The pandemic has caused many shifts in the enterprise IT landscape, including the hastening of new changes from Microsoft. This is especially true as it relates to Microsoft’s security and compliance offerings – particularly numerous M365 changes in the last few months.
Microsoft released several new bundles in April: M365 E5 Information Protection and Governance, M365 E5 Insider Risk Management, and M365 E5 eDiscovery & Audit. These new offerings are in addition to the existing M365 E5 Security and M365 E5 Compliance offerings. The E5 Compliance offering has had somewhat of an overhaul and includes these new “mini-suites” as a bundle within a bundle.
Before delving into the details, it is important to understand that Microsoft has two “Cadillac” products – M365 E3 and M365 E5. These are the products that Microsoft wants to sell to every customer. As such, expect to hear about these products during your next renewal as the sales reps are incented to emphasize them. The company has even told Wall Street that the growth of Microsoft will be tied to these products (and Azure). Another important thing to keep in mind is Microsoft is a master when it comes to product bundles. The individual products are not always “best of breed” when viewing competitive offerings, but they almost always make a compelling price picture when bundled with other products.
Let’s also recap the basics of M365 E3 and E5. Simply put, M365 E3 includes Office 365 E3, Enterprise Mobility & Security E3, and Windows E3. These product bundles are all licensed on a Per User basis. M365 E5 is simply a higher edition with the “E5” versions of O365, EMS, and the Windows OS. Microsoft would love to have all customers move to E5 editions. But there’s one slight problem – the E5 version is almost twice as much as the E3 version. Ouch!
Microsoft M365 changes highlight demand for improved security, compliance and governance
Back to the new security, compliance and governance offerings announced in April – what are they? They’re all subsets of the various components offered in the M365 E5 offering. If you’re not quite ready to make the leap to M365 E5, but need more robust security/compliance/governance, you have the option to purchase one or more of the new bundles. But how does the math work out? What’s the breakeven?
Let’s look at an example for a customer with 7500 qualified users, purchasing under the Enterprise Agreement at Level C pricing. The E5 product is $52.26 per user per month, while the E3 product is $29.71. Purchasing M365 E3, plus the E5 Security bundle and the E5 Compliance bundle would provide use rights for all of the security products, and would be priced at $49.91 per user per month. That’s an annual savings of over $211,000, which is not insignificant – but the customer is far short of the benefits and functionality of the M365 E5 product, which includes Phone System, Audio Conferencing, Power BI, and the full version of My Analytics.
Different customer requirements will present different cost scenarios, considerations and breakeven points. However, some cost increases may be mitigated leveraging historical discounting, license/subscription optimization on other areas of the Microsoft estate, purchase/renewal timing, and Microsoft’s current period revenue target.
Another important element for customers that have deployed more than 7,500 Microsoft 365 licenses is to be sure your house is in order – a detailed inspection of usage to find dormant or underutilized licenses, double-assignments, licenses that are mis-matched with profiles and other overhead can reveal from 10 to 20 percent waste (or more!) and is a wise thing to do as you approach a true-up or renewal. (NPI calls this a Usage Optimization Assessment – it’s a tedious, but fruitful, activity. Contact NPI to learn more about this service.)
Optimizing your Microsoft 365 licensing and cost is a complex undertaking. Customers need to get under the hood in order to assure that they are buying the best-match SKUs for their needs.
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