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.
- By Scott Braden
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
- 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
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:
- Hiring Binges or Planned Growth
- Reorganizations of Divisions or Business Units
- 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
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
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
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
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.