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Microsoft versus Google? Answering CIOs’ FAQs on platform costs and value
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By Karlee Long and Max Sankey
So you've negotiated your Microsoft or Google renewal in June – now could be the perfect time to strategically reassess your suite of productivity and collaboration tools. With Microsoft 365 and Google Workspace boasting a variety of features, how do you decide which is the best fit for your organization and optimize your contract?
Below are our answers to some questions IT leaders commonly ask us regarding the cost and benefits of Microsoft and Google platforms:
Maximizing Platform Value: How to Streamline Costs
To maximize value from your current platform, look for opportunities to consolidate features and eliminate redundant tools. Consider critical functionalities like communication platforms, identity access management, SSO, file storage, telephony, data visualization, cybersecurity, and even hardware.
We recommend regular or automated license harvesting to reduce unnecessary purchases. Companies which do not have a standardized harvesting strategy are often paying for 20% more licenses than required.
I keep seeing price increases, with G Suite transitioning to Google Workspace and Microsoft 365 increasing its list price. Is now a good time to reevaluate Google vs Microsoft?
Google Workspace and Microsoft 365 may have comparable license prices for standard users. But to effectively evaluate the cost of either platform, you should compare the total cost of your wider tech stack, including the various systems discussed in the previous question.
For a more nuanced review, take a look at your user profiles, employee mix (full-time or part-time, for instance), hiring seasonality, and turnover. For example, Microsoft offers a more modular license model for specific roles in your environment (for instance, F vs E, M365 vs O365, and any combination of add-ons), which can drive significant cost reductions if you are currently only utilizing a single license type.
The cost of fully migrating between platforms can be considerable (anywhere from one to three times your annual license cost plus internal resource effort), but we are nonetheless seeing many of our clients considering the switch.
Should I consider a one-year contract agreement or stick with my three-year one?
Google and Microsoft both offer one- and three-year agreements, but the differences can impact your bottom line
Both Google and Microsoft's three-year agreements typically make sense for larger enterprises with a consistent or growing employee base. Typical advantages include better overall unit pricing and longer-term price protection.
One key difference is that Microsoft's Enterprise Agreement also allows clients to true-down their subscription licenses at anniversary within your three-year term.
Google's one-year agreement is similar to the three-year, but it may take away discounting in exchange for the flexibility of a shorter commitment.
Meanwhile, Microsoft’s one-year New Commerce Experience (NCE) or Cloud Solution Provider (CSP) options are even more flexible, allowing for month-to-month commitments. This can be advantageous for seasonal license requirements or mid-year reductions. That said, if you are using the NCE/CSP, make sure to review usage monthly! We often see clients sign up for the monthly NCE/CSP at a higher unit price for the added flexibility without taking advantage of the true-down opportunities.
Can I leverage cloud spend in my Office or Workspace negotiations, or vice versa?
Yes, absolutely! Always leverage your entire Microsoft or Google spend and footprint during negotiations, especially to see if you can co-term your various agreements.
While cloud teams typically rely on reservations, savings plans, and forecasts to optimize their commitments, make sure you also understand any advantages you can use in your licensing models. For example, Azure's “bring your own license” may make buying Server or SQL through your EA more advantageous than on-demand.
What should I consider when it comes to Microsoft Copilot and Google Gemini pricing?
Microsoft Copilot (powered by OpenAI's advanced LLMs, such as GPT-4) and Google Gemini (powered by Google's AI technologies) both aim to boost user productivity through AI integrations within their respective ecosystems. They offer a comprehensive list of features, such as content generation, summarization, analysis, and contextual suggestions to empower your team and create efficiencies.
Microsoft and Google are currently offering fixed per-user prices for each AI module, allowing clients to pick and choose which users can use the AI functionality. The list price for each AI module is similar to that of the productivity license (Workspace or Microsoft 365), effectively doubling your monthly spend. However, we are seeing many of these new add-on products (for example, GCP’s Anthropic, Google’s Gemini, Microsoft’s Co-pilot, Microsoft Power Automate) effectively being used as “sweeteners” during negotiations to help secure improved discounting on your core products. We more often see clients testing AI licenses in Year One of the contract with a small sample of users before scaling up.