To meet the diverse needs of various organizations, Microsoft has introduced umbrella agreements, such as the new Microsoft NVZ framework. These agreements come with both advantages and risks, making it crucial for organizations to be well-informed before committing.
These initiatives have arisen from members’ desire to secure volume discounts. Microsoft’s goal, as a publicly traded company, is to increase revenue, and they aim to achieve this by migrating as many businesses and institutions as possible to the cloud. However, this strategic objective can potentially lead to a ‘vendor lock-in’ situation and the development of a recurring revenue model.
The benefits of Microsoft umbrella agreements
Cost savings: One of the most attractive aspects of umbrella agreements is the potential for cost savings. Organizations, even smaller ones, can benefit from volume discounts offered by Microsoft. Comprehensive cloud suites are often offered at reduced rates, which can be enticing for organizations using a wide range of Microsoft products.
Riding the volume discounts: Relatively smaller organizations can leverage the scale of larger members within the umbrella agreement, granting them access to the same discounts and price advantages that might otherwise be out of reach.
Uniformity and consistency: Umbrella agreements provide a consistent set of products and services for all members. This can ensure consistency within your organization and make it easier to comply with licensing terms and policies.
The drawbacks and risks
One size fits all: A common issue with umbrella agreements is that they are often presented as “one size fits all” contracts. This means that all members of the agreement receive the same set of products and services, regardless of their specific needs. This can lead to unnecessary costs and underutilization of certain functionalities.
Lack of alternatives: Microsoft and its partners typically do not emphasize alternative scenarios that may better suit your organization’s needs. This lack of transparency can lead to suboptimal choices for your licensing requirements.
Limited possibilities for negotiation: It’s important to note that if customers have completely different needs and wish to negotiate, Microsoft can sometimes be hesitant. In these cases, consulting with an independent specialist is crucial. This is important to create the right business case and justify why an umbrella agreement is not being used.
The importance of independent advice
It’s clear that choosing the right Microsoft umbrella agreement can be a complex task, especially given Microsoft’s strategic objectives. Therefore, we highly recommend seeking independent advice.
An independent specialist can help you:
- Provide insight into all possibilities: A specialist can help you understand the full scope of available options, enabling you to make an informed choice.
- Weigh the pros and cons: Through a thorough analysis of your current and future needs and the available agreements, a specialist can assist you in identifying the advantages and disadvantages of different contract forms.
- Explore alternatives: Independent experts can propose alternative licensing structures and solutions that may better align with your organization than a standard umbrella agreement.
At BeSharp, we understand the importance of transparency and finding the right licensing solution for your organization. We offer independent advice to help you discover the most optimal Microsoft licensing solution based on your current and future needs.
Contact us for a consultation, and let us guide you in making an informed decision. We aim to provide you with the licensing structure that best suits your organization, with transparency and cost-efficiency as our core values.
With our advice, you can rest assured that you’ll have a Microsoft licensing solution perfectly tailored to your needs and goals. Let us assist you in navigating the complex landscape of Microsoft umbrella agreements and making the right choices for your organization. Contact us today for more information.
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The BeSharp Experts team
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