HOW TO OPTIMIZE YOUR MICROSOFT UNIFIED SUPPORT CONTRACT IN 2021
Enterprises across the globe are unable to get reasonable and predictable Microsoft Unified Support pricing. Infrastructure and Operations leaders negotiating Microsoft contracts can use the tactics below to successfully avoid significant cost increases. Sourcing, Procurement and Vendor Management (SPVM) should optimize their Microsoft Unified Support agreement to improve licensing and support forecasting resulting in more accurate IT budgets.
Audience: Microsoft Unified Support | Negotiating Microsoft Contracts | Infrastructure and Operations Leaders | Sourcing, Procurement and Vendor Management (SPVM)
Unified Support Contract Concerns
Changes from year to year, how the price is calculated, what is included and what is optional.
Result: Challenging to quantify and difficult to justify the cost of MS Unified Support.
Software Assurance Benefits (SAB)
Software Assurance Benefits are different from year to year.
Result: Sourcing, Procurement and Vendor Management (SPVM) leaders struggle to account for Microsoft SAB surprises.
3-4x More Cost
Per Gartner Microsoft is charging three to four times more for Unified Support on products without Software Assurance (SA). Source: Gartner 2020 Market Guide LINK https://www.uscloud.com/gartner-us-cloud-microsoft-support-guide/
Result: Licensing and Support budgets not sustainable with Microsoft’s 5 year look forward.
Wasted Support Spend
Organizations cannot pick a subset of MS products in their Unified Support contract.
Result: Unified Support renewal costs include increases in spending for MSFT products the organization may not be using.
Optimize Your Unified Support Contract
Look at the break-down of your enterprise’s Microsoft support – proactive, reactive, DSE, TAM, etc… Determine which pieces are important to the business.
Result: If you cannot justify the cost of Unified, switch to Premier, incidents or a 3rd party provider.
Look at your Unified Support proposal to determine its accuracy. Request a full list of contracts with Microsoft products and how they are allocated to Unified.
Result: Correct any errors and negotiate with MSFT to remove products you don’t use and track changes year to year.
Create a multiyear Software Assurance Benefits (SAB) forecast looking at credit allocation and expiration.
Result: Improved budget accuracy and limit Unified Support cost increase fluctuation.
Decrease investment in Microsoft products that don’t truly need Unified Support. Move to alternate products or procure MSFT products outside of the Unified Support equation.
Result: Limiting Unified Support costs by buying products from a CSP and supporting via 24/7 incidents or a third-party support provider.
Create a multiyear Unified Support renewal forecast based on your enterprise’s increasing cloud spends, discounts and SAB credits.
Result: A more predictable Unified Support budget with less fluctuation in cost from year to year.
Track Microsoft Spends for Better Pricing Predictability
Organizations that aren’t actively tracking their increased consumption and spending on Microsoft products and cloud services may suffer “sticker shock” at their Unified Support renewal. Most enterprises are reporting 15% to 30% higher than expected cost. Through 2023 it pays to preplan SAB credits and discounts to smooth out your Unified Support ride and budget appropriately.
History of Unified Support
Unified Support is the replacement for Microsoft Premier Support. In Premier, organizations bought the number of support hours they needed for proactive/reactive support, TAMs and DSEs. In late 2017 Microsoft introduced Unified, in which you receive unlimited amounts of some types of support. The price is determined by the enterprise’s entire Microsoft software and cloud services spend. Compare Premier to the new Unified plans.
How is Unified Pricing Calculated
Unified Support pricing is calculated on an organization’s entire Microsoft software and cloud services spend. 6-12% of annual Software Assurance (SA) and cloud services. Plus 6-12% of the license costs of products purchased without SA over the past 5 years. Read more about how Unified is priced or use the pricing calculator to see your Unified cost and savings with US Cloud.
Why the Unexpected Unified Cost Increases
Sourcing, Procurement and Vendor Management (SPVM) leaders frequently report unexpected Unified Support cost increases at renewal because of the removal of one-time discounts, loss of Software Assurance Benefits (SAB) credits and untracked increases in their Microsoft spending.
Consumption-based vs As Needed
Premier Support is a consumption-based model. You buy the number of hours you think you will need in a given year. Overall, most Sourcing, Procurement and Vendor Management (SPVM) buyers feel that Premier gets them close to their actual needs most of the time. Unified Support is an as needed model. The issue being that some SPVM buyers and organizations don’t need support for all Microsoft products and cloud services – they simply don’t use all of them. As a result, they can’t justify the significant cost increase or multiple of moving from Premier to Unified.
In some cases, moving from Premier to Unified Support has been a non-starter for IT leaders who have been forced to cut budgets and even staff. Some existing Unified customers are finding a renewal cost-prohibitive during the crisis and are seeking alternatives.
Ask Microsoft to Stay as Is
For those suffering enterprises being pressured by Microsoft during the Covid-19 crisis to move from Premier to Unified, there is a path. Simply ask MSFT to stay in Premier for another year – they are giving folks a pass and understand now is not the time to press. Unified Support is a complex proposal requiring resources and energy many IT leaders simply don’t have during the crisis. Expect a 5% annual increase by staying in Microsoft Premier Support.
Premier Still Available
Many Microsoft enterprise support customers are being told by their Microsoft sales teams that Premier is no longer available. And yes, in some cases MSFT has refused to offer Premier Support and forced some organizations to move to Unified, Premier is still available. Premier Support contracts are still being written and are open for negotiation.
What Premium MSFT Support is Necessary?
As you try to optimize your Unified Support contract it’s probably worth your time to meet with IT infrastructure and operations leaders at your organization to see if premium Microsoft support is needed. If your Microsoft workloads are mission-critical and you need direct access to the products teams (in other words you are on bleeding edge and things break often) then the Unified Support premium with a TAM and critical situation management may be worthwhile. Otherwise downgrade to Microsoft Business for incidents or consider a third-party support provider. Both of the aforementioned will increase your escalation time to Microsoft product teams but may result in considerable cost savings.
Alternatives to Unified Support
Microsoft SAB Support / Business Incidents
The first alternative is from MSFT. Organizations can use SAB support incidents for their support needs. The downside to SAB incidents is they lack a TAM, have limited escalation, no proactive support and no CritSit process. In addition to SAB, you can also purchase incidents directly from Microsoft. This was previously known as Professional and is now Microsoft Support for Business. Buying Business incidents has all the attributes of SAB incidents but also includes a slower time to resolution since most of the techs are offshored.
Single Third-Party Provider Alternative to Unified Support
Single third-party alternatives to Unified Support include independents, VARs, large integrators and CSPs. The downside of the third-parties in broad strokes are lack of references, limited escalation to Microsoft and wide variance in ability to perform both proactive and reactive support. Independents offer fairly comprehensive support and consulting and have more expertise on some MSFT products than VARs, integrators or CSPs. See the Gartner report on Independents.
Multiple Third-Party Providers as Alternative to Unified Support
Organizations can certainly use multiple third-party providers to cobble together a replacement to Unified. These can work where an enterprise is heavily dependent on a few Microsoft technologies so you can select a “specialist” in SQL, Office 365, etc…. And then use another vendor for reactive support and possibly a third for proactive projects or consulting. The obvious downside is not having one throat to choke and the complexity of managing multiple vendors.
Large System Integrators as Vendor Alternative to Unified Support
These integrators already have hardware or consulting relationships with large enterprises worldwide and understand the issues with Unified. They also have strategic relationships with Microsoft so they fill support gaps carefully so as to not tread on MSFT. Things to consider are focus and responsiveness. Microsoft support is not a core focus to mega providers while the world’s jumbo integrators move slowly and deliberately.
VARs as Vendor Alternative to Unified Support
Some Value Added Resellers (VAR) who sell Microsoft software and licensing offer limited support services. As previously mentioned, VARs struggle with reference-able customers, have limited escalation to Microsoft and lack expertise to deliver consistent proactive and reactive support across the Microsoft portfolio of products.
Reasons Why You Must Audit Your Unified Support Proposal
Make sure that all contracts in the support contract proposal actually belong to your enterprise and ensure accuracy of the allocated costs.
Confirm that your organization has all the software and that the entire entity has access to the support services. If your enterprise has distributed purchasing or shares the support services across multiple organizations, negotiate with Microsoft to exclude those parts that aren’t your responsibility.
Ensure that the Microsoft products you are subscribed to have not been counted twice. An organization that recently purchased the Microsoft Office suite and later moves to Office 365, should not be charged for the Office licenses support.
Take a close look at pricing to confirm it’s correct. Microsoft 365 (formerly Office 365) is charged 75% at the lower user rate and 25% at the higher server rate. Inaccurate pricing or mistakes in misallocation can result in hundreds of thousands of dollars to a large enterprise.
Verify that true-ups are calculated correctly. A Microsoft software true-up of $1M does not increase Unified Support costs by 6-12% – most of the $1M is the cost of the licenses which are not included in the calculation of Unified Support. Also, don’t forget that Software Assurance paid in true-ups should be spread evenly across the true-up.
Check that multi-year Azure agreements are charged against Unified appropriately. For example a 5 year agreement should be charged 20% per year – not the entire 5 year amount at one time or the amount consumed in any one particular year.
Microsoft offers private discounted Unified rates for enterprise customers buying large and/or multi-year Azure contracts. Make sure that these public cloud support rates are competitive with the other competing public cloud support tiers and rates from Amazon and Google.
Microsoft Unified Support contracts and proposals are based on past MSFT spends but you can and should negotiate on future trends. Lookback based proposals are a good deal for growing customers, however they are not advantageous if an organization is pulling back or contracting which is particularly relevant in 2021 and 2022 as enterprises recover from the Covid19 crisis and recession.
Audit the Unified Support Proposal
At least 3 months prior to your Unified renewal, conduct an audit on the renewal proposal in order to fully understand how the price is calculated. Your audit rights allow you to see and fully understand the lookback over a 3-5 year timespan – remember that Microsoft premium support is based on your organization’s prior spending. If Microsoft fails to provide the information in a timely manner, Sourcing, Procurement and Vendor Management (SPVM) leaders should escalate beyond their MSFT account team. Ask for the information as spreadsheet, not a PDF. The information should include:
Contract number and type (Enterprise Agreement, MPSA, etc…)
Detailed list of every product in the contract, annual cost, and type: user, server or cloud (for support cost purposes)
Check for Microsoft 365 Unified Support Billing Error
In 2019 Microsoft was alerted that it had been incorrectly billing enterprises for MSFT 365 spends impacting their Unified Support costs. It turns out many organizations had effectively overpaid from 2017 thru 2019. Microsoft 365 should be charged for Unified Support in the User pricing at 6, 8 and 10% for Core, Advanced and Performance Unified Support plans. These rates come in at about 1/3 less than Server pricing of 8, 10 and 12% respectively. However, Unified customers were billed at the Server rates resulting in a 25-30% overcharge. MSFT has issued a 2019 credit but has yet to take action on credits for 2017 and 2018.
Forecast Your Software Assurance Benefit (SAB) Incidents
You can and should exchange your SAB incidents in order to reduce your Unified Support bill. There is more information later on which explains the SAB policy and how incident credits are calculated. SAB incident credits can vary dramatically from year to year. They play a particularly impactful role the first year of moving from Premier to Unified Support. Most of the time there are fewer SAB incident credits in year two and beyond to offset the Unified support cost. This is in part due to Premier Support SAB rules and how many SAB incident credits may be applied. Enterprises with many Microsoft agreements falling on different anniversary dates further complicate the transparency of how many SAB incident credits will be available to help reduce the price of their Unified Support contract.
What Qualifies for Software Assurance Benefits (SAB)?
SAB incident credits are accrued based on an organization’s Microsoft Software Assurance (SA) spend, including payments for online services. Once an enterprise has transitioned from SA to full USL online subscriptions (new users covered by Microsoft 365) they no longer qualify for SAB. To reinforce this statement, Microsoft 365 and Azure payments do not qualify for SAB.
SAB Credits Often Offset Unified Costs by 25% or More
Software Assurance Benefit (SAB) incident credits often reduce an organization’s Unified support bill by 25% or more according to Gartner (June 2020). This savings is lost as an enterprise transitions to Microsoft cloud services like Dynamics, Microsoft 365 and Azure. Software Assurance (SA) decreases over time as traditional on-premise licenses are retired (EOL) and most of the Microsoft licensing spend turns to Online services. As a result, SAB credits accrue more slowly or fall off completely resulting in a net increase to Unified Support costs of 25% or more.
Unified Support Renewal SAB Credit Falloff
Newly minted Unified Support customers are finding themselves with unexpected price increases due to SAB incident credit falloff from decreased SA spends and increasing MSFT Online services spends. For example, if an organization received $400,000 in SAB credit on its first Unified support contract, then finds out at renewal that they are now receiving a $150,000 SAB credit, this results in a $250,000 cash outlay (Unified Support cost increase) which was not budgeted.
Software Assurance Benefits (SAB) Changes Effective February 2022
Enterprises receive one 24/7 Problem Resolution Support (PRS) incident per $20k of server SA and one 24/7 Problem Resolution Support (PRS) incident of information worker SA. SAB support incidents can be converted to a credit for Premier or Unified Support.
Effective February 2022, organizations spending more than $250k per year on Software Assurance (SA) will no longer receive SAB incidents. They will receive “as needed” basic support with a 24-hour initial response time (IRT). Or they can receive a one-time credit towards upgrading to Unified Support. Organizations spending less than $250k per year on Software Assurance (SA) with no Microsoft enterprise support agreement (Premier/Unified) will be introduced to a partner for support or can purchase Business (formerly Professional) support incidents.
Don’t Buy MSFT Products That Don’t Require Direct Support from Microsoft
A seemingly obvious but more difficult option for enterprises is to limit their MSFT spend and thus their Unified Support renewal cost. Since all Microsoft product and service spends count towards your Unified cost, an option is to simply not buy Microsoft products that aren’t core to the business and require direct support from Microsoft. While Office 365 and Azure may be critical to the organization, perhaps open source SQL is an option.
Carefully Consider Unified Support Costs When Upgrading to MSFT Cloud
Many organizations are keen to consider themselves “cloud first” regarding their Microsoft stack but often fail to consider the significant Unified Support costs that incur as user counts and consumption grows in Dynamics 365, Microsoft 365 and Azure. Even seemingly benign level ups from Office 365 E3 to E5 can result in unanticipated Unified Support cost increases. Make sure to have the Unified costs included in your MSFT cloud services proposal.
Consider Purchasing MSFT Cloud Services from a CSP
Microsoft products purchased through a Cloud Solution Provider (CSP) don’t count towards your spend total used to calculate your Unified Support contract bill. The downside of buying cloud-based services from a CSP is that the enterprise doesn’t receive discounts such as SA SKUs for Office 365. Sourcing, Procurement and Vendor Management (SPVM) leaders should consider moving some licensing such as Microsoft 365 or Office 365 to a CSP as they may not need as much support as other critical workloads that require Unified Support.
Create 3 Year Unified Forecast for Increased Spends and Lost Discounts
Once you have a handle on what Microsoft products and services you need and that drive your Unified Support cost, put them in a spreadsheet and apply anticipated growth across the various products for 3 years. In addition, forecast SAB credits and SA discounts that will be lost over the next 3 years. This analysis will allow you to arrive at an effective Unified Support cost forecast for your enterprise.
Sync Unified Support and Enterprise Agreement (EA) Renewal Dates
It’s best to have your Unified Support contract and Microsoft Enterprise Agreement (EA) with the same renewal dates. Granted most EAs are 3-year agreements, and Unified Support agreements are 1 year contracts. Having them fall on the same renewal date will force some support cost focus for Sourcing, Procurement and Vendor Management (SPVM) leaders, at least every 3 years, as products changes are made to the organization’s EA.