I’ll say it…Bundle.
Bundling is one of Microsoft’s favorite pastimes and rightfully so. It checks the boxes on a number of objectives that serve their customers well…in some cases. It serves Microsoft even better as they lock customers into their product suites that offer a wide range of services from collaboration to security to voice and beyond.
The problem is most customers are using what they consider to be best of breed for the various technologies that are direct competitors to Microsoft. Proofpoint, Okta, and Crowdstrike are a few of the technologies that Microsoft is chomping at the bit to replace, but are they? In many cases, they are not. Customers are not abandoning the best of breeds but continue to purchase the Microsoft M365 E3 and E5 suites for a variety of reasons. Here are some:
Compliancy – customers want to avoid any compliancy issues so licensing all technologies for all users simplifies compliancy concerns.
The Deal – Microsoft offers significant pricing concessions (including liberal ramped payments) to lock customers into the suite. Once in, many customers have difficulty switching users to a licensing SKU more suitable to their role.
They plan on using all of the technologies over time. “we will grow into the suite”
The math makes sense for what they are using. When reviewing the technologies that customers have deployed, the suites do make sense as purchasing the products ala carte would be more expensive.
Do we have any volunteers?
Does anyone in procurement want to step forward to manage this process? Usually not. Determining licensing type based on roles is usually completed in a fashion that grossly underestimates the cost savings, by a low-level procurement or IT infrastructure person. I have yet to see anyone do it well and customers continue to spend hundreds of thousands of dollars and even millions, on shelf ware. The analogy that I use – it is like ordering a box from Hello Fresh and throwing out everything but 1 or 2 ingredients.
Or choose to work with the Microsoft licensing experts at Green Cabbage. We advise customers on role-based decisions and assist them in making decisions that reduce shelf ware. Reduce costs. Save time.
As a side note, the US Department of Justice wasn’t a fan of bundling either and currently, the EU is following suit. On October 1, 2023, Microsoft will offer versions of Microsoft 365 and Office 365 suites without Teams at a slightly reduced cost. If a customer chooses to purchase Team-less suites and then purchase Teams separately for all or a subset of users, they will ultimately pay more. We are not envisioning a significant impact and expect that customers will continue to purchase the suites with Teams included. The only wildcard is a customer that has locked into competing technologies with a long-term agreement, they will see cost savings of €24.00 per year per user for the E3 and E5 suites. More details can be found here - New subscription structure for Microsoft 365 in Europe
Written by: Dan Pavlick VP of Cloud Services, at Green Cabbage