Redmond Negotiator

The More Things Change...

Scott looks at the fairly static state of Microsoft negotiations, and what you can do about it.

"The more things change, the more they stay the same." I've been reminded of that old saying a lot lately, as several clients are discovering the joy of working with Microsoft toward new Enterprise Agreements. Plus, this column marks two years since I started writing for Redmond, so it's a good time to look back and take some lessons.

Here are some of the things that never seem to change:

1. Microsoft customers face hard-line negotiating stances from their Microsoft sales team. One common refrain is: "We gave you such a great deal last time, you shouldn't really expect a better deal this time." Another one frequently heard in midsize companies, is: "You're really not large enough to justify a discount or special terms."

What's changed in the past few years? On the positive side, Microsoft has standardized some terms and pricing that used to be "custom." On the negative side, Microsoft seems to be more willing to play hardball when the customer has no real other alternatives, is out of compliance or is otherwise in a losing situation. What are effective counter tactics? Same as always: preparation, knowledge, options and time.

Which brings us to the second thing that never seems to change...

2. (Most) Microsoft customers are still not using SAM (Software Asset Management) broadly or effectively. Bigger companies tend to have a better handle on their licensing, with strong corporate controls and policies, locked-down desktops, and software discovery tools to report on usage and installations. But as a rule, organizations with 5,000 PCs or less rarely have effective SAM in place. If you fall in this category, this probably means that you're out of compliance, and that Microsoft will find out (it's not hard to ask the right questions. Even if you happen to own enough licenses, you're lacking the data you need to make smart spending decisions.

The solution? Spend a few bucks. There are literally dozens of products that can help with SAM, ranging in cost and scope from free one-time scans to complex and expensive enterprise systems. Just get one.

Of course, buying and implementing a SAM program takes time, and another thing that never seems to change is...

3. Nobody has any time to do it right, but we have time to do it wrong at the last minute! Pick up any book or course about negotiating and look for the most important elements of negotiation power. One of the key factors will be time.

For a Microsoft customer, this means several things. There's "calendar time," where, for example, you should begin reviewing and planning for your next agreement at least six months before the current one expires. There's "resource time," for all the people who have to be involved, who are also busy with other demands. Resource time includes the time you need to re-familiarize yourself and your team with Microsoft licensing, the time to research alternatives, double-check prices and terms, meet with reps, and so on.

And don't forget, your Microsoft rep has time constraints, too. But remember that your Microsoft rep spends a lot more time thinking about Microsoft than you do. And while we're on the topic of what your Microsoft rep thinks:

4. Your Microsoft rep is not a licensing expert. Sure, he or she understand the programs and options better than your CIO and can effectively deliver a two-hour overview. But when it gets down to giving specific details -- "Here's how our environment works. Now, what are our specific rules and options, and what's the best way for us to do this?" -- your Microsoft rep is probably not the right person to ask.

I know this is hard to believe, but I've worked with hundreds of clients and it seems like every single time, I catch an error in fact or interpretation that originated with the Microsoft sales team.

The solution? Don't take an answer at face value; demand to see where it says that in the terms. Understand it for yourself.

Speaking of licensing terms and details, here's a trend that's continuing predictably:

5. Microsoft uses their licensing rules to push customers into spending more money for the same set of products. I can't claim credit for spotting this one -- Gartner nailed it way back in the mid-'90s and it's held true since then. For proof, just read the usage rights for Windows Vista, Office 2007, Windows Server 2003 (let's not forget R2) and so on. Basically, Microsoft wants you to buy Software Assurance, and with every new release they are going to make it more painful for you to not buy SA.

This brings us to the final point:

6. The resellers themselves haven't really changed. Call them LARs or ESAs or whatever -- customers are still left with impressions like, "They're nice, but they don't really add any value." And all too frequently, customers have to spend hours to get history reports and confirm their accuracy. Resellers are still perceived as chained to Microsoft, unable to become true advocates for their customers.

So what's new in the Microsoft licensing world, post-Vista and Office 2007? Lots of fine print and new rules for licensing, but the big themes are the same. The question is, what are you going to do that's different?

About the Author

Scott Braden has helped more than 600 companies negotiate Microsoft volume license deals. For a free case study, "How a Mid-size Company Saved over $870,000 on a $3 million Microsoft Enterprise Agreement, in Less Than Three Weeks," visit www.MicrosoftCaseStudy.com.

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