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Working With Microsoft During an Economic Downturn

Leveraging Microsoft’s deep pockets and Financing division can save your IT budget and allow you to continue to provide mobile productivity and secure access for your entire organization. If your Enterprise Agreement (EA) is coming up for renewal in the next six months, we will likely be in an economic downturn and IT turmoil.

Back in the financial downturn in 2008, the cloud and Office 365 were not in the market, and both customers and Microsoft had to come up with creative ways to fund Enterprise Agreement renewals. This creativity and lessons learned will likely apply to many organizations over the coming months leading up to Microsoft’s year end (June 30).

Things are a little different now with the cloud subscription model. In the past, if your EA became unaffordable, you could just choose not to renew it and you still owned the licenses and could continue to use the products. Now, with the subscription model, if you don’t renew or don’t pay, you can’t use the cloud products that you’ve deployed across the organization. This is a daunting concern for IT managers as they look ahead into uncertain times.

Renewal Financing Options

Microsoft, like all enterprise software companies, needs to maintain its cloud revenue streams through poor economic conditions. Like in 2008-2010, Microsoft will be open to various renewal and financing options to allow customers to continue to use and deploy cloud offerings. If you are struggling with budget issues and uncertainty with your EA or other agreement renewal, there are several options available through Microsoft to consider as you work through your renewal. Work with Microsoft and your reseller to stretch out payments with longer agreement terms, the Extend Payment Term amendment, or financing for monthly or quarterly payments.

Recommendations

• Negotiate a longer EA Term – 5-6 years to spread Software Assurance (SA) payments.
• Do a ramped discount or payment plan. Start low in year one and ramp up to exit year.
• Consider a subscription EA agreement with more flexible true-down options.
• Work with Microsoft to leverage the Extended Payment Terms (XPT) amendment option.
• Renew what you need. Don’t commit to additional products to get renewal discounts.
• Talk to Microsoft Finance to leverage their monthly or quarterly EA payment options.

Bottom Line

Microsoft needs and wants your business. Renewing or struggling customers need to talk to Microsoft and work with them on how to lesson the financial burden of their agreement payments for the near and mid term to allow them to get through these challenging times. Deployment and payment flexibility are key to getting though these tough times, and Microsoft has several options that can help your IT budget. You need to ask for them and be strong on your position, as some are negotiable and some can be relationship based.