Executive Focus: Negotiating Microsoft Licensing Agreements

• Licensing and negotiations favor Microsoft, but adopting the right approach allows customers to negotiate from a position of strength.
• Microsoft makes licensing an intentional maze of interdependencies, nuanced and special offerings, and traps, which are continually adjusted to lead customers to higher-priced subscriptions.
• Microsoft is pushing customers to the cloud by making on-premises software less attractive via price increases, shorter product life-cycles, and more dependencies on hosted services. 
• Licensing agreement negotiations are risky because most customers fail to dedicate adequate resources and time to the effort, which often exposes them to long-term commitments and future budget overruns.

This report provides an executive-level overview of the key issues and risks organizations should be aware of before and while negotiating Microsoft licensing agreements. Directions recommends understanding Microsoft tactics and dedicating the time, resources, and support for procurement and IT to negotiate a licensing agreement that ensures users have access to the software and services that benefit the organization’s goals, while also protecting the organization from unexpected cost increases and compliance risk.