Product Spend.

Product Spend, in the context of Microsoft support, refers to the total financial investment an organization makes in Microsoft products and services. This crucial metric typically encompasses licensing costs for software, subscriptions for cloud services, and potentially hardware purchases. Product Spend often serves as a key factor in determining support contract pricing or eligibility for certain premium support levels. For instance, Premier Support pricing may be calculated as a percentage of an organization's annual Product Spend. Understanding and effectively managing Product Spend is essential for organizations to optimize their Microsoft investments, ensure appropriate support coverage for their Microsoft environment, and make informed decisions about their IT infrastructure and support needs.

What is Microsoft Product Spend?

Microsoft Product Spend is a comprehensive measure of an organization’s financial investment in Microsoft products and services. It encompasses a wide range of expenditures, including:

  • Software licensing costs
  • Cloud service subscriptions
  • Hardware purchases from Microsoft
  • Consulting services and implementation fees

This metric serves as a crucial indicator of an organization’s commitment to and reliance on Microsoft technologies. Product Spend is not just a simple tally of expenses; it reflects the strategic decisions made by businesses to leverage Microsoft solutions for their operational needs and growth objectives.

Understanding Product Spend is essential for both Microsoft and its customers. For Microsoft, it provides insights into customer engagement and helps tailor support offerings. For customers, it forms the basis for negotiating support contracts and accessing premium services.

The Components of Product Spend

Product Spend is composed of several key elements that reflect the diverse ways organizations interact with Microsoft’s ecosystem:

Software Licensing

This includes perpetual licenses for on-premises software as well as subscription-based licensing for cloud-ready applications. Examples include:

  • Windows Server licenses
  • Microsoft 365 subscriptions
  • Visual Studio licenses for developers

Cloud Services

As organizations increasingly move to the cloud, a significant portion of Product Spend often goes towards cloud services:

  • Azure consumption and reserved instances
  • Dynamics 365 subscriptions
  • Power Platform usage

Hardware and Devices

While not as common, some organizations include Microsoft hardware in their Product Spend:

  • Surface devices for employees
  • Xbox consoles for entertainment areas
  • HoloLens for specialized applications

Impact on Support and Services

Product Spend plays a pivotal role in determining the level and cost of support an organization can access:

Support Contract Pricing

Many premium support offerings, such as Unified Support, use Product Spend as a basis for calculating contract costs. The pricing is often structured as a percentage of the annual Product Spend, with rates decreasing as spend increases.

Service Level Agreements (SLAs)

Higher Product Spend often correlates with more stringent SLAs, providing faster response times and more comprehensive support coverage.

Access to Advanced Services

Organizations with substantial Product Spend may gain access to:

  • Dedicated support personnel
  • Proactive monitoring and advisory services
  • Early access to new features and products

Strategies for Optimizing Product Spend

Effective management of Product Spend can lead to significant cost savings and improved ROI:

Regular Audits

Conduct periodic reviews of licenses and subscriptions to ensure alignment with actual usage. This can help identify opportunities to:

  • Consolidate licenses
  • Upgrade to more cost-effective plans
  • Eliminate redundant or unused services

Cloud Optimization

For cloud services, implement strategies to optimize spend:

  • Use reserved instances for predictable workloads
  • Implement auto-scaling to match resource allocation with demand
  • Leverage hybrid benefits to reduce costs when moving from on-premises to cloud

Negotiation and Volume Licensing

Leverage your Product Spend to negotiate better terms:

  • Explore Enterprise Agreements for large-scale deployments
  • Consider multi-year commitments for more favorable pricing
  • Investigate bundled offerings that combine multiple products at a discount

Conclusion

Microsoft Product Spend is more than just a financial metric; it’s a reflection of an organization’s strategic alignment with Microsoft technologies. By understanding and optimizing Product Spend, businesses can not only control costs but also unlock greater value from their Microsoft investments. From accessing premium support services to leveraging advanced features, a well-managed Product Spend can be a powerful tool for driving digital transformation and maintaining a competitive edge in today’s technology-driven business landscape.

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