It’s always interesting for NPI to watch what happens when a technology vendor is acquired by another larger company. Will the acquired company fold right into the culture and operations of the acquirer, or will they continue to operate relatively independently and maintain their pre-acquisition culture? Will there be a big push to close lots of deals to validate the acquisition, or will it be business as usual? In NPI’s business, these and other questions become very important as we assist clients with getting the best deal on their IT purchases and renewals.
One such transaction we’ve been watching very closely is Microsoft’s acquisition of GitHub, the Git repository software maker. NPI has analyzed GitHub deals for several years now and the vendor’s behavior has been mostly consistent. GitHub is known to be a tough negotiator, but ultimately they will work with clients to arrive at fair pricing.
However, recent deal reviews indicate a shift in behavior. GitHub has held firm and has not “played ball” at the negotiating table. Additionally, GitHub has held fast to its tiered pricing model. In simple terms, the first 100 developers cost one price, the next 1000 have a slightly lower cost, the next 2000 still a lower cost. In the past, once a certain tier has been reached, GitHub has been willing to offer all users at the same lower price.
We suspect this tougher stance is due to a combination of (a) being emboldened by the new relationship with Microsoft (and feeling less vulnerable), and (b) pressure to validate the acquisition with strong revenue numbers.
Thinking About Purchasing GitHub Through a Microsoft Enterprise Agreement?
We have seen some companies add GitHub to their Microsoft EA, which has resulted in better pricing and bigger discounts. However, GitHub has recently told some clients there will be trade-offs to this approach with some functionality unavailable through the Microsoft EA.
NPI’s advice is to batten down the hatches and prepare for a tough negotiation. GitHub knows its technology is “sticky” and it isn’t easy to switch to another repository. Once the vendor is entrenched, it can be difficult to secure fair pricing in a renewal. Before your next purchase or renewal, consult with NPI as we continue to keep tabs on how Microsoft’s GitHub is going to price and negotiate.
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