5 Tips for a Better Software Contract Negotiation

How to Strategically Negotiate with Microsoft

Hard Savings vs. Soft Savings

Soft Savings vs. Hard Savings in Software Asset Management

 

Savings are what makes the software asset management world go ‘round; it’s what all the SAM tool vendors preach and it’s one of the main reasons people get into software asset management in the first place. Knowing the difference between hard savings vs. soft savings is an important component to getting the most value for your software dollar.

However, what exactly are you signing up for when you sign a deal with a SAM tool vendor, who is promising ‘savings’ in a high theory sense? What does ‘30% annual savings’ (or whatever your SAM tool vendor promises you) actually look like?

What are the types of savings that you actually see when you successfully implement software asset management?

At MetrixData 360, we are all about transparency and working with our customers to achieve strong tangible results. Here, we’ll look at what type of results you can expect from signing a deal with a SAM tool vendor and exactly what you can expect to save after a SAM implementation by diving into both hard and soft savings.

 

Hard and Soft Savings Defined

Hard Savings are easily tangible benefits to your bottom line; increased revenue streams and reduced costs. Soft Savings are indirect savings where the company reduces risk and exposure to compliance and legal costs. Watch our video below to see the best hard and soft savings areas we’ve discovered in our client’s IT environments.

See the 12 Best Hards and Soft Savings Areas You Can Target to Save Money In Your Organization.

Download our Hard and Soft Savings PDF for Free:

Hard Savings in Software Asset Management

 

Hard Savings are an inflow of cash that has a direct relationship to the bottom-line profits or losses. These are things like revenue enhancement (increasing the price of your product) or cost reduction (finding cheaper materials for your product or finding a way to manufacture your product faster).

Some examples of hard savings in SAM include:

Streamlining the Efforts of the IT Department

There are elements of software asset management that can help every area of the IT department, including:

  • Asset tracking
  • Effective asset disposal and replacement
  • Risk mitigation
  • Software security

Having an organized software environment means that there is less to manage, less to go searching for, fewer blind spots and less shadow IT that your IT department will constantly be compensating for.

No one is left scrambling to do a year’s job in a matter of months in the event of an audit or true-up. Best of all, IT is given the data they need to advocate for new software or for the replacement of old software.

Related: Want to know how Software Asset Management can create value for the rest of your company? Check out these articles: Partnering CFO and CIO: How to Use Tech to Save Money and How SAM Can Improve Your Cyber Security,

The Real Source of Hard Savings in Software Asset Management

The one area where software asset management can yield real results is in the fact that SAM equips you with the data you need to hand tailor your software contracts to match the specific needs of your software environment.

Without SAM, companies will be forced to guess how many licenses they need to purchase — guessing too high is a waste of money and guessing too low will leave you exposed to the heavy fines of an audit, both scenarios amounting to lost money.

Knowing exactly what you need takes the power out of the software vendor’s hands and levels the playing field, since not having SAM leaves you buying simply what your sales rep has told you to buy. As charming as a sales rep might be, they sit in a position that is adversarial to yours.

They want you to simply buy more while your goals are to buy only what you need to. You need to have your own knowledge to back up your purchases.

Soft Savings in Software Asset Management

Soft Savings are savings found through adding to the bottom-line profits or losses, these are usually intangible and difficult to measure. These are things like improving safety in your workplace to avoid accidents and to conform to new laws as they are passed, since failing to adhere to both can lead to heavy lawsuits.

Increasing employee satisfaction is another type of soft savings since this will lead to fewer people quitting and less time spent hiring and training a constant stream of replacements.

Software Asset Management is rich in soft savings, which is often why it is overlooked by many organizations since soft savings are more difficult to measure. That doesn’t take away from its value, especially when considering the following areas:

Track Arrivals, Movers, and Leavers for Soft Savings

Large organizations are composed of thousands of employees, new hires coming in, long-term employees retiring, or employees getting shuffled around from one department to another.

This constant state of motion must beg the question: what happens to the software of those employees? How can a company hope to keep track and make use of the software licenses that these shuffling employees need without SAM?

It is important to have a process for the purchasing of new software and its retirement, to avoid the repurchasing of licenses and the accumulation of ‘shelfware’ – software that you aren’t using but still paying for.

Software asset management is an excellent way of keeping track of…well, software assets. Although it is important to understand that many Software Asset Management companies with discovery tools to sell will often promise high percentages of saving continuously over several years. They promise this using their discovery tool to find unused licenses and putting them back into your software environment. This can be a way to cut costs if you were already planning on buying more licenses or your contract renewal is approaching, and you plan on cutting those unused licenses out of your contract.

But discovery tools alone will not provide you these types of results, not without software licensing metering (which must already exist in your software environment) to be paired with the discovery tool. You will also need the knowledge to understand the data that the discovery tool will provide you.

However, without the other two elements to this recipe — and paired with the right circumstances — it is unlikely you’ll see such tangible results through the implementation of a single software tool.

A single SAM tool typically only increases visibility into your software environment by 10%, which makes sense when you consider the fact that most SAM tools only give you visibility into a single product or vendor, of which your organization may very easily have dozens.

This is why MetrixData 360 takes the unique approach of creating a holistic view of your data, examining every product throughout your software environment and providing you with our expert’s insights in how to read the data you have been given.

Soft Savings by Avoiding Auditing Penalties

Our clients have come to us in the midst of disaster-level software audits. We’re talking millions of dollars in audit penalties being paid out that they didn’t actually owe. This is because they didn’t have a proper SAM process in place. They didn’t know how to respond to the auditor’s claims because they didn’t have visibility into their software environment.

While having software asset management during an audit in and of itself will not make you money, it could certainly keep you from losing money unnecessarily. Imagine if you could find problems before they incite an audit and you get to avoid the unpleasant process altogether. Going through a software audit successfully is also a great way to demonstrate organization and control to the software vendor, making them less likely to audit you again in the near future (it’s not a magic bullet for software audits but it does help).

Software Asset Management will also cut down on a silent expense of software audits that many companies are not actually aware of until they are in the middle of a software audit: wasted time and resources. Software audits can cut away thousands of working hours from your company so that your employees spend their days chasing down sometimes pointless data requests from the auditor, instead of doing their jobs.

This can prove to be a massive expense that can easily be avoided with the right software asset management strategy on your side.

Get Finding Hard and Soft Savings with SAM

Software Asset Management can help identify hard savings vs. soft savings. That statement might be true, but it can also prove a bit simplistic. Before you get on board the SAM bandwagon, you’ll want to know where it’s going. After all, there is no point signing up for something that will be just another software expense to keep track of.

At MetrixData 360, our whole process is built around saving you money, from the tools we design, to the consulting services we offer, our goal remains aligned with your interests.

If you would like to know how you can get started with software asset management today, you can contact us using the button below and we can get started!

Guide to Software Contract Negotiations

Not many people enjoy software contract negotiations. This is because not many people think that they are good at it. There’s an anxiety that you’ll run up against a smooth-talking salesman who will spin circles around you until you’re signing your life away on the dotted line. This fear is only exacerbated when we consider the hyper complexity of software licensing that makes it difficult to understand on the best of days. Software negotiations may not be an exact science, but they are not derived solely from born talent either — you can learn to be good at it.

At MetrixData 360, we have spent 20 years going through software contracts, and as a result, we have successfully negotiated over a billion dollars in software contracts for our clients. In this booklet, we will go over how best to get ready for your negotiation with your software vendor, whether that negotiation is a contract renewal, the arranging of a new contract, or looking for a concession at the end of a software audit.

Table of Contents

  • Inventory and License Knowledge
  • Trained Responses to Suite Their Goals
  • Cultivated Relationships
  • Time
  • Focus On What You Need, Not What You Want
  • Prepare and Surround Yourself with the Right People
  • Follow Your Own Timeline
  • Know Your Data
  • Come to the Table with the Right Attitude
  • Know Your Vendor Better Than They Know You

Understanding the Vendor

It may be unfair to paint the vendors as the villains of this scenario, but while they don’t have forked tongues and horns coming out of their foreheads, it is important to remember that they and you sit in adversarial roles with opposing goals in this arrangement. They want sales, maximum profit, and a push to popularize certain platforms (Microsoft has been aggressively pushing Azure as a good example of this tactic). You, on the other hand, want software that will only bring value to your company, and you want to pay a fair price for only the features you need. By their very nature, these goals will butt heads and therefore you must keep in mind that for this moment, the vendor is your opponent, no matter how much your sales rep will act like they want to be your friend or business partner. To start this battle, it is important to get to know your opponent first. So, what advantages will your software vendor’s sales rep have when they come to the negotiations?

Inventory and License Knowledge

Usually when vendors first hire new sales reps, they will have them go through extensive training that forces the new hires to learn the ins and outs of all the vendor’s products and the licenses to go with them. They will most likely have a strong understanding of contract templates and will be trained on customer relationship management. A seasoned sales rep spends their days going over these same products again and again, however, their knowledge of software licenses only really covers how to effectively sell the software to you. In addition to this, the software that they are pushing on you might have very little to do with your goals for cost-saving or value, it’s simply what they were told to sell. Often, we have seen software sales reps, when pressured, produce more cost-effective deals that fit our client’s needs far better. So, whatever you do, do not let the mind-set sink in that the sales rep knows what is best for you, only you can answer that question.

Trained Responses to Suit Their Goals

Any objection you could possibly think of to why you shouldn’t buy a product, there’s a guarantee that your sales rep has heard it before, and they already have a perfectly timed answer ready. It’s important that you let go of the idea that both of you can come to a win-win scenario. That’s not how the sales reps will be thinking, at least, because sadly we live in a world where behavior is controlled by business objectives and annual reviews. This means that no matter how much they might like you as a person, the software vendors are always going to work solely with their own victory in mind, so you will need to take the same approach.

Cultivated relationships

The software vendor will work hard to cultivate relationships with the C-level employees of your company; doing research to figure out where the upper levels of your management went to school, past employment, favorite charities or civil organizations, searching for any and every connection. If you aren’t on “golfing buddy” terms with your CEO and you need to walk into a software negotiation with people who are, it could leave you at a disadvantage. If you aren’t necessarily the be-all-end-all decision maker of your company, then that means the software vendor will be especially rigid towards you, because whatever progress you make with the software vendor, the sales reps will have to go through the same process again with the people above you in your company, only this time the starting price will be whatever progress you made.

Time

Software vendors will often pressure you to wrap up the deal quickly. The truth is that the software vendor has the advantage of time on their side. The situation is exacerbated if the software the vendor is selling is critical to run your business because there’s only so long you can wait before not having that technology impairs your business’s productivity. In many cases, if the vendor doesn’t like what you’re proposing, they can simply fold their hands and wait in order to outlast you.

Of course, you will be able to tell if you have a good vendor on your hands if they don’t resort to any of these ploys: if they don’t take their merry sweet time about closing a deal; if they don’t leap-frog over you to get cuddly with the C-levels; and if they offer deals based on your business’s interests and needs, you should reconsider your relationship. If you find a vendor who makes it clear that these underhanded strategies are not how they roll, cherish that relationship.

Tactics at Your Disposal

Despite the seeming unevenness of the situation, there are a few tactics you can use when approaching a software contract negotiation that can ensure the best outcome for the situation.

Focus on What You Need, Not What You Want

We all like shiny new things and getting the latest and greatest software always seems like a tempting offer to give into, but it may not be what your company needs. Even just going for a discount may not serve your company the best in the long run. You need to know exactly what your company needs based on the following factors:

  • Use: What do employees at your company use, and what do they not use? There is no point renewing products that your company’s employees have used only once or twice in a year. This may be due to lack of education on the new software, or it may be that they just don’t need it to get their jobs done.
  • Future Growth: Buying based only on what you have purchased in the past does not allow your company to grow.
  • Manageability: Do you have the processes in place to manage this software? Does it look too complex for your current SAM processes to handle? Signing up for overly complex licensing models may lead to disorganization and compliance risks later down the road.
  • Full Cost: Subtle expenses like maintenance and upgrades can easily add up to outweigh the overall value of the software.

Prepare and Surround Yourself with the Right People

When it comes to software contract negotiations, there’s no such thing as too much information. We have often seen customers rush into a conversation with their suppliers about features and needs before they are completely ready to do so. You need to start preparing for your contract negotiations long before you start arranging a kick-off meeting. Make sure you have a firm understanding of your business’s requirements, the full extent of the features and benefits your desired product offers, and the particular licensing metrics of the software vendor you’re dealing with.

Take the time to prepare a meeting agenda outlining any and all outstanding questions or issues you may have.

As part of your preparation, you should surround yourself with a team of experts. Expertise sits in many different departments, including procurement, IT, and the legal department. Remember, the ones who are arranging the purchase of the product are often not the ones who will be using it. Seek insights from a variety of sources and don’t get caught up in the petty squabbles between departments; despite the fact that many organizations often create internal walls that are difficult to overcome, it’s important that you face the software vendors with a united approach.

Follow Your Own Timeline

The vendor will often press you and make it seem like they need your answer quickly but that hardly means there is anything tangible behind this pressure. It’s not like the vendor’s main office is going to collapse into the sea unless they get your answer; if they can meet with you tomorrow, odds are they will also be available next week or the week after. It’s important that you pick a schedule that works for you, and that you resist the vendor’s pressure whenever possible. Try breaking your contract negotiation into parts, instead of taking an all-or-nothing approach. This strategy will compartmentalize your efforts, which can allow you to track your progress and will give you a feeling of accomplishment rather than slogging through one giant battle.

A negotiation can be broken down into four parts:

  1. Preparation: In which both parties prepare their stance and approach before meeting.
  2. Negotiation: In which an agreement is reached between both parties.
  3. Execution: In which the terms of the deal are carried out.
  4. Further Cultivation: In which the deal is completed but the relationship between the two parties is nurtured and further partnership opportunities are explored.
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Know Your Data

This is the key to developing a strong approach to a software contract negotiation. If you don’t know what you have deployed, if you don’t know what you are using or how much value your company is getting out of it, then you won’t be able to make smart purchasing decisions. We have often seen companies buy simply based on what they have purchased in the past or they make an educated guess at what they need. However, if you purchase based on what you have bought in the past, then it both fails to account for any future growth your company may experience and opens you up to rebuying licenses that you never needed. Guessing will also lead to similar problems since guessing a license number that is too high means you are losing money and guessing too low leaves you exposed to heavy penalties in the event of a software audit.

The best way to gain insight is through effective software asset management procedures. If you want to know how you can get started, you can check out our article, Implementing Software Asset Management for Beginners.

Come to the Negotiating Table with the Right Attitude

While emanating charisma might come easier to some than to others, it is a skill that can be learned given enough practice. Bringing the right disposition to negotiations will allow for the meeting to go smoothly.

  • Be optimistic and positive, even if you are frustrated.
  • Be bold, don’t let the software vendor push you into deals you don’t like.
  • Be creative, problem solving is often met with favor.
  • Be generous with your willingness to supply equal opportunities for growth and prosperity for both parties.
  • Be humble. Approach the situation with kindness and grace. They are humans, after all. Treat them the way you’d like to be treated.

Know Your Vendor Better Than They Know You

The software vendors will have to go through a few questions while they are considering their partnership with you. Considering these questions can help you direct the conversation in a way that ensures that they are positively answered in the mind of the vendor:

  • Do we have ongoing business with this customer?
  • Do we have an established relationship with the decision makers within this customer’s organization?
  • What are the customer’s goals?
  • What is the customer’s budget?
  • What is their project schedule? The importance of their project?
  • Is there a way we can become their sole supplier?
  • Is the customer doing business with our competitors?
  • Is the customer doing business with one of our resellers or distributors?

Your knowledge cannot be limited to what your sales rep likes and dislikes. Many companies are not willing negotiate with anyone within the software vendor’s company other than the sales rep, especially when they have developed a friendly relationship. You don’t want to upset the balance within the software vendor’s company and the software vendors are great at making sure things stay this way. It’s critical that you break out of this cycle in order to get the software contracts that you want. Be willing to escalate the situation up the chain of command if needed. A well-placed phone call to a high-ranking member of the company may be just what you need to get your software negotiations moving again.

Have a List of Talking Points

There’s no hard and fast rule to leading a successful negotiation because contract negotiations are as unique as the software that you are trying to obtain. However, there are a few general things that should be addressed during the negotiations, consider the following areas:

  • Definitions like Use, Licensee, and Parameters. Ensure they are properly expanded upon.
  • How software is defined, will it include everything the licensee is ordering or simply what the licensor is delivering,
  • Restrictions surrounding copying, access, transferring, sub-licensing, or providing the software to a third party.
  • How both the licensee and the licensor intend to protect their own information; if the licensor will have any access to the software in the licensee’s environment, along with data protection or security measures.
  • Auditing rights, whether the licensor is required to provide notice, who can conduct an audit, the number of audits that can occur in a given time period, whether the audit must be conducted during regular business hours while also having minimum impact on the licensee’s business are all important details.
  • Where will the software be located? On-prem on designated machines or servers? Third-party host? Cloud Environment?
  • Will a third-party need to be accessed by or have access to the software?
  • Other than the installation if not provided by the licensor, what will the licensee be expected to do with the software? Will modifications, patching, or maintenance be required?
  • Are there territorial restrictions surrounding the software?
  • Is the license perpetual or only for a fixed period of time?
  • What is the process around expanding the licensee’s rights? If the licensee wants more users, more devices, or anything else similar in nature, what is the process around that increase? If you expect an increase in your counts soon, consider actions that will protect any current discounted rates you’ve gained during the negotiations.
  • Test and Development server environments, disaster recovery scenarios and how both pertain to the licensor’s definition of ‘Use’.
  • Are there any disclaimers and other warranties within the software license?

Having answers to these questions will give you a lot of the information you need to make sure you will be able to use the software correctly without compliance issues. Most products and services can be purchased in a variety of sizes, models, and shapes, each with their own unique benefits and varying costs. Be certain to evaluate each option carefully.

Knowing what you want to say will also help you in figuring out how you will say it. Messaging will be everything and understanding what to say and when to say it will be critical. We’ve seen simple careless statements like “don’t worry about it, procurement is just playing hard to get,” absolutely destroy months of hard work. Make sure that everyone in your company is on the same page of what can and cannot be said and that all departments’ goals are aligned to deliver the best results.

For More Information

Software contract negotiations can be stressful, and it may seem like you’re surrounded by fake smiling faces that are pressuring you into bad deals for software you ultimately don’t need. But it doesn’t have to be this way, with the right tools in place, you can properly defend yourself against these ploys and be able to counter them effectively. Have insight into your own data, prepare, have questions, and above all else, don’t do this alone. At MetrixData 360, we’ve spent years perfecting the art of business negotiations. We’re here to save you money, to stand for your interests and your goals in this venture. If you’d like to learn more about our approach to contract negotiations, you can contact us using the information below and we can get started on getting you the deals you need.

5 Key Traits to Winning Contract Negotiations

Contract negotiation is not an exact science, it is an art form and to be successful at contract negotiation it takes the right frame of mind. Personality plays a large role in how your contract negotiation will play out and it is more important than ever that companies walk away from their software contracts with a good deal designed to nurture the long-term growth of their company. At MetrixData360, we have sat through countless negotiations and we know what kind of an attitude it takes to see success from one.

1. Positivity

Even though sometimes contract negotiations feel like you’re bashing your head against a wall, a successful negotiator radiates optimism. No matter how good it will feel to let them know just a fraction of your frustrations, it will not get you anything but stony and uncompromising faces. Instead state how happy you are to see your sales rep when they walk in — bring excitement and enthusiasm into the meeting and hopefully it will be contagious.

Now, that being said, don’t be fake with your smile. It’s important that you come across as sincere and genuine. The last thing you want is for your sales rep to feel as though you are untrustworthy. Build your integrity with the sales rep by keeping your appointments, following the rules (to the best of your ability), and remaining honest.

When confronted with challenges, approach the situation without aggression and instead try to phrase your concerns in the form of questions. Make sure that you ask enough questions to fully understand your contract.

2. Bravery

You will also need to be brave in your software contract negotiation. It may seem intimidating but there’s only one way to become braver: do something that you are afraid of and do it often, then it will steadily become less scary over time. In order to build your confidence, it is important to be prepared. You need to make certain you have a strong stance on what you and your company are aiming to achieve. If you are frustrated by a long drawn out process, make sure that you make this frustration known to the software publisher. You will also not be able to win if you are full of fear and uncertainty. That certainty comes from a firm knowledge of what is in your software licensing environment and that your data is accurate Visibility into your data is gained through the successful implementation of software asset management. If you’d like to learn about how you can get started with software asset management, you can check out our article, Getting Started: Implementing Software Asset Management.

3. Ingenuity

Who says there is no room for creativity in the business world, especially in the seemingly unforgiving realm of software contracts? Software publishers are often willing to hear out creative ideas and will reward you for your outside-of-the-box thinking. Creativity is often required if you are going to get what you want out of your contract negotiations. Benchmark your progress with your contracts against past deals you have made with that vendor and use that to build a creative solution.

4. Generosity

As social animals, we tend to gravitate towards people who offer us both kindness and generosity, same goes with your software vendor. We’re not saying you should throw copious amounts of money at the software vendor for no good reason – quite the opposite. Offer up information and be willing to share details and specifics, something that won’t jeopardize the competitive edge of your company, but your software vendor will still find valuable, such as an introduction to a potential client. Such information will generate trust and create a sense of partnership between the two of you.

Generosity is an active form of both empathy and sympathy. Spending some time to understand the needs, wants, and pressures driving your opposition will give you valuable insight into how to tactfully approach the negotiating table.

5. Humility

If you have ever worked in retail, you know the agony of challenging customers. They made your job so much harder, and you counted the seconds until they would leaveleft the room and doing favors for those people was probably the farthest thing from your mind. The life of a sales rep, regardless of whether they sell coffee or software licenses, is hard enough. Making their day that much more challenging won’t get you the software contract terms you want. In fact, it’s a good way to raise the floor-price that your sales rep is willing to go down to.

Be an ideal customer and treat your sales rep kindly. Take the time to understand the sales rep’s motivation, it will help you through your contract negotiations and it will allow you to phrase your position in just such a way to appeal to their interests. Now, being kind is not the same thing as being a pushover — don’t agree to any deals just because you are afraid of hurting the sales rep’s feelings. Be kind but be clear and assertive about your position. A healthy relationship is one where both parties feel respected and heard and is fertile ground for positive negotiations.

For More Information

Contract Negotiations can be frustrating but it’s important that you enter the meeting with the right frame of mind. It can make all the difference if you want to leave the contract negotiation having fostered a mutually beneficial relationship. Now that you have the right attitude, it’s time to set it to work. At MetrixData 360, we have helped hundreds of clients achieve the contracts they want without damaging the relationship with the vendor. You can learn more about how to get ready for your contract renewal by reading our article, 5 Simple Tips for Software Contract Negotiation.

Software Contract Negotiation (When You Don’t Have the Upper Hand)

How to Negotiate Software Contracts When You Have No Second Option

Software contract negotiations can be difficult, frustrating, and exasperating. But they can also be tolerable when it feels like you have cards of your own to lay on the table. Having the option to be able to walk away can be the silver bullet in a negotiation:

“I think I’ll take my business elsewhere. I hear your competitors give out enticing offers to new customers.”

Such words usually drain the blood from the sales reps’ faces and they’ll scramble to keep your business, even if it means they keep it at a lower selling price.

But what if you don’t have that option? What if the software vendor sitting on the other side of the table has you pinned in a corner?

    1. Maybe they have a monopoly on the software that is critical to run your business. There’s no one else selling the software that you need and if you don’t have the software that this vendor is selling, then your business is as good as dead.

 

  1. Or it’s possible that, while you have alternative software vendors available, you’ve already implemented this software so thoroughly throughout your company that switching at this point would be impossible.

This seemingly skewed power dynamic means that negotiating a contract feels more like a shake-down.

What can you do other than bend to their demands, which will steadily get more and more outrageous when they figure out they have you chained to your chair?

At Metrixdata 360, we’ve had many clients come to us in just such a predicament and we’ve discovered that while you may not have the option to walk away, there are still a few cards you can play.

Create a Value Gap

While it’s true you need the software the vendor is selling, very few businesses need 100% of their workforce to have every top-of-the-line software product.

Within a workforce, we have usually seen that around 20% to 30% of workers use the software provided to them constantly. These are the power users. They are the ones who need five monitors and a remote laptop stacked with top-of-the-line software.

Then you have the middle-range users — the ones who would need their desktops but maybe only use two or three programs on it throughout the day.

Lastly, you have people who are on their feet all day, users who share a single computer, or employees who only use software to clock in and out of their shifts.

Software vendors usually arrange their contracts so that 100% of your workforce is licensed as though everyone needs the same amount of software as the tech-heavy user. This is often the source of a lot of wasted money and can be solved by creating multiple “worker types” throughout your company, each with their own licensing requirements to account for the variety of work that is needed to run your company.

If you’d like to learn more about how you can create the value gap with your software vendor, check out our video, The Microsoft Office 365 Value Gap.

Understand Your Software Contract and Your Position

You need to make sure that you know the contract you’re signing up for inside and out. It is equally important that you understand how your company’s software consumption and usage relates to the contract so you can be sure the work you need the software for is sufficiently covered while avoiding paying for features you won’t use.

Make sure that the terms are clearly defined in the contract. Terms like “users” and “devices” tend to be notoriously ambiguous and can lead to compliance issues down the line.

After you understand the license, ask yourself if there are different licensing models that could suit your needs better.

    • If your business is subject to strict seasonal change, perhaps a subscription-based license would be better suited to your company than a perpetual license?

 

  • Is the license model that you’re purchasing completely necessary or are there unnecessary features to it that can be removed if you sign up for a cheaper version (going from enterprise to standard editions, for example)?

Having clear visibility into your company’s software usage will give you the information you need to make these types of decisions. Don’t expect the vendor to simply offer up these cheaper alternatives for you, you need to do your own research because chances are that the sales rep will try to set you up with the most expensive edition with the least effective licensing model.

You can even negotiate for non-standard language to be added into your contract. These are specific clauses that account for your unique software profile.

One client we recently negotiated for was able to create a clause that outlined specific usage around a single day during the year where their business would spike. Don’t be afraid to push for a hand-tailored contract if it gets you the results you need.

Give Yourself Lots of Time

One client we recently negotiated for was able to create a clause that outlined specific usage around a single day during the year where their business would spike. Don’t be afraid to push for a hand-tailored contract if it gets you the results you need.

Since you don’t have the option of going elsewhere, biding your time may not be the best strategy because the software vendors already know there’s little chance in you leaving.

Instead you need to make sure that you are well prepared. You may have to try a few other tactics to move the process along, such as assigning tasks to keep track of progress or escalating the issue to the sales rep’s upper management (a well-placed call to any higher ups could mean the difference during a stalemate).

These tactics will take, above all else, time and patience. It’s recommended that you begin negotiations anywhere from nine to twelve months before the renewal date to give yourself the time you need.

If you’d like to learn more tricks for negotiating your next software contract, check out our article, 5 Simple Tips for Software Contract Negotiation.

You Can Negotiate a Software Contract (Even If You Can’t Walk Away)

Software contracts are a balancing act. But when you don’t have the option to pick your vendor, it may feel like you’re doing that balancing act with lead shoes on.

Although it may be a more challenging process, there are still cards you can play to get a deal that maximizes your software’s value without blowing your IT budget out of the water. After all, IT budgets are only being stretched thinner these days and IT departments are constantly asked to do more with less.

If you’d like to learn more about how you can get the most out of your software, MetrixData360 is here to help. We have negotiated hundreds of contracts with every software vendor in the market today, from Microsoft to VMware. We speak the language of the software vendors and we know how to get you the results you need.

If you’d like to learn more about how MetrixData360 can save you from wasting your company’s money, check out our contract negotiation page!

Mike’s Minute: Negotiating a Microsoft Audit or SAM Engagement

I enjoy reading inspirations and thought provoking quotes every now and again.  I found one recent, that was from John F Kennedy about negotiating that I believe applies to negotiating a Microsoft audit.  Since JFK was a President, he found himself in all kinds of tough negotiating spots and he provided this little bit of wisdom.

Anyway, the quote goes like this:

“Let us never negotiate OUT OF FEAR, but let us never fear to negotiate”

One of the Forgotten Laws of Software Audits and SAM Engagements

An audit is a negotiation.  Understand that your deployment position is a negotiation.  Period!

Let me explain.  Right now, software vendors like Microsoft are auditing or disguising audits as Software Asset Management engagements – (SAM for short) 1000s of companies.  It’s a huge revenue generator for them.  So many companies are falling into the trap that their vendor tells them that the SAM process is to help them understand licensing and their deployments. But it really isn’t, its about generating revenue. And in this free short video, I’m going to show you how they use these audits to generate revenue and what you can do to ensure you only pay for what you are actually using!

A Better Way To Handle SAM Engagements

I’m not only going to show you how, with MetrixData360’s SAM Compass, you can use the same tools the auditors use (most of these are free) , but I will show you the tool we use to clear the noise out of deployment data, structure your data, and how to apply licenses to get the optimal results for you. And guess what! You don’t need to be a licensing PhD to apply these strategies. You can save yourself thousands of dollars just by copying us (or allowing us to do it for you).

More importantly, I’m going to show you the one simple tool that empowers you to do this on your own.  You don’t need an army of IT folks, lawyers, and other resources to do this, and you definitely don’t need a million-dollar budget to implement some fancy Asset Management Tool!

Defending Your Dollars During a SAM Engagement

But let’s back up for a second; about two years ago when Microsoft started auditing more people, our business began to grow.  People were looking for help to defend themselves against what they felt were unjustified audit positions (and they were unjustified) and so we built a lot of manual process to help organizations in negotiating a Microsoft audit.

Over the last two years we have successfully defended almost 100 companies (from 250 users all the way up to fortune 50 companies) with Microsoft Audits or SAM Engagements and shown them how to save millions of dollars in incorrect audit findings.

I’m talking about real dollars saved.  Not just from audit findings, but we were also able to take their actual deployment data and licenses that they owned and create licensing models that worked for them versus the typical Enterprise Agreements they were being sold, saving them even more money.

And here’s the bottom line that I keep coming back to – no matter how big or how small the company, organizing and understanding your data is the key to saving money when negotiating a Microsoft audit.

Use Data to Defeat a Microsoft Audit

For client after client, our manual tools that we developed did TWO things really well.  They helped us organize the data so we could visualize it simply (removing all kinds of noise) and it helped us OPTIMIZE LICENSE ASSIGNMENTS driving savings.

I guess if you can only do two things well and it saves you money, those are two pretty good things.

So let’s start off by talking about organizing data, about how you need to be able to visualize your deployment information in a simple and easy to understand manner.

First let me ask you a question. You are trying to save your company money, right? You want to be able to optimize your Microsoft licensing (whether that is on-premise or cloud based licenses) so you can help your company save money, right?  And you’ve seen the big Asset Management Tool companies promote how their tools give you the rigor and process to save you 20, 30, even 40% on software licenses and audits?  So as someone that is responsible for software licensing, can you tell me how you can save money without being able to correctly visualize and analyze your deployment data?

It’s impossible, right?  And there is a reason for that.

Structuring your data correctly works for a lot more than audits though, but audits are definitely one great area to apply the concept – and what you need to know is what the smartest people who defend software audits know, what those expensive SAM Tool companies know that saves you millions of dollars – it’s something you need to pay attention to.

And I think one of the best things about this tool, is you don’t need to change your current process!  It works with your existing tool, whether that is SCCM, BigFix, Altris, Flexera, etc.  Don’t have an inventory or network management tool? Not to worry, there are some free tools like Microsoft MAP that will do.

Clients Who Saved Big During SAM Engagements

Here are just a few examples of the big audits that I’ve worked up close and personal on where we saved millions of dollars for our clients (identities masked to protect the innocent obviously!)

A large Healthcare Organization was audited by Microsoft.  The auditors had produced findings of $9 Million in non-compliance.  For 6 months they argued with the auditors about the findings.  Figuring the real number was about $1 Million. MetrixData360’s process helped them settle for less than $500,000 in 8 weeks.

A global transportation company was facing an SAM Engagement to validate their use of Microsoft SQL Servers.  Their account team took the raw data that was provided and assumed they needed $5 Million dollars of licenses.  When we formatted the data and gave them a visualization of the data, they soon learned the shortfall was actually $0.

Not as big as these two examples?   Don’t worry!  The bottom line?  These two companies saved Millions of dollars and countless hours of wasted time and aggravation trying to deal with incorrect audit findings.  The best part is the results scale to the size of your organization!

Let SAM Compass Guide You Through Your Next Microsoft Engagement

MetrixData360’s SAM Compass and software deployment visualization process saves you money!

I know you know this, but for whatever reason, you’ve only messed around with deployment data, or you haven’t done it all.  Maybe you think it’s too complicated, or it’s too expensive, or you’re going to wait until you receive an audit notification.  Already engaged in an Audit or a SAM it’s not too late!

Let me save you the trouble – let’s look at someone who’s already used SAM Compass and figured it out.

I want to show you what one of our clients has done with the tool and how they used it to figure out exactly what they had deployed and where they had potential compliance gaps – before they even became a problem.

These guys had a good handle on their licensing but they never had a way to visualize it.  Like many of you out there they were managing everything in many different spreadsheets.  However, once we implemented MetrixData360’s SAM Compass, they were able to see everything quickly and easily.

I know what you are thinking!  That is tough to implement, how do I get the data.  Let me put your mind at ease!

The client I just showed you did not have an inventory tool installed.  All their license management was done in spreadsheets.  As someone requested something new, they just added it to a running total to figure out what their true up would be.  That was until we ran them through the SAM Compass process and automated it for them!

This client (and about a dozen others I’ve worked with in the last 90 days) ran Microsoft MAP Toolkit.  It is a free tool.  It does the same thing as those fancy inventory tools that are out there, and the great thing is it works for someone who has 100 devices to someone who has 100, 000 devices.  Cost to use this tool $0.  Sorry inventory tool vendors.

A One Man Army Against SAM Engagements

The next thing people ask; they must have had an army of people running this MAP thing.  Not at all!  1 IT person with the right credentials, about 10 minutes to set it up and BAM! results.  We used the Assetlabs ECHO tool to validate the data, ask them to make a few changes, and done!

What about having to run all kinds of reports out of that MAP toolkit to get the data!  Nope (we don’t like their reports anyway; we think they are wrong!)  With that ECHO utility that I just mentioned from Assetlabs (free as part of the SAM Compass service) the data automatically gets extracted from MAP.  Five minutes after that you can be in the portal visualizing your data.

Before we built SAM Compass, this process took us days.  We also know that many of you stop building SAM practices because it would have taken you just as long.  When we used manual processes, it was painful. I mean, it hurt to get the data in a consistent format for visualization and licensing optimization!

The thing is I am an audit and licensing expert – I never wanted to be a data analyst.  I want to help clients save time, save money, and save aggravation. I use SAM Compass because it’s more effective than anything I’ve ever done – now I don’t have to manipulate standard reports and stitch data together for hours and hours.

What does this mean to you?  It means you don’t need a multi-million dollar budget to get started in SAM.  Just sign up for SAM Compass!  If you don’t have an inventory tool – just install Microsoft MAP!  You don’t need an expensive inventory tool!  I will make you a bet – if I showed you the results from someone who had a multi-million dollar implementation of a fancy SAM tool and the same results with SAM Compass, you wouldn’t be able to tell the difference.  Well that’s not exactly true, SAM Compass will give you better, more actionable results and data you can easily visualize!

Get Guidance Through Your Next Microsoft SAM Engagement

So why don’t you know what your license position is?  Are you able to easily defend yourself in an audit?  Do you have easy access to all your deployment data?  Is it easy to visualize and understand?  Is your Enterprise Agreement optimized based on your actual usage?

You know what?  Don’t answer that because I don’t want to incriminate you!

Send an email to info@metrixdata360.com and ask for us to schedule a demo of SAM Compass for you today and let’s discuss how you too can save time, money and aggravation!

How to Negotiate Software Contracts During Mass Corporate Layoffs

If your business is one of the thousands going through tough times during this pandemic, you find yourself budgeting just to keep the lights on and sadly, that means you may be forced to lay off or put on furlough your hardworking employees unless you can come up with some innovative cost saving ideas.  

What makes it worse is that there’s no way to predict what will happen. If you’re planning on rehiring staff, you might be stuck keeping your pricey infrastructure in place even though there’s no one to take advantage of it. 

At MetrixData 360, we recognize that these are hard times so we want to share with you how you can temporarily scale your software estate back without permanently losing your assets.

The ‘Shelfware’ Trap

What is annoying about momentary slumps in business is that they are just that – momentary.

Business will pick up again at some point. Which means that there is hesitation to retire or downsize on any asset because tomorrow your workers will be back on staff and you will need everything in place again.

However, when it comes to your software licenses, it is important to remember that you don’t actually own anything, you’re only paying for the use of that software. If the employees affected by layoffs and hour reductions aren’t using it, why are you paying for it? You’re essentially just giving the software vendors free money if you are doing that.

Many companies do not have a strategy for retiring assets, commonly called ‘shelfware’, where the asset is put into storage and never used again but you are still left paying for it.

In these trying times, unnecessary spend is the last thing you need. Buying products is the easy part, maintaining them and making sure that you maximize their value is more difficult.

Plan A: Read Your Contract for Chances to Decrease Your Software Spend

In current contracts, there are no standard provisions for a long period of downtime. The only clause of that nature would be downsizing due to divestiture. However, the beauty of software contracts is that they can be hand-tailored to the client, so there may be something in your specific contract which could allow you to temporarily downsize.

If you have a license that is committed annually, then depending on your renewal date, you may be allowed to push the renewal date sooner to allow you to talk about negotiating your contract with the vendor.

If you have a subscription, it is important that you decrease your count as quickly as possible and there may be clauses in your contract which allows you to do that.

The longer those counts are in your software environment, the longer they will be costing you money. Most contracts will not let you just decrease your count for your licenses without forcing you to jump through hoops and there’s the tricky part.

You see increasing your licenses with the software vendors is easy, they encourage it and it is almost expected of you within the partnership that you have established with the vendor. It’s decreasing your count that is the issue, your contract may not allow it, but everything is negotiable.

Plan B: Negotiate a Decrease with Your Software Vendor

If you’ve read through your contract and found nothing that could possibly let you lower your counts for the time being, then it’s on to the next step. You’ll need to get in touch with your software vendor and set up a negotiation as soon as possible.

This will be a hard thing to negotiate because during this economic downturn, the software vendors are also taking a hit, so they will probably take an aggressive approach to their sales. A decrease in licenses may be the last thing they will want to hear right now. Here are some tips for dealing with this difficult negotiation.

  • Emphasize the value of your long-term partnership over immediate gains. Bring up how long you have been or how long you are planning to be a loyal customer.
  • Escalate the issue to the higher ups in the software vendor’s company, if you have the connections.

If you’d like some tips on how to face a tough contract negotiation, you can check out our article, 5 Simple Tips for Software Contract Negotiation.

Plan C: Suggest Alternatives

Alright, so you looked through your contract and you can’t reduce anything, and you talked to your software vendor and they might as well have stuck their fingers in their ears and hummed loudly for all you got through to them.

If you can’t decrease your count, you can try a few of these alternatives with the software vendor to see if anything sticks:

Swap your On-Prem Licenses for the Cloud

<p”>In recent weeks, some companies have completely laid off their workers while other companies have just sent them home.

Applications like Microsoft’s Teams and Zoom have seen a skyrocket of activity and you may find that while you’re struggling to find something to do with your on-prem licenses, at the same time your Cloud platform is stretched to full capacity.

Therefore, you might get some traction with your software vendor if you offer to temporarily swap your on-prem licenses with any alternative Cloud subscriptions the vendor might have.

Microsoft, for instance, is particularly aggressive with pushing its Cloud platform onto its customers, so such an offer might spark their interest.

Push Your Spend Back

If you have a large deal in place with your software vendor over a long period of time, you may ask to just push the spend for this period back into next year. This will give your business the time it needs to recover and will offer the chance to improve immediate cash flow.

Trim Back Any Decoration

In more economically prosperous times, certain applications found in a bundled package may have just been nice add-ons or may have contributed to a better discount at the time. Now is the time to take a hard look at those applications and see if they are really worth the effort and the money to upkeep.

For a more in-depth look on where you can cut savings during times of crisis, you can check out our article, How Will Your Software Contracts Be Affected By COVID-19?

Plan With MetrixData 360

During hard times, it’s more important than ever to be smart with your software. Harnessing these saving opportunities could mean avoiding wasting critical resources on software no one is currently using. 

At MetrixData 360, we know how to cut your software costs down so that you only pay for what you are using and what you need. We have sat through hundreds of contract negotiations and we know how to manage your software to get you the results you need.

If you would like more information, you can contact us for a free consultation.

Negotiating a Microsoft Enterprise Agreement: What to Expect

Microsoft is Changing How it Negotiates EA Renewals:
Here’s What You Need to Know to Prepare

If you’re a part of a large company with at least 250 devices, chances are you have some sort of an Enterprise Agreement (EA) in place with Microsoft. The EA offers Microsoft products at reduced prices, gives you the opportunity to add licenses while paying (true up) later, and it allows an easy way to purchase online services such as Microsoft 365.

Given the right circumstances, this can prove exceptionally valuable and highly cost-effective. If you find yourself in the wake of a looming EA renewal, there are some recent changes that you should take into consideration before entering negotiations with Microsoft.

At Metrixdata 360, after over a decade of experience dealing with Microsoft, we have noticed a change in how Microsoft approaches these renewals that may make your renewal more challenging than they have been in the past. We’ve outlined the some of those changes to how Microsoft handles Enterprise Agreement renewals below.

Pressure to Move to the Cloud

While Microsoft’s Azure may not have as many features or as wide availability as Amazon’s Web Service (AWS), Azure popularity is skyrocketing, and its sales organization is highly motivated to push you to the Cloud.

Now, Microsoft has become quite aggressive in moving its business – and subsequently its clients – to the Cloud and away from traditional on-premise licensing. This means you can expect a lot of pressure from Microsoft to get you to sign up for some commitment to Azure and other subscription-based licensing models (Office 365, Security Products, Teams Voice Features, etc.).

The particular complication that Azure presents that we have often seen occurs when companies sign up for Azure services and find out that there are many hidden or unexpected costs that can quickly add up, making it difficult to predict what the total cost will be for your company. Services that are sold for only a few cents per minute could easily cost thousands of dollars when scaled.

A big indicator that points to Microsoft’s desire to move the Cloud comes in the form of traditional on-premise products often being ignored by Microsoft. If you had discounts on these products in the past, Microsoft is removing those discounts and the revenue that is associated with these purchases is no longer of much interest to the Microsoft sales teams.

For more information on moving to the Cloud, check out our article 4 Best Practices For Cloud Optimization.

Microsoft Will Use Tight Timelines

In the past, Microsoft had internal pressure to ensure that Enterprise Agreement contracts were renewed on time.

We have seen a shift where they are now using this deadline against customers. This pressure leaves companies feeling forced to sign a contract that may not be the most beneficial for them.

Running the clock down to make a Microsoft representative sweat may have resulted in a better proposal when the actual expiration date drew near. Now, however, this strategy no longer yields the results customers are looking for as Microsoft has shifted the pressure to the customer and may not make any improvements on their proposals even when the date for renewal approaches.

Since tight deadlines no longer hold much sway, we would suggest giving yourself ample time to prepare. Previously, you may have only needed three to six months to prepare, but now, you may need nine to twelve months. The first six months should be used to ensure you have a complete handle on what you actually require from Microsoft and the remaining three to six months should be used to actually negotiate the renewal.

Microsoft Needs You to Keep Buying and Upgrading in Order to Consider You a Partner

Are you just starting to deploy to Office 365? Perhaps Microsoft will pressure you into buying security products as well. What does it matter to them that you already have a contract with another vendor, or that to make the transition from your current vendor would be a needlessly laborious task? You can expect no concession from Microsoft when it even comes to the time that it would take for you to actually move or justify those purchases.

If you own E3 licenses, you can be expected to be pressured to buy E5s and if you have Office 365, you’ll see pressure to purchase Microsoft 365.

Large commitments to Azure are constantly being pushed on customers, and we have also seen an increased interest in selling LinkedIn Services within the EA, this includes services that revolve around recruiting, sales, and marketing.

This raises a question: if you already have top-level products like E5s and there’s nowhere you can upgrade to or you simply don’t need anything new, how will you be able to get those price concessions from Microsoft that you need if you seemingly have no bargaining chips?

Download our PDF on Software Sales Rep Motivations:



Microsoft Needs You to Keep Buying and Upgrading in Order to Consider You a Partner

Are you just starting to deploy to Office 365? Perhaps Microsoft will pressure you into buying security products as well. What does it matter to them that you already have a contract with another vendor, or that to make the transition from your current vendor would be a needlessly laborious task? You can expect no concession from Microsoft when it even comes to the time that it would take for you to actually move or justify those purchases.

If you own E3 licenses, you can be expected to be pressured to buy E5s and if you have Office 365, you’ll see pressure to purchase Microsoft 365.

Large commitments to Azure are constantly being pushed on customers, and we have also seen an increased interest in selling LinkedIn Services within the EA, this includes services that revolve around recruiting, sales, and marketing.

This raises a question: if you already have top-level products like E5s and there’s nowhere you can upgrade to or you simply don’t need anything new, how will you be able to get those price concessions from Microsoft that you need if you seemingly have no bargaining chips?

Our Recommendations for Your Next EA Contract Renewal

At MetrixData360, we recognize that things are not the same with Microsoft as they have been in the past and going into your EA renewal, you’ll be confronted with a new process that is far more frustrating than it used to be, so here are some tips to help you deal with these changes:

Air Your Frustrations – Tactfully

We’re not suggesting you flip a table (despite how satisfying that might be), but be prepared for this situation to be exasperating. Microsoft will use all of the corporate structures as justification for drawing out the process and as a way to avoid legitimate business requests.

Make sure you let Microsoft know how irritated you are with this process and talk to them frequently. It will be helpful to move things along if you set up, early in the process, a weekly meeting with Microsoft and present them with small tasks to do during these meetings. This will allow you to track their progress.

Anticipate That You May Need to Purchase More Licenses Than You Use

It may seem counter-productive if you’re looking to save money and cut spending, but Microsoft is known to reward those who buy into their strategies early. Sometimes, you can get concessions that may be worth the purchase, even if you end up buying things you don’t need, such as E5 licenses and LinkedIn services.

Make sure you have a strong understanding of what a reasonable price would be for the bare minimum you require for your company. This is done through understanding your company’s usage regarding these Microsoft products. A 20% discount will still mean losses if it turns out you’re overspending by 45%, so keep that balancing act in mind if you decide to scale up.

If you’d like to learn more about the value gap in Microsoft Negotiations, check out our Youtube video from the SAM Channel.

Know Your Options and Be Assertive

Microsoft will push you to get things done quickly, and to increase your spending, so you have to be prepared to push back.

You may need to be prepared to move beyond the expiration date in order to see flexibility from Microsoft. We have seen organizations that have gone two months past the expiration date to finally reach agreement with Microsoft.

The only other option available to you to get around this unfortunate situation is to start earlier and get serious about the negotiations as soon as possible. In the past, the intensity of the negotiation came to its peak around one to three months before the renewal but now, in order to reach the most ideal agreement, negotiations should begin in earnest around three to six months before the renewal.

You also need to be prepared to escalate within your organization and with Microsoft’s.

Having a strong understanding of your software usage and current spending will give you the knowledge you need to create two or three pricing options that will allow you to decrease costs or at least to not increase it.

Don’t expect Microsoft to be any help to you in these areas, their goals are very clear, they want you to increase your spending regardless of whether it will provide greater value to you.

Hire a Professional Negotiator

There are many stakeholders involved in a contract renewal, each with different goals that need to be persuaded, what words do you use to convince them all?

You will need an in-depth look into your spending and your software usage. This will empower you to pursue the best deal possible for your company.

Also, if you do manage to lower your spending with Microsoft, it is likely that they will attempt to make up for any shortfalls in their revenue target by sending you some version of an audit, either a friendlier SAM engagement or a straight-up audit.

For this reason, it is important you get a professional to help you prepare for your EA renewal as though it were a software audit because it could very easily turn into one, depending on how things go.

If you want to know about your options for the management of your software, see our article Hire a Software Asset Management Expert or Do it Yourself? The Pros and Cons of Each.

Microsoft Negotiation Services for Your Business

Enterprise Agreements are a vital part of your business, and it’s important you prepare for your EA renewal sooner rather than later, lest you be stuck with an overpriced agreement that fails to deliver on value.

Your best defense is to be prepared and to know your data backwards and forwards.

At MetrixData 360, we pride ourselves in providing our customers with solid data that is easy to understand. If you’d like to know more about how MetrixData360 can provide you with the deals you need and the prices you want, clicking the link below will take you to our Contract Negotiation page.

Download our PDF on Software Sales Rep Motivations:

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Don’t Wait Until June To Negotiate with Microsoft

Waiting for June to Negotiate with Microsoft? Don’t Bother!

There is a piece of common wisdom that has been rolling through the Software Asset Management community for a while now: negotiate with Microsoft in June to strike better deals on your licensing contracts. Unfortunately, like most tall tales, it lives purely because it continues to be repeated without regard to data or evidence. In fact, after completing hundreds of Microsoft negotiation projects over nearly a decade and negotiating over $1 billion in license contracts, we can confidently tuck this myth away as little more than folk wisdom. So where did this myth come from? And why has it become so prevalent in the SAM industry? Let’s dig deep and dispel this myth once and for all.

June is Microsoft’s Fiscal End of Year

The myth that Microsoft is willing to give better deals stems from the fact that June is the end of Microsoft’s fiscal year. While many businesses try to shore up any negotiations to boost their end-of-year earnings, we assure you that Microsoft is well ahead of you. For a corporation as large as Microsoft, making a last-minute sale of even a few million dollars at a huge discount for the year-end doesn’t make sense on the scale that Microsoft plays at. They know you need their software or face a huge hassle when you try to move away from their products, as the scientists at CERN are currently finding. So why should they care whether you buy today or tomorrow? Microsoft knows they’ll get your money eventually.

Aside from the sales rep that wants to make his quota look good, the fiscal end-of-year for Microsoft does not change the margins they are willing to accept during a contract negotiation. Microsoft didn’t become the industry giant they are by painting themselves into a corner when negotiating. In fact, going into a negotiation with the assumption of being on a deadline is a great way to pay more. To quote Chris Voss in Never Split the Difference, “Deadlines are the Boogeyman of negotiation–almost exclusively self-inflicted figments of our imagination, unnecessarily unsettling us for no good reason.” By assuming you have a deadline of June 30th to close a deal, you’re robbing yourself of the best tool any negotiator has: TIME. In the end, Microsoft doesn’t care whether your contract gets put on the books for this year or next, they just want your money.

Microsoft Made $118 Billion Last Year

Let me say that again for those in the back: Microsoft took in over $118 Billion last year. To give you a sense of scale, consider that a $1 Million dollar license contract is less than 1/100,000th of their total revenue. Even signing a $10 million contract would be less than 1% of 1% of their total revenue. For many organizations, a million-dollar deal either is a huge expense or a boon, depending on what side of the contract they are on; for a company like Microsoft, it’s pocket change. Those looking to craft a deal under the pretense of boosting Microsoft’s end-of-year bottom line fail to realize where they sit on the scale of a company like Microsoft. The truth is your contract is a drop in the ocean of Microsoft’s revenue. That doesn’t mean that Microsoft isn’t willing to sit down and talk, however. Making a dollar is still better than not making a dollar, as Economists like to say.

Software Publisher Revenue 2017-2019 Statista
Software Publisher Revenue, 2017-2019. Statista.com

A Drop in Microsoft’s Bucket

Now that we’ve established how little your contract contributes to Microsoft’s bottom line, it’s time to shift your thinking when you go into a negotiation. There’s a good chance your company is not as big a fish they want to negotiate as. When it comes to bringing clout to the table, there are not a lot of players that can shake Microsoft. And that’s okay. Now that you know your agreement won’t have debilitating effects on Microsoft’s bank account, it may seem that you’ve lost your leverage. But you haven’t. Instead, you are now in a better position to negotiate because you understand the reality of the situation. Negotiating from a false position is reckless at best and could end up sabotaging your own efforts.

When IS the Best Time to Negotiate with Microsoft?

Unfortunately for those looking for the best time to enter into talks with Microsoft, the answer isn’t found on a calendar. The best deals are made through good negotiations and a solid understanding of both parties’ positions. When it comes to negotiating with Microsoft, there are a few tips and tricks you can use to get a better deal.

Have Accurate License Inventory

The easiest way to be sure that you don’t give Microsoft more money than you need to is by maintaining an accurate list of your license inventory and use. This data will guide you in how many licenses you need, the type of software your organization needs, and give you leverage when you enter negotiations.

Don’t be Intimidated by Microsoft

A second tip is to stand your ground. It is easy to be intimidated once talks with Microsoft begin. Microsoft is one of the biggest dogs in the park, and all that clout can be intimidating. The truth, however, is that a good negotiation is one that both parties walk away feeling satisfied with. By knowing what you want, why your position makes sense, and sticking to that position, you have a better chance at striking a deal that works for both parties.

Hire a Professional Contract Negotiator

For those who still don’t feel comfortable going toe-to-toe with the biggest player in the software industry, hiring a professional negotiator can be a reasonable solution. Negotiators in this realm often know Microsoft’s negotiating tactics and limits. By hiring a third-party provider who understands how Microsoft as a company thinks, your team can effectively counter Microsoft’s tactics and/or be better prepared for how they will react to your offers.

Facing a negotiation with Microsoft can be stressful. Let MetrixData 360 relieve some of that stress by preparing you for dealing with vendors through our Learning Center. If you still have doubts about your organization’s ability to negotiate the best possible license contract, contact us and let our expert software license negotiators handle it for you.