Redmond Negotiator

2007 Licensing Resolutions

Our licensing and negotiation guru Scott Braden walks you through what you can do now make sure your Microsoft licensing costs stay in check through the new year.

Hi everyone, and welcome back! How was your break? Did you get to see some family, eat too much, watch some football? Me too. But now it's time to plan our new year. First off, let's all get out our PDAs and Outlook calendars or paper planners -- it's time to set some goals and deadlines to control your Microsoft licensing costs.

Step #1: Get Your Schedule On
First, get out your current agreement paperwork and note the following dates:

  • Agreement Start Date
  • Anniversary/True-Up Dates
  • End Dates

Mark these in ink in your calendar. If you don't have a quick-reference document to your agreements, now would be a good time to start compiling one.

Next, set a reminder from your anniversary/true-up dates to give yourself enough time to:

  • Reassess and validate your current license counts and additional needs.
  • Get pricing.
  • Get a PO cut for any true-ups or anniversary payments.

How much time is enough? Depends on your organization, of course, but in my experience one month is the minimum.

Now, set a series of reminders from your agreement end date(s). You'll need more time for these, again depending on the specifics of your organization. I recommend at least six months to get started with assessments and planning and strategy. Also, set a reminder one month in advance of the end date, with a note that says, "We'd better be deep in negotiations by now or we're in trouble."

Step #2: Review Your Paperwork
You've just laid the groundwork for significantly improving your ability to get a great deal on your next round of Microsoft agreements. Go ahead, pat yourself on the back.

But you're not done yet. For most shops, your agreements have been gathering dust in a file cabinet since they were signed. Pull them out and schedule a few hours over the next couple of weeks to do a quick reassessment of your current situation versus your agreements. Has the company grown significantly? Have you made an acquisition or merger or sold off any divisions? How about your technology plan -- are you moving toward heavy SharePoint usage, or virtualizing dozens of servers?

You can renegotiate even if you just signed the deal last week! Every Microsoft agreement has a termination clause. You can terminate for any reason with 30 or 60 days' notice, depending on the agreement. However, you may be responsible for outstanding commitments such as remaining payments for Enterprise Agreements or Software Assurance.

Step #3: Determine If Now Is Time To Renegotiate
Is it worth it? Here are a few reasons you might investigate reopening that can of worms:

  • Mergers
  • Acquisitions
  • Divestitures
  • Hiring Binges or Planned Growth
  • Reorganizations of Divisions or Business Units
  • Layoffs
  • Changes in Technology Plans

As a simple rule of thumb, any time the total number of users covered under your Microsoft agreement changes by plus or minus 10 percent or more, you should investigate the benefits of renegotiating.

If, for example, you have gone through a merger and it took both of the companies from a Level A seat count to a Level C, you'll certainly want to start investigating a new set of agreements. But why settle for Level C standard pricing? If the change in your circumstances is large enough to justify revisiting your agreements, then you should approach this as a whole new negotiation, not just a revision.

Divestitures (selling off part of a business) can be a little trickier. If you have an Enterprise Agreement, and your organization will be getting smaller, you're essentially asking Microsoft to decrease your seat count for the annual payments.

That's why Microsoft's Enterprise Agreement includes this clause:

"If the number of qualified desktops or qualified users covered by an enrollment changes by more than ten percent as a result of (i) an acquisition of an entity or an operating division, (ii) a divestiture of an affiliate or an operating division of the enrolled affiliate or any of its affiliates or (iii) a merger, we will work with the enrolled affiliate in good faith to determine how to accommodate its changed circumstances in the context of this agreement. If an enrolled affiliate acquires or merges with a customer with an existing Qualifying Enrollment, we will work with the enrolled affiliate in good faith to accommodate its changed circumstances in the context of this agreement."

And as long as you're looking at your changed circumstances, maybe you should look at your entire agreement again from top to bottom, to make sure you still need everything you signed up for.

Hiring binges, large projects, anything that's going to be a large unexpected payment can also be negotiated -- especially if you can time it for June or December.

For example, I once saw a company with a Level C Select get Level D-minus pricing for a large ($200K) SMS rollout, as long as they paid for it before the end of June. It can be done.

Why would Microsoft help you with something like this? Two reasons:

  • Your rep has a quota. Depending on how your renegotiated deal works out, she or he may get credit for a new sale.
  • Sometimes Microsoft will approach you well before your existing deal is set to expire and offer special terms to get the additional revenue in the current fiscal year.

The basic principles outlined above are what give negotiating power. If you have a real business case you can make, and you're deploying additional Microsoft technologies into your environment, you can usually get a concession out of Microsoft.

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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