What is the first step in negotiating with Microsoft?

Microsoft

What is the first step in negotiating with Microsoft?

This article is an interview with Stephen Covert, Manager of Vendor Services at Highlights for Children, Inc, and is based on his recent presentation “ITAM is the first step in negotiating with Microsoft” at the IAITAM Fall conference last month.

So what exactly is your day job?

Presently I am transitioning from the role of Manager of Vendor Services to the role of a Project Manager. My first project was related to implementing a font management server that ensures that the editors of Highlights for Children stay in compliance with the font EULAs. I had led the acquisition process and due to the need for project managers within our company and my past experience in this role I was selected. Recently, I have been given the opportunity to lead a team in building a business case for an ERP system to replace our Accounting and Human Resource Systems.

You recently presented at the IAITAM conference, can you tell us a little bit about your presentation?

Last year, two days before I was to present at the Palm Springs IAITAM ACE conference, a CIO called me and asked if I would be willing to help him with negotiating their Microsoft Enterprise Agreement, to which I replied “yes”.  The CIO then told me he needed to sign the agreement the following week.  It was at that time that I knew what I would be speaking about this year.  I decided that I would present a two-step process that first builds a competitive negotiating stance and then second provides a method of creating mutual benefit with Microsoft through a cooperative negotiation.  The presentation focused on building walk-away point and alternative options to the Enterprise Agreement, thus creating a strong negotiating position.

During my talk, I further touched the second of the two step process discussing how an ITAM Manager can ensure an organization is aware of the benefits related to an EA and how to guide the organization toward implementing the benefits of value to their organization. Next year I am hoping to further expand on how to negotiate the implementation of the benefits as part of the “EA deal”, thus building value for both sides of the negotiation.

Due to the ITAM manager getting pulled in so many directions, there will always be a struggle with having adequate time to prepare for the negotiation. Many factors such as licensing complexity or the fear of a Microsoft audit in the event that the EA is dropped lead to a bias towards continuing with the status quo, renewing the EA. During my presentation I discussed how to get commitment from your management to provide resources towards preparing for the Enterprise Agreement negotiation.

During my presentation I discussed how to get commitment from your management team to provide resources towards preparing for the Enterprise Agreement negotiation, by showing the cost of the unused benefits.  As an example: I show a timeline of how many times the desktop OS version upgrade has been implemented. Next, I overlay the same timeline with the money that had been spent on the OS upgrade rights through the EA terms. I then explained to the group that after getting management’s attention with the large cost number, I told management that there had been multiple desktop refreshes where the newest desktop OS version had been included with the purchase.  Once the money spent on the poorly used benefit had been exposed to management, I focused their attention on the future money that would be spent over the term of the next Enterprise Agreement across all products.  The final step of the process concludes with proposing to allocate a team to evaluate the utilization of the Enterprise Agreement benefits compared to the cost.        

What is the most important thing that ITAM manager should do before heading into these discussions?

“START EARLY AND PREPARE”.  The reality is most companies do not have a resource that understands Microsoft’s Agreements, Licensing, Product Packaging, and the Sales Environment.  Huge savings or gains in value are possible though proper negotiation preparation. If an internal expert is not available, it may be worth looking at getting the assistance of a Microsoft licensing consultant.

What is the best way to determine the value that the current agreement brings to the organization?

I love a quote that Warren Buffet is credited with saying “Price is what you pay, value is what you get”.  The Microsoft offerings have a great deal of value, but only if they are being utilized. It is important that a negotiator understand the value that the agreement provides the organization though how the products, and the Software Assurance Benefits are utilized.  Once the utilization this known, then the negotiator should look at other options that may more appropriately fit their utilization while providing the same or more value.

Any final comments on the topic of negotiating Microsoft Volume License Agreements?

There is a great deal of value and cost savings available to ITAM Managers that take the time to prepare for a Microsoft negotiation.  The preparation can take a lot of effort but can provide great returns for the organization.

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