Prices increased more at the low end (20 per cent, from $5 to $6 per user) than at the high end (12.5 per cent, from $32 to $36 per user), a sign that Microsoft is pushing companies to spend more for save more. The percentage price increases, in fact, are less on the purchase of more complete (and more expensive) bundles. These changes do not affect the consumer or educational versions of the software for the time being.
This announcement has unsettled organisations, which already allocate a substantial chunk of their IT budget to Microsoft licences, and is leading them to wonder what exactly they are paying for. M365 is the most widely used Saas application in the world because it meets the needs of new, more flexible and hybrid ways of working and is a must-have for many companies. Since M365 is central in the enterprise technology stack, how can companies deal with this increase in spending?
Considering its centrality in the company’s technology stack, how can companies cope with this increase in spending?
Reducing the impact of Microsoft price increases? You can!
Microsoft's is perhaps the most striking example, but rising software costs are on the radar of many vendors.
And yet, according to Gartner, 30% of the growing expenditure on cloud software and services will remain unused. The conclusion is that by optimising unused capacity, companies may not experience significant changes to their existing licence budgets.
According to the "Global Office 365 Report: Licensing Optimisation" 56% of M365 licences are more expensive because the licence is:
- inactive: no one is using it.
- under-utilised: the user is not using all the features included in the licence.
- oversized: the user has been assigned a licence plan that exceeds his or her actual use
- unallocated: it has not been allocated after the employee's exit
What actions can you take to reduce spending on licences you don't really need, in order to have a budget to cover the increases planned for March?
Price increases: 4 things to do to reduce the impact
At WEGG, we have a long history of Spend Optimization on the software licensing assets of large corporations, based on an in-depth understanding of the contractual, commercial and compliance logic of the major vendors.
There are actions that companies can take to protect their IT spend and be more aware of renewals. To remind you, we even have a nice acronym: URRÀ (it could be just the italian exclamation to use when faced with a protected budget!).
Understand the usage
Re-allocate the unused
Rationalize the technology
Analyse the whole scope of expenditure
Let's see them in detail:
understand the real use of M365
The first step in finding out whether we are incurring unnecessary costs is to know what we have in the corporate ecosystem and how we are using it. To do this, we need to relate data on three fundamental elements:
- users: who needs access to Microsoft 365 services (i.e. who is active)
- assignments: licences and subscriptions assigned to the various users
- uses: applications that each user uses to do their job.
This information can be retrieved natively within the Microsoft365 administration center (sometimes even directly from the applications, see PowerBI usage data).
Typically companies export the individual items into reports, then aggregate them into Excel spreadsheets. They then perform calculations to check users and assignments, as well as the applications they are using within each assignment (taking into account the components included in each level).
This is a long and laborious process that has to be multiplied by all the users in the company and often cannot be done in time for pushback in negotiations. Our advice is to automate the verification process as much as possible.
Use a SAM (Software Asset Management) tool with advanced software recognition features included. These types of tools offer lists of already "normalised" data (thus avoiding background noise) and correctly reconcile the different Microsoft application families and software entitlements with their usage data (users, allocations, uses).
We configure in our customers’ tool a view dedicated only to Microsoft 365 and its licensing models.
What insights can you glean from these reports? You can see at a glance:
whether there are users using a subscription level that is higher than their real need
M365 licences for businesses (Business/Enterprise, depending on the number of users), are sold on the basis of increasingly expensive tiers, with each tier providing additional applications and services. The price differences between one level and another are not insignificant, ranging from 7 to 53 euro.