I'm taking a couple weeks off before the busiest part of Microsoft's 2012 kicks into full gear. But never fear: The Microsoft watching will go on while I'm gone. I've asked a few illustrious members of the worldwide Microsoft community to share their insights via guest posts on a variety of topics -- from Windows Phone, to Hyper-V. Today's entry is all about a major change in Microsoft pricing for businesses and is authored by Richard Gibbons.
Microsoft alerted partners in early 2012 that there would be “significant” price increases coming to Volume Licensing in the UK starting July 1.
Many partners were been preparing their clients for “up to 30%.” Recently, partners received the final word from Microsoft:
- Enterprise Agreements = 25.7% increase
- Select/Select Plus = 24.6% increase
- Office 365 = 21% increase*
- Open Value/ISV/SPLA = 33.5% increase
- Open = 7.5% increase
* This will all but wipe out the Office 365 price drop we saw earlier in the year.
This change does not impact consumer software or academic pricing, but it does affect many other customers.
These are huge increases. There’s no doubt about it. An £80,000 order now will be £100,000 in 7 or so weeks!
Why has Microsoft done this? Word is, it’s to bring the UK into line with the Euro pricing seen throughout EU/EFTA as up to now the UK has been up to 30 percent cheaper than mainland Europe for no real reason other than currency fluctuation. I think it is also fair to say that Microsoft, in general, alters its pricing less frequently and less radically than many other vendors thus making this a more immediate and obvious hit. (By the way, as part of this price alignment, Microsoft also is reducing pricing in Switzerland.)
If you currently have a three-year agreement such as an Enterprise Agreement (EA), then anything on your agreement before July 1 is price-protected until the end of the agreement. That means you will be able to add additional licenses of those products at the pre-increase price. So if you’re planning to deploy a new product before the end of your agreement, such as CRM or Visio, adding just a single license now will lock in your pricing for up to three years (depending how long your contract has left to run, of course).
That said, organizations must be careful not to “panic buy” and end up with licenses that they don’t need. Buying something before the price increase is still more expensive than not buying at all. Performing due diligence and identifying the correct solution is still very important, and this is an area where Microsoft is drawing fire.
Even with the advance notice given to partners, the window for organizations to evaluate their plans and their budgets will only be around 4 months; in the world of large enterprises, and even many SMBs, that is not a lot of time for what can be a major business decision. Chief financial officers may well feel pressured into green-lighting projects earlier than they feel comfortable with to avoid paying the increased costs come July 1.
For organizations with purchases on the horizon, even if that horizon is 18 months away, it is definitely advisable to talk to your VAR/LAR/partner of choice (as well as your Microsoft Account Manager if you’ve got one) to discuss your options and how this could/will affect you.
Rich Gibbons is a Manchester United supporting, MLB & NFL watching Software Manager at European VAR Bechtle and one of the (seemingly) few fans of Microsoft Licensing. His tweets and blog posts keep customers, colleagues & others up to speed on not just licensing but most things Microsoft, including Xbox, Cloud & Windows Phone.