You may find new clauses included that state if your Cloud consumption grows 5% or more in a year, you must true up at years’ end.
As the year comes to a close, global inflation rate ended at around 6.6%. 2023 was filled with warnings of an impending economic recession that has yet to fully appear, but the effects are already being felt. Vendor rate lock-ins have become a priority for Enterprise IT sourcing and procurement, which means that cost containment and predictability are the most important aspects of Microsoft Enterprise Agreements (EA) and Unified Enterprise Support agreements for many businesses.
Naturally, with the economy in such a volatile state, companies would seek out multi-year support agreements to avoid costly yearly renewals. Microsoft is also motivated to lock customers into Unified contracts that span 3 or more years as third-party alternatives begin to gain market share and take a share of their clients. A multi-year agreement saves you money and saves Microsoft from losing your business so what’s the real issue?
An added clause to multi-year proposals is causing some headaches. The new Unified contract clause states that if a company’s Cloud consumption grows 5% or more in a year, they must true up at the end of the year. This multi-year Unified agreement language would make it possible for an enterprise to have 2 Unified cost increases during the term and being stuck in the agreement until the third Unified price increase is levied.
Now, instead of both parties benefiting from a multi-year contract, Microsoft gains the full benefit, while those that need support are left with steadily increasing prices. The reasons for the contract changes come down to two motives. Mid-contract true ups increase Unified revenue for Microsoft’s current fiscal year, giving them a monetary boost at their customers’ expense.
It’s recommended that you don’t sign 3- or 5-year Unified Support agreements. The only exception is if your organization uses mostly on-premise Microsoft licensing spend and has no plans to grow its Microsoft cloud consumption by over 4% in the next 3 years.
If your Cloud growth is expected to increase by more in the coming year, you’d be better off signing a single year Unified contract. While this does potentially put you in a financial bind as the price of Unified tends to fluctuate each year to suit the needs of Microsoft, you won’t get hit with a true up requirement mid-year due to your Cloud needs going up. If Microsoft is too expensive and you don’t want to deal with a multi-year or even one year contract with them, but still need support, the other option is the one they want you to avoid: third party support.
US Cloud offers Premier/Unified support that saves you 30-50% on your Microsoft spend in the first year. We have a dedicated team of engineers that are all US based and have an average of 16 years’ experience with all Microsoft products and services. Our financially backed SLAs ensure that your ticket has a response within 15 minutes of submission, regardless of severity. For faster, more affordable Microsoft support, US Cloud is the answer.