Mike Austin explains how Microsoft bundles expensive security products into enterprise agreements that customers rarely use, then locks them in at renewal. He applies Alex Hormozi's value formula to show the gap between what vendors claim and what actually delivers results.
Chapters
Foreign. You talk to Microsoft, when you talk to any software publisher, they talk about value all the time. And they talk about value in that from the definition of value as to estimate the monetary worth of something. Right. And so you'll hear them say things like, oh, the EA is valued at $1.2 million per year, but because it's in an EA, it's only a million. So we're, we're, you know, we're giving you $200,000 of value. Right. I look at value from the perspective of a gentleman by the name of Alex Hormozzi who talks about value being an equation of your dream healthy outcome times the likelihood of that happening, divided by the time and delay the time delay to get that done, multiply the efforts and sacrifice to get there. Right. And so how does that look? So if you look at Microsoft, for instance, Microsoft's dream outcome is that you purchase what Microsoft wants you to purchase. E5 across the board, you move to all their security products. It might be the right thing. Right. What's the likelihood of that happening? It's probably pretty high because you really don't have much choice, right? The time delay, not much. If I'm in O365 and there's a renewal, it's like it's got to happen on this data. They start threatening all kinds of crazy stuff like charging list price plus 20% or whatnot. The efforts and sacrifice by Microsoft, very little. I mean, you talk about some of the largest companies in the world. Microsoft doesn't even spend time helping them understand why they would go to third parties, you know, to their security products until the very last minute. Like they're like, hey, we're six weeks, weeks away from ea. Let's have a, a road map discussion on security products. Right? And what's the value to Microsoft? It's massive. You just signed a new three year deal at 20 to 40% more than you were paying on the last contract. And you bought software you'll never use. They love that, Right? Because then they'll spend the next three years trying to get you use that software that you bought that you'll never use. You put this in your perspective. What do you want? I want to buy only what I need. And a lot of the times I'm hearing now, especially with what's going on in the economy, not only do I only want to buy what I need, I need to reduce my cost 10 to 20%. Right. The likelihood that happening for you is pretty low. Right. Because you have no leverage over Microsoft. Especially if you approach it from the we're going to get an E5 proposal from them and try and push down. Right. If we don't understand our technical roadmap around the security products and where we're going and when it makes sense to buy and how do we get value out of that? And then how do we go and discuss that with Microsoft, even if we want to adopt it? You can't do that. Right. What's the efforts and sacrifices a lot for you? I hear so many people spend so much time with Microsoft in these meetings where they go round and round in circles and they get nowhere. And then the value is less. Right. It's less than your last agreement because you face price increases and you bought more stuff yet again that you don't need.
