In part 1 we discussed what’s new in Microsoft Licensing. We covered how licenses, subscriptions, and contracts are changing with the relationships between Microsoft, Microsoft’s partners, and their customers. Next, we need to discuss how to approach the task of purchasing and managing Microsoft solutions within our businesses.
Preparing for a licensing contract renewal can be a complex process, but with the right approach, you can navigate it smoothly and ensure your organization gets the best value. Here are some essential steps and rules to follow when preparing for a licensing contract renewal.
First and foremost, always be smarter than what you are dealing with. This means knowing exactly what you are paying for, what you are using, and what you will need in the next three years. Understanding the costs associated with your current licenses is crucial. Additionally, take inventory of the licenses you are actively using. This will help you identify any unused licenses that you do not need to renew. It’s essential to match your actual usage with what you are paying for.
Forecasting your organization’s needs for the next three years is also important. It is common for an organization to have more licenses and bigger licenses than they need (E5 over E3). It is also common that most organizations don’t have a license harvest process that removes licenses from disabled users. Understanding what licensing you have in the 'pool' that can be repurposed before you are asked is a proven cost-saving strategy. Consider any upcoming projects, expansions, or changes in your business model that might affect your licensing requirements. Planning ahead ensures that you are not caught off guard by sudden needs.
The second rule is to understand what you need and can use. This involves reiterating the importance of understanding your current expenditures and ensuring that you are fully aware of all costs involved in your licensing agreements. Emphasize the need to match your usage with your payments, making sure that you are not paying for licenses that are underutilized. ENow Software provides a report on the functional usage of each license, which will identify opportunities for license changes that create cost savings.
Relating all requirements to business outcomes is the third rule and one that most often is misunderstood. Focus on what your end users need to do to complete their jobs and be productive. Identify the tools and licenses that your end users need to perform their tasks efficiently. This focus ensures that your licensing strategy supports productivity and business operations. Additionally, consider the security and compliance requirements of your organization. Ensure that your licensing agreements include the necessary protections to safeguard your data and operations. Look for overlaps in your technology portfolio to avoid redundant purchases and streamline your licensing agreements to be more cost-effective. If you use Zoom, GoToMeeting, WebEx, Sophos, CrowdStrike, Trend Micro, Symantec, Slack, or Confluence, there are licensing strategies that can be aligned with these solutions that save significant expenditures.
Understanding what contracts are available to acquire technology from Microsoft is the fourth rule. The Enterprise Agreement and Microsoft Customer Agreement Enterprise are designed for large organizations and offer significant discounts and benefits. Understand the terms and conditions to see if they fit your needs. Explore other volume licensing options that might be more suitable for your organization’s size and requirements. The Cloud Solution Provider (CSP) program offers flexibility and scalability, ideal for organizations that need to adjust their licensing frequently or have a more complex user profile requirement. In some cases, purchasing directly from a Microsoft Partner might be the best option. Evaluate all available channels to find the most advantageous terms.
When you start building your strategy, as mentioned before, it is important to understand what you need. After all your research, ensure that the products you choose align with the needs of your end users. This alignment is crucial for maintaining productivity and efficiency. Identify any overlapping technologies that might render certain Microsoft functionalities unnecessary to avoid paying for redundant features. Plan the timing of your license acquisitions, as not all licenses need to be purchased immediately; some can be phased in as needed.
Managing your licenses effectively is another critical aspect. Define your standard procurement process to ensure that it is efficient and aligns with your licensing strategy. An outline of a license procurement policy would include:
These tasks would be completed after a request for a new license and before the purchase of a new license.
Develop a plan to reclaim and reallocate unused licenses to optimize your licensing costs. Create a strategy for managing the adoption of new licenses and technologies, including training and support for end users. Ensure that your licensing strategy can be shown to impact the organization's bottom line through regular reviews and adjustments to your Microsoft 365 licensing agreements.
Understanding how Microsoft is selling its products can also give you an edge. Know Microsoft’s sales objectives to better negotiate your Microsoft 365 licensing agreements. Identify key products (Hero SKUs) that Microsoft is promoting, as these might come with better terms or discounts.
Be aware of the conditions under which you must purchase licenses for all users (Enterprise Commit Requirement), as this can impact your overall licensing strategy.
Finally, don’t be afraid to ask for help. If your company is not a Microsoft 365 licensing company and you only handle this once or twice a year or only when your Microsoft Enterprise Agreement is due, consider hiring an M365 licensing expert or consultant. Their expertise can help you save money and get the best possible terms. Most will work for a portion of the savings.
In addition, utilizing software like ENow’s Microsoft 365 License Optimization product can help ensure you have accurate data that gives you the necessary visibility to make data-driven decisions. A surprising number of organizations still manage and track licensing in spreadsheets, but ENow provides a better and more accurate way to evaluate your Microsoft 365 licensing strategy. Guessing and making assumptions often result in over-purchasing; accurate data is key for saving money and improving adoption.
By following these rules and steps, you can prepare effectively for your licensing contract renewal and ensure that your organization’s needs are met efficiently and cost-effectively.