Microsoft`s mission is to transfer its customers within the traditional on-premise software company to its subscription-based cloud services. Revenue from its cloud commercial offerings is growing strongly, while traditional software sales are declining and the mix is weighing on Microsoft`s ability to support a multi-faceted business. Microsoft`s success will be measured against the success of this mission, and customers will be under increased pressure to travel to the cloud or to pay for on-prime-price solutions through increased contract and price complexity. Most customers have managed the jump to 365 and are experimenting with azure. The good news is that the window of agreement for new cloud editions with Microsoft is still open. As a public company, Microsoft`s mission is to accurately predict revenue. To do this, the company must have a clear overview of its sales pipeline and be able to close purchases and renewals faster and earlier in the quarterly sales cycle. There are a limited number of legal resources and license desks to process these transactions, and it is almost impossible to process paperwork less than two weeks before a calendar year, fiscal year or end of the quarter. Managing these largest volumes in deal volume is a challenge for Microsoft`s operations, and delays in this pipeline can have a domino effect on quarterly and annual revenue, share price and overall market perception.
Customers should use the supplier`s desire to prevent purchases and extension periods accordingly. Contrary to popular opinion, Microsoft may be more flexible in negotiations outside of their peak sourcing periods. While the vendor`s cloud offerings may be the future of its business, most Microsoft customers are still operationally and contractually blocked in on-premise deployments. There are increasingly licensing and subscription optimization challenges in Microsoft transactions, as well as new cost, flexibility and licensing/subscription opportunities you can capitalize on. As Microsoft continues to make a transformation and business demands and usage requirements are changing rapidly, customers should prepare for a more demanding purchasing and supplier management environment. The only other way you can get around this unfortunate situation is to start early and take the negotiations seriously as quickly as possible. In the past, the intensity of the negotiations peaked about one to three months before the renewal, but now, in order to reach the most ideal agreement, negotiations should begin seriously about three to six months before renewal. If you want to learn more about your software management options, read our article Hire a Software Asset Management Expert or Do it Yourself? The pros and cons of each. To become a licensed mobility partner, you must be a microsoft Services Provider License Agreement (SPLA) partner and attach an addendum with additional licensing mobility requirements to your SPLA contract. To get the addendum, contact your dealer or microsoft Partner Development Manager or partner technology strategists.
You may need to be prepared to go beyond the expiry date to get Microsoft`s flexibility. We`ve seen organizations that have spent two months beyond the expiration date to finally reach an agreement with Microsoft. Changes in today`s business climate, coupled with Microsoft`s mission to relocate businesses to the cloud, are changing the way it does business with its largest customers. Companies considering renewing their enterprise agreements or acquiring supplier offers for the first time can use the forces that fuel Microsoft`s behavior at the negotiating table.