Tags: Microsoft Unified Support Agreements | Negotiating Microsoft Contracts
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 2022 Market Guide
Result: Licensing and Support budgets not sustainable with Microsoft’s 5 year look back.
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.
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 Enterprise, switch to Unified, 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.
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.
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.
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 request information from US Cloud to verify Gartner reported savings of 30-50%.
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.
In addition, as enterprises increase their reliance on Azure, M365, and Dynamics 365, their Unified costs increase rapidly. Even in 3 year Enterprise Agreements, Unified Support has an annual true-up so cost predictability and containment are challenging.
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 during the post Covid economic downturn.
Some existing Unified customers are finding a renewal cost-prohibitive during the crisis and are seeking alternatives. Others are considering going without OEM support altogether although operating without a safety net is not without its perils.
For those suffering enterprises being pressured by Microsoft during the Post Covid-19 economic crisis to move from Unified to Unified Enterprise, there is a path. Simply ask MSFT to stay in your Unified plan for another year – they are giving folks a pass and understand now is not the time to press.
Unified Enterprise Support is a complex proposal requiring resources and energy many IT leaders simply don’t have during the crisis. Expect a 12% annual increase by staying in one of the three Microsoft Unified Support plans.
As of July 1, 2021, Microsoft no longer offers Premier Support agreements for new commercial customers.
As of July 1, 2022, Microsoft no longer offers Premier Support agreements for renewing commercial customers.
Public sector customers:
Beginning July 1, 2023, Microsoft will no longer enter into Premier Support agreements for new public sector customers.
Beginning July 1, 2024, Microsoft will no longer offer Premier Support agreements for renewing public sector customers.
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.
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 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.
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.
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.
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.
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:
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.
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.
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.
Software Assurance Benefit (SAB) incident credits often reduce an organization’s Unified support bill by 25% or more according to Gartner (June 2022). 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.
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.
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.
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.
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.
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.
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.
It’s never a good idea 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 often “hide” the cost increase of Unified in the much larger EA total cost.
Tying Unified to your EA also locks you into Microsoft support quality degradation (record long Time to Resolution in Q4 2022) as well as lost cost avoidance opportunities with third-party support providers. Analysts recommend keeping Unified separate and opting for 1 year contacts so you can keep all you options available.