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How you can negotiate better software licensing deals with Microsoft — even if your company recently signed a new contract with the Redmond software kingpin?
The question is especially pertinent now, with many users' three-year-old Software Assurance (SA) licensing deals set to expire on June 30.
But negotiating a licensing deal with Microsoft is a skill worth honing any time. And who better than a former Microsoft large account reseller (LAR) to walk you through the paces?
Without further ado, here are some negotiation guidelines from Scott Braden — a self-professed "licensing geek," who personally negotiated more than 600 volume license deals for customers with Microsoft (and lived to write about it in his forthcoming e-book "Microsoft License Secrets"):
Hone Your Microsoft Negotiation Skills
By Scott Braden
In order to negotiate effectively with Microsoft, you must be able to answer four key questions:
What software do you currently have installed on all the PCs and servers in the relevant enterprise?
What licenses can you prove you own? And when did you buy them?
What's your technology roadmap for the next one to five years? The real one - the one the CFO and CEO like. (You do have one, right?) Where is Microsoft in that plan? Let them help you make the most of their technology. You're using it anyway.
What is your real budget? Or to ask another way - has the CFO approved the cost of that roadmap? You don't have to reveal your budget to your Microsoft or reseller rep, but you've got to know what you can actually spend in order to move Microsoft in that direction, and to know what's feasible.
Most companies fail to answer these completely and accurately and arrive at the negotiating table at a disadvantage. If Microsoft finds out you don't have solid asset management, a defined roadmap, or clear spending plans, suddenly you could find yourself the proud owner of an Enterprise Agreement (EA) that you probably didn't need. Do the hard work up front before you invite the Microsoft rep to the table.
Microsoft employees genuinely believe they are selling the best products. Take advantage of this! If you have the four aforementioned questions answered well, you can build a business case for how you need to acquire/deploy Microsoft technology. Your Microsoft rep will love this and help you get there.
Read on For More Negotiating Tips
("How to Negotiate With Microsoft" Page 2)
If, on the other hand, your negotiating style consists of arm-waving while repeating the magic word "Linux," your Microsoft rep may respond in a way that you don't like - perhaps by inviting your CEO to dinner with Bill Gates. Leave your hatred of the Evil Empire at home. This is business.
Your Microsoft rep is carrying an enormous quota, and has a very small customer list. Your purchase decision is very important to this person! Therefore s/he is strongly motivated to get some kind of deal — even if it's "unique." Work for a win-win.
Remember that Microsoft rep and (most) reseller reps are not licensing experts. They simply don't know all of the options available to you, having had little more training beyond the same PowerPoint overview that you've seen. Bottom line: somebody on your team has to become the licensing expert — more hard work.
Possibly the most important tidbit in this article: The power to make deals is in the hands of your local Microsoft rep and his/her boss, the general manager. It's not in Redmond. Don't waste your time trying to escalate over their heads, or getting lawyers involved to haggle over obscure terms and conditions. Focus on doing a great business deal with the person across the table from you.
Think outside the box about possible concessions you may be able to wrangle:
Parent company, subsidiary, or affiliate aggregated pricing: A 100-person division can get the same prices as its 6,000-employee parent. It's not unheard of for 11 small hospitals owned by a holding company, for example, to band together for great pricing.
Bundle changes: The EA bundle is negotiable. You should ignore the default and seek to custom build the bundle that best suits your company.
Price per seat adjustments (credits) for previously bought licenses or maintenance.
Discounts from list price from your reseller: Your reseller gets between a 17.7% and a 21.7% discount on estimated retail pricing (ERP) when selling Select licenses. Make an offer to your reseller(s). Throw in other business if it makes sense.
Creative payment plans: How about suggesting the first payment of your EA (which could be millions) be delayed for a full year at no interest? Or changing to a quarterly or monthly, rather than an annual, schedule, to keep your CFO happier about cash flow?
Free or discounted support: Try negotiating for Premier support, upgraded telephone priority, or maybe free implementation services or consulting from Microsoft or a partner.
Vouchers for MCSE (Microsoft Certified Systems Engineer) testing or classes: As part of your Software Assurance contract, why not take advantage of those vouchers you get alongside your server licenses? Use these vouchers! Ask for more!
The customers that get the great deals and save millions all have one thing in common: A committed person or team who makes the effort to learn about the options, understand the four key questions, and round up the resources and people.
About the Author: Scott Braden is finishing an e-book about negotiating with Microsoft. For your free pre-publication copy, visit www.microsoftlicensesecrets.com.
(This article originally appeared in the May 17, 2004, issue of the Microsoft Watch newsletter.)
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