The Importance of Establishing a Formal Microsoft Contract Negotiation Team and Strategy

By Joshua Osborne

Director of Client Services – Microsoft, NPI

April 19, 2018

Microsoft contract negotiation continues to get more complex and arduous with each passing year. Just when companies believe they have a handle on Microsoft’s offerings, license rights, and terms and conditions, Microsoft changes things up. This behavior is nothing new for Microsoft – or other enterprise tech vendors for that matter – but the pace and frequency of these changes is mind-boggling (and risky) for large customers. Your ability to keep up with these changes, as well as changes in Microsoft’s negotiation behavior, has a direct bearing on spend, compliance and IT performance.

Here at NPI, we talk a lot about the importance of price benchmark analysis, software licensing strategy and software license optimization in preparation for your next Microsoft purchase or renewal. But that’s only one part of a successful contract negotiation with Microsoft. Buying team alignment and communication strategy are also critical success factors for an optimal outcome.

Taking a Page from the Microsoft Contract Negotiation Playbook

As it prepares for your purchase, Microsoft formally establishes a negotiation team, with pre-defined escalation paths to all anticipated problem-solving people or departments that may need to be invoked for your purchase. This team comprises sales reps, sales management, attorneys, product personnel, business decision-makers, and contracts and licensing personnel.

It’s imperative that you come to the table with the same negotiation team mindset and preparation. Having the right stakeholders involved and continuously briefed during the buying process is critical to a successful negotiation. Establishing ground rules, such who Microsoft is allowed to communicate with (and who they aren’t), is very important. Microsoft’s sales team is trained to “divide and conquer.” They are skilled at reaching out to various persons in your organization to glean insight and negotiation leverage.  Optimizing licensing and cost is a game of chess, not checkers. 

If you’re coming to the Microsoft contract negotiation table without your own negotiation strategy and playbook – one that rallies the right stakeholders around a shared set of objectives and supports them with the right communication protocol and timing – the likelihood of overspending and suboptimal licensing rights and contract terms is high. On the flipside, a strong negotiation and communications strategy combined with vendor-specific negotiation behavior intel can result in material savings on your Microsoft purchase, and maximum usage flexibility for your evolving requirements over the term of your new agreement.