Mike Austin maps Microsoft products on a 2x2 chart: value to Microsoft versus strategic importance. Azure, Power BI, and Dynamics 365 sit in the high-value, high-strategy corner. On-premise tools like Exchange and SharePoint rank low on both. Shifting your spend toward cloud and strategic services gives you better negotiating power.
Questions this video answers
August 31, 2020.
47% year over year (as of the speaker's statement).
Chapters
Hi, Mike Austin, CEO of Metrix Data 360 here. A lot of the times I get asked by clients how to think about Microsoft or what has changed with the way that Microsoft behaves when it comes to negotiating enterprise agreements or renewals of software contracts. And so I put together this chart that I'm going to talk through today to show you how I see Microsoft viewing their products and the different ways that they're treating them depending on where they fall foreign. So we have a pretty simple XY graph here. From left to right is the value that Microsoft sees in that product and from top to bottom is the strategicness of the product to Microsoft. So I'm going to start talking about the upper left hand quadrant first. And so that quadrant is somewhat strategic but low value. So it's higher on the strategy but lower on the value. And products that are going to fall in here are going to be like Windows and SQL Servers. And so these products are products that Microsoft cares about, but they don't really care about them in the on premise world. In fact, what I'm going to say is that the left hand side of this chart are products that Microsoft probably wants to go away and they want to move everything over to the right hand side in their subscription model because the left is going to be kind of your perpetual on premise stuff. The right is going to be cloud and subscription based. So Windows and SQL Servers, for instance, are products that Microsoft see some strategic value in. If you're going to be moving those to Azure, they'll see more strategic value in them. So what does that mean? It means that they're going to put a really low focus on selling you these products and they're going to put a literally low focus on investment in those products, whether that's helping you implement them or whether it's providing you discount or incentives to buy those products. There now in the bottom left quadrant is low value, low strategy. And this is going to be all of your on premise products. So this is going to be Project visio, Exchange servers, SharePoint servers, Skype servers, anything that's on premise. Microsoft is actually, I would say abandoning these products. They see little to no value in them. There is no investment that's happening in client deployments of these products. And these are actually products that we see when it comes to renewals where Microsoft is really pulling back, if not eliminating any discounts that you may have seen in the past on these products. So from here I'm going to move over to the bottom right hand corner where this is A little bit more value, but a little bit lower on the strategicness side of things. So this is going to be products like Office 365. It's going to be the Microsoft 365 Apps, which is really Office 365, Office Pro, which was renamed to Microsoft 365 Apps just to keep you on your toes. And it's going to be things like Project Online, Visio Online. So these are things that Microsoft believes that you already have purchased and have probably already deployed. So what you'll see here is decreasing investment. So if you need help with deployments, they're not necessarily going to be interested in funding deployments of these products and they're not going to be really focusing their sales efforts on them because you already have them. So we're going to see decreasing discounts here. So they may not go to zero like the discounts in the left, lower left hand quadrant, but they may, they may decrease significantly from what you've seen in the past. Now where Microsoft really wants you to go is into this upper right hand quadrant. High value to Microsoft, high strategicness to Microsoft. And these are going to be a lot of their newer products. So obviously Azure is there, they want to grow that product. It's growing at 47% year over year I believe as of last year. But they want to catch AWS and they want to overtake them as the market leader here. This is also going to include their new products like the Power BI's, the Power Apps team, Voice Dynamics 365. So these are products that Microsoft is either incubating and wants to grow into billion dollars and multi billion dollar product lines, or they're very strategic to them. And this is where you're going to see your account managers get the most excited if you talk to them about it and they're going to focus all of their sales efforts on here. You're going to see the most dollars from an investment perspective also flow into this quadrant. So that includes deployment dollars, like helping you get products deployed, running POCs, those sorts of things, as well as through discounted pricing. So when you're looking at your EA negotiation, this chart overall will help you think about what buckets your products fit into and how to focus and the different ways to target that within a negotiation. So for instance, if I've got to buy a bunch of stuff in the bottom left hand quadrant, I know Microsoft's not going to be that interested in it, but is there a way maybe that I can shift it from the bottom left to the right. For instance, can I take a project or Visio on premise and move that to a project or Visio online subscription? Even better is can I shift it out of the bottom left corner quadrant up to the top right? So for instance, if I have a SharePoint server that's on premise and I don't want to move to SharePoint online inside of Office365, I may want to move that into Azure. And there Microsoft would get excited because we're moving even though it's our own sort of on premise, we control deployment to the Azure cloud. Okay, so you want to be thinking about how to move out of those from the left to the right and from the bottom to the top of this chart, and which products fit where and what dollar amounts are associated with those so that you can figure out your best negotiating strategy with Microsoft. So I hope you find this video interesting and helpful. Don't forget to click the link below if you want to download a PDF of the chart that we've talked about here for yourself and for your future reference. Also click the like and subscribe. Thanks for watching. Until next time, have a great day.
