Bundling the two together allows Microsoft to hide costs and increase margin while the 3 year term of the EA locks you in, removing the opportunity to save millions of dollars with viable alternatives to Unified.
Audience: Microsoft Vendor Management | IT Sourcing & Procurement | CIO
Microsoft 365 licensing bundles for enterprises are a well-known example. On the other hand, Enterprise Agreements with Premier or Unified Support bundled together are less well-known but equally effective at driving support revenue at Microsoft.
By bundling Premier or Unified Support with the EA, Microsoft quietly picks up another 6-12% in margin and avoids scrutiny and analysis of Unified Support’s rapidly expanding costs. Microsoft astutely understands that EA negotiators and IT Procurement may not have the time or appetite to dive into their Unified Support bill or engage Gartner, IDC, or InfoTech for assistance.
As a percentage of the overall Microsoft Enterprise Agreement, Premier or Unified Support looks insignificant, but when converted to real dollars, it is meaningful. Negotiators and IT Procurement should plan accordingly and analyze Premier or Unified Support costs outside the EA to reduce their overall Microsoft spend and preserve their enterprise IT budget.
This vendor lock-in may result in your enterprise’s inability to both avoid Unified support cost increases via annual true-up at Microsoft and take advantage of cost savings opportunities outside of Microsoft.
By adding Premier or Unified Support to your Microsoft EA, your organization may assume that its support costs will be contained. Unfortunately, this will not be the case if your cloud consumption is growing like most companies. Your enterprise’s support spend baseline will true-up once per year, most likely establishing a new and higher cost baseline for Microsoft support.
If IT Procurement or your EA negotiator bundles Premier or Unified Support with the Enterprise Agreement you will not be able to explore alternatives to Microsoft for at least 3 years. Analysts report 30-50% cost savings is possible with third-party Microsoft support. Gartner, IDC, and InfoTech and have each identified viable alternatives to Microsoft Premier and Unified Support. Organizations moving away from Microsoft earlier are able use their savings strategically to grow while others are shackled to their Microsoft EA.
While Unified Support typically only makes up 4-6% of an Enterprise Agreement’s total cost, it is often worth over 10 million dollars, over 3 years, to Fortune 500 and Global 2000 companies.
In the past, some Sourcing and Procurement leaders have elected to play it safe with OEM support from Microsoft and not explore alternatives to Premier or Unified Support. However, record-high inflation and recessionary economic conditions are now forcing organizations of all sizes and industries to scrutinize their Microsoft spends.
Winning enterprises are responsibly cutting Microsoft support costs while maintaining quality with viable third-party support providers. Analyst market guides and Proof of Concepts are available for research and risk mitigation. Once satisfied, these forward-thinking organizations are able to use the millions in cost savings to drive growth and outpace industry competitors.