Microsoft renewal looming? Answering CIOs' FAQs

by Karlee Long, Maxim Sankey, and Wei Wu

If you are responsible for managing and implementing your organization’s internal technologies, you may be feeling the pressure of recent list price increases from a powerhouse in your tech stack: Microsoft 365.

Microsoft’s fiscal year ends on 30 June. This time of year often coincides with renewals and true-up/down anniversaries – and that means the best opportunity to re-evaluate licenses or leverage new purchases. As the cost of collaboration tools continues to rise, CIOs often approach us for “low-hanging savings opportunities” and “longer-term strategic shifts” that can help them to effectively manage these costs.

Below is a quick overview of our thoughts and advice in response to a few common Microsoft questions we’ve been hearing from IT leadership in the run-up to this period: 

How does the Microsoft Teams break-out affect me?

In a recent move, Microsoft is now allowing companies worldwide to unbundle Teams from their enterprise licenses. If you have enterprise-licensed users who do not require Teams, such as contractors or Slack users, this is an opportunity to remove them from your enterprise license and save costs in your renewal.

Looking to the long term, many IT leaders are evaluating whether to invest in other communications tools such as Zoom, Slack, or Google. This will require collaboration across various business units, change management plans, data migrations, and employee communication.

Should I be considering a new VAR? 

The top VARs receive similar discounting structures from Microsoft based on their partnership level. So, how do they differ from one another, and how do you make sure you’re working with the right one?

Find a vendor you work well with who provides active support and fast responses. Key differentiators also include free tooling, flexibility of payment terms, the possibility for a CSP agreement, and the availability of subject matter experts who can provide technical and licensing support. You may also want to consider aggregating spend with a preferred VAR, which will require conversations with procurement and other engineering or IT teams to unlock additional discounts across your wider software spend.

Are others using Co-pilot yet?

Most companies using Co-pilot are still running proof of concepts (POC), with small pockets of users as opposed to full org rollouts. If you are close to the end of your POC or plan to increase user adoption, you may have more pricing leverage at the financial year end.

Is now the time to finally upgrade from M365 E3 to M365 E5?

E3 licenses are currently popular among our clients. However, Microsoft is reducing discounting for existing E3 licenses to try to make the E5 more attractive. Updating to E5 does require alignment with your IT, security, and business system teams to sunset enough third-party applications which offer similar functionality. Alternatively, buying ‘add-on’ features with your E3 can also be a great option. In the short term, many organizations will find that one of the best opportunities is to optimize your contractors and temps’ licenses with O365 or E1, especially if they have their own devices.