT or otherwise, you have to have a walk away position, what is your walk away position with respect to software. The problem with Oracle, Microsoft, IBM and other major vendors is unless your organisation’s technology roadmap is to reduce the dependence on the technologies licensed by these companies the sourcing group is on a hiding to nothing.

    It is critical that you CIO/CTO and Technology Architects and strategists have a clearly articulated plan to cut dependence. I often describe software as enterprise “Crack” and you will find that there is no Betty Ford Clinic to get you off it. You have to plan the hard the organisation’s withdrawal program.

    Much of an organisation’s operations today depend on products sourced from Microsoft et al. Most line of business software will only run on Oracle DB, Microsoft SQL or IBM’s DB2, no matter what action sourcing may wish to take with these guys, they will always find a way back in, Why? Because somewhere out there is an executive that will join you organization who will demand installation of product x, that if not supplied by these org’s above it will need products from within their product set to work.

    Messing around with MS Office is the lipstick on the pig, Office is a PxQ exercise, if you walk away from office who do you go to? Walk away from Oracle wher do you go? MySQL, since the acquisition of Sun, Oracle own that so off to IBM or Microsoft you go…..

    Enterprise tools is where the action is and I would hate to be the sourcing guy who turns off the Maintenance & Support contract on Microsoft only to find there is an enterprise wide incident that can’t be remediated because someone in sourcing/procurement thought we were paying too much to the software company and got his savings targets by ratcheting it down or turning it off. It won’t be the technologists who take the fall in the Root Blame Analysis, sorry meant Root Cause Analysis.

    Don’t laugh, or scorn this as I have seen it happen when an organization I worked for ran a Procurement Value Program and the external Sourcing and Procurement “Consultants” did this as part of the program, the senior procurement executive and the Manager who introduced these “experts” careers with the company were shortened dramatically.

    Just a few thoughts from a battle scarred veteran, by the way I was firmly against the decision and was sidelined for being short sighted – the joys of experience….

    Reply
  2. Joe Kohls

    March 16, 2012

    This process certainly works and very similar what I have executed except 12 months in advance due to the size and scope of our fortune 50 company. The major key to success with Microsoft is not to take due diligence efforts of determining value and future demand roadmap internally. Significance results can be acheived if you drive the value acheived or plan to acheive from a future financial modeling perspective. This requires challenging the need within the business for maintaining status quo. Most large organizations has a central IT group responsible for funding Software and Maintenance activities. As such, the user community will always want the latest technology especially if it is funded by another organization. Past experience has shown that to get Microsofts attention, it is what you don’t buy rather than what you buy over time. Negotiation is a process not an event and as such it may take several renewal periods of only buying the bare minimum from Microsoft to gain their attention. This requires good stakeholdering with your user community and the willingness to make the tough decisions. There are so many bells and whistles you can put into a word processor and a strategy of buying every other release (or more) has proven to be a cost benefit strategy as it relates to the Office products. This requires you not to “buy into” their argument that it will cost you more later on within their product life cycle and that backward compatibility will become an issue. I have never seen that to be true if you have the fortitude to make the no buy decisions over time. At some point, Microsoft will come to the table and offer better than D level pricing if you hit them up and the end of their quarter or year.

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