Secrets to Successful Software Contract Renewals: Expert Strategies for Maximizing Value

Okay. Good morning or good afternoon and welcome to Metrix Data360's webinar on unlocking the secrets to successful contract renewals. I'm Mike Austin, CEO and founder of Metrics Data360. For those of you that don't know me, I am a software asset management expert focused very heavily on license compliance and software contract. Today we're going to talk about, you know, kind of an important contract, important contract, important concept around contract renewals. You know, what we're seeing in the market right now is that all the software publishers are, you know, changing licensing terms and rules and, you know, causing havoc on IT budgets, to be frank. You know, we're hearing things like Broadcom renewals are up 300, 400%. You know, Microsoft contracts are pushing up 20, 30%. So across the board, all these contracts are going up and companies are struggling trying to figure out how to even keep their budgets flat, let alone save money, which is what they're typically trying to do. So today we're going to try and give you some useful tips on things that you can do to help help with your software contracts. You know, so we're going to talk about not just tactics around how to negotiate and, but we're really going to focus as well on how to make sure that as you're doing these things that you're compliant, how to, how to optimize your contracts for usage and things like that. Okay? So for those of you that are new to one of our webinars, if you do have any questions, please feel free to drop those in the chat. I'll be watching and I'll try and answer those, those throughout the presentation. If not, we'll try and leave a few minutes at the end here for any questions that you may have. So obviously, you know, I already sort of started with this, but why is it important? Right? And it's just the financial impact on IT budgets is growing, you know, particularly if you take a look at what's happened, you know, over the last five, six, seven years. Right? So, you know, software used to be a game of perpetual licenses. There used to be capital budgets. All the vendors have changed to subscription based, SaaS based, cloud based licensing, which has not only changed the dynamics, you know, it's changed the financial impact because it's gone from operating expense or, sorry, from capital expense to operating expense. And that's a whole different, you know, a whole different ball game for IT organizations. And so as software contracts have become a bigger part of the IT budget, it's actually caused A lot of challenges for organizations, right? And then I think if you go back even a few years ago, I think people were focusing on renewals. But a lot of the lot of the time it was really, let's just focus on the unit price and we'll just try and see if we can save a few, a few percentage points on, on our contracts and we would work from there. But they weren't really focusing a lot on T's and C's and ways that they could frame these contracts to do things differently. They were taking things like software contracts like the standard terms and conditions, buying a lot of shelf where, you know, playing, allowing the, the vendors to play their bundling games and things like that. And so, you know, that's sort of to catch up to people. For those of you that have been working with me or know of my stuff, you know, when Microsoft started, for instance, going down the path of Office365 into SAS based licensing models, I was like, this is not a good thing for the customer because what's going to end up happening is once they get you there, you're in subscriptions, you really have no other options. And then at that point in time they can continue to increase prices and you know, you're, you're stuck. And we're actually even seeing, for Microsoft it's even getting worse in that it used to be as they brought out new innovation, that new innovation would get pushed into their top level licensing, but now they're actually making these add ons. So for Microsoft 365 E5 customers, things like Teams Premium that used to be pushed into that bundle are now separate. So this is part of where the cost increase continue. If you look at things like Broadcom, for instance, broadcom, they buy VMware. VMware used to have perpetual licenses. It used to have, you know, 40 or 50 different products that you could purchase depending on what you were, what you were looking for. And you know, they say that they're going to simplify it to a subscription based license and one product basically. And what that, what that has done is not only has it made it more difficult for organizations that have perpetual licenses and things like that because now they got to make the switch to subscription, but it's increasing the cost that we've seen broadcom renewals at 400% plus and organizations, you know, can't react fast enough to that in order to, in order to make sure that they can minimize that impact to their budget. Right. And so, you know, all of these things start to come come together. And so a lot of the times people say, okay, what can I do? And you know, some of this seems like it's, some of this seems like it's fairly straightforward and simple. But the reality is a lot of the times what ends up happening is most organizations are doing this or they're doing it sort of haphazardly. And so one of the things that we're telling people is you have to develop a cross functional team. Now this is no longer these renewals can be done within it or it can come and build out a list of requirements that then gets pushed over to procurement. Procurement tries and negotiates the best, you know, the best deal. You're now looking at full on teams where you have to have it, procurement, vendor management, legal, finance, right up into, you know, ensuring that you have third party experts that are all part of, all part of your team. Right? So it's, it's no longer a simple process. You have to have a team. You also have to make sure that all in all your stakeholders are aligned and understand, you know, the goals of what you're trying to do, particularly around your roadmap with the technology. You know, there's nothing worse than having a strategy built by say the negotiation team and the vendor runs in and talks to, you know, a technical resource that basically undermines the entire entire strategy. You know. So for instance, you know, it could be something as simple as, you know, we need to build a business case in order to purchase Copilot from Microsoft. And you know, you find out that you've got technical resources like oh yeah, no, we're already playing with that and we'll just. And then all of a sudden it's like this becomes a pervasive thing in the discussion with Microsoft. So you have to make sure that your communication is aligned and simplified. In fact, you know, we suggest that when you get into negotiations that all communication go through a single point of contact within the customer. So even, you know, you may even have to get to the point where Microsoft or IBM or Oracle are not allowed to even book meetings with your team without going through the central person. So they understand what's going on to avoid this sort of thing. Because the software publishers are becoming better and better at these games of divide and conquer, you know, and particularly as you move into applications that are more pervasive not just in the IT but across the business. Right. So if you look at things like, you know, Salesforce, you know, they'll have no problems going and talking directly to the sales and marketing leaders. And you know, circumventing it and procurement and then saying basically, well, we know that the sales leader strategy is this, we know they have the budget to do this and they hold on these things, right? Without looking at what's the, you know, the overall roadmap of the organization, what is it's limitations, et cetera. Right? You also want to make sure that you understand what your requirements are and you prioritize those before engaging with vendors. Right? So is it product, is it terms and conditions, is it payment structure, is it price? So you really want to make sure that you have all of that laid out before you start to get into, into these negotiations with, with the vendors. Okay? Now most times when you're, you know, depending on who you're, who you're dealing with, you're going to have some sort of relationship with, with this vendor. We're seeing, you know, for the most part renewals being treated as a transaction, right? And when you treat a renewal as a transaction, you're not able to leverage your relationships with that vendor. And so what I mean by that is if it's just seen as a transaction, my Microsoft EA is up for renewal, I have to do that transaction. My IBM Passport contracts coming up, I have to do that transaction. The vendor knows that it's a transaction and you're not going to be able to build out and leverage things more strategic, you know, within, within the business. So you know, there's the, the simple tactics of looking across the vendor at their strengths and their financial cycles. So for instance, most people will say that you're going to get your best Oracle deal in, in May, you're going to get your best IBM deal in December because of fiscal year ends of the vendors. And so they'll try and negotiate around quarter ends. Now you know this can be true, right? We do see that deals happen at the end of quarters, at the end of fiscal years. But that's not always the case. Like I have lots of years of data on Microsoft that does, does not suggest that you get a better deal in June than you would get in September, for instance. What I would say is sometimes getting to the deal becomes faster because of the pressure on them around, you know, their fiscal year end. But you do want to leverage that how you can. You want to also I talked about this, you know, already, but you want to make sure that you're mitigating their land and expand tactics, right? So in other words, you know, take a look at what, what does that vendor offer, not just what are you buying because A lot of the times they're looking to land you as a customer and then expand. And sometimes that's a good thing, depending on what your strategy is. Other times it's not such a great thing. Right. So if you look at what Microsoft has done historically, they are the experts at land and expand. They create these bundles that you're using 22% of the products within the bundle. And then they push and push and push to trying to get you to take more and more and more. So, you know, if you look at, just look at Office 365, it started out as Office 365. You know, you had an E1 and E3. You know, now you have Microsoft 365 where they're pushing not just, you know, the Exchange, Sharepoints, etc. But their windows OS is, is included in that. All your access through your MFA and things like that. So they, they're expanding that footprint that they built with electronics into other products. And then they come out with an E5 where now all of a sudden we have a bunch of security and compliance products. We're going to put that in and then what are we going to do? We're going to give you deals that look like a deal. So if you're an E3 and you want to, you know, Europe for renewal, we're going to make an E5 look more attractive to you financially, be based on playing a game with a discount. So in other words, we'll give you a much higher discount on E5, much lower discount on an E3 in order to get you to move to that E5. And then we have three years to work you or to push more and more of this technology so that you adopt it, right? And so they're going to do that, land and expand. And like I said, sometimes that might be the right thing if your roadmap was to say, yes, we want to look at Microsoft Security products and move on those and grow there. But you know, if you're looking at those products and saying they're not ready for, for our organization, we have other vendor contracts that we're in for the long term. Maybe you believe in best of breed and security, whatever it is that land and expand doesn't work, but they're going to play the game, they're going to try and get you there. And if you look at, you know, what they'll do now, for instance, is copilot is their big thing. You know, anything Power apps is their big thing. So you want to deal, you have to take X Number of seats of copilot or power apps or whatever it is, right? So you have to figure out strategies to mitigate that. And one of the best way to do that is to work with them on a long term perspective. So not to treat the EA as a one time renewal, but to work with them on where are they, they, where do they sit as a vendor with you? Right? So you know, are they strategic, are they key, you know, are they a key part of your digitalization strategy, what is it? And let them know where they sit and start working with them not just, you know, at renewal time, but throughout the contract. Microsoft used to have this thing called, for instance, used to have this thing called the T minus 36 playbook, which was really their internal playbook of once you signed an enterprise agreement, the things that they needed to do every month within your account to manage that relationship, to do these land and expand and all these other things. You need to have those same sort of playbooks with your vendors, right? So what is your long term strategy with that vendor? You know, if I just signed a three year deal or I signed a five year deal, or I signed even a one year deal, what is that long term strategy? And share that. And one of the things that we're seeing work very well is to create a vendor scorecard around what it is that you're looking for and what partnership means to you. Right? Because you should define what partnership means to you and get Microsoft to, or not just Microsoft, Microsoft, but your vendors to agree to that and then work towards that. Right? Because if you ask them what partnership means, partnership typically means that you're adopting more of our technologies and that you're, you're spending more money with us. Right? And that might not be what that partnership should be. And so you want to make sure that they understand where they sit, right. Are they a strategic vendor or are they a tactical vendor? And if they're tactical, why are they tactical? And what would they have to do in order to become strategic? And maybe, you know, for them to become strategic, it's not something that's going to happen in one contract cycle, right? So you have to make sure that you're, you're having these conversations with them, put a vendor scorecard and share it with them. You know, make sure that you're showing them here your red, yellow, green and these, these things, you know, and those sorts of things could be, you know, there's the financial side of it, there's account management side of it, there's techno, technical adoption side of it there's, you know, all kinds of different things that you can put into these vendor scorecards. But I suggest you start thinking, particularly for your top vendors, about creating those and having conversations with them on a regular cadence to discuss how they're performing around that. A lot of the times what I will say in the vendor's defense is because these communications aren't happening in this way, that in some ways they think that they're doing a great job. They have blinders on quite often, to be honest, but in some ways they think that they're doing a great job. And then what ends up happening is when you get to renewals and then you start, you know, kind of expressing dissatisfaction and stuff like that, it almost surprises them to some degree. And they actually just think it's a tactic in order to get better pricing. And they are highly trained to handle that as a tactic in a negotiation. So we sort of touched on this. But I do believe that you have to be proactive around your planning and timing. You know, if you look at guidance for even just say a Microsoft renewal, we used to say that you want it to be working on those nine to 12 months before the anniversary, before the renewal date. Now I actually believe that there are things that you should be doing every month, every quarter and every year, even throughout the three year term. Right. So you have to be proactive around understanding the planning and the timing. I am about to release a T minus 36 plan for customers on the things that they should be doing, be doing for Microsoft. I think that'll be helpful for organizations. But you know, even if you have a vendor that maybe isn't that big, maybe they're only a few hundred thousand dollars in a renewal, they're not really strategic. A lot of the times those things would just get left to the last minute. But if you need to start to find savings across the board, there's things you need to do and those things take time. And so you'll definitely want to be making sure that you put time in there to do that stuff. Right? So if we got to go out and understand what is our usage, our deployment, do we have the right licenses, are we buying the right license type? Is there a different model? Does it, does something else make sense? Or even do we have other technology that we own that could replace that? Those things take time. And if you start looking at these things, you know, 90 days before the renewal, because we think it's a simple, you know, going to be a simple process that could catch you. So, you know, making Making sure that you're planning for that, that you have that roadmap for all of your renewals, even if it's a simple one. Right. Like I said, it might not be as detailed as say an IBM or Oracle or Microsoft or an SAP renewal, but you definitely want to have a roadmap for that. And then you want to make sure that you have alignment across the departments. Right? Because you know, especially, you know, similar to like what I was talking about with Salesforce around them going directly to sales and marketing, you want to make sure that you're aligned in terms of what your strategy there is. Right. And you could even have departments within it. I've seen like, you know, the desktop team and the server team or the networking teams have disagreements on what should be done, you know, in, in a vendor negotiation. And so you need to make sure that everybody's mind because it just takes one team saying oh yeah, that other team, you know, they're saying this, but that's not really what you know. And then that's it. Those negotiations are not going to go the way that you really want them want them to. So you really want to make sure that you're planning and that you're putting a lot of time into, into getting ahead of these things. Right. So if we, if we move away from the planning and get into just looking at software contracts, right. So. I've done webinars on this in the past where I, I talk about once in one slide what, you know, you should be doing for renewal. You know, really renewals come down to three or four kind of main things, right. You have to understand your usage and your roadmap. We've talked a little bit about the roadmap side of it, haven't touched and I'm not going to touch much on the usage side. But you need to really understand what is out there and then you need to understand what you own today. And you need to make sure that you're, you know, you're compliant and that's how you do contract optimization. I go figure out what's deployed, I figure out what I have licenses for. I create what's called a, a license position. Basically shows me I have this much deployed on this many licenses. You know, what most people do is where they have excess licenses, they'll try and decrease those if the vendor will allow you to do that. And that's kind of what they do from an optimization perspective. And then they start to really look at driving down in, on maybe negotiating on price and unit cost and things like that. But really where you want to be focusing on is not just that, but also being able to look and go, does that vendor offer a different license metric? Should I be resetting what I'm doing? Because you know, I can give you a real world example here. We had a client that was an IBM customer. They had everything licensed on processor value units. We went in, analyzed their environment, found out that their dev environment only had about 10 employees in it. They were spending about $300,000 for PVU licensing in their dev environment when they could have bought $20,000 of user based licenses to do that. So on renewal they were just going to renew the PV. We came in and said actually drop the PVUs for that by user based licenses and you can save all this money. Right? So you have to have the data in order to do that. And so that's kind of that process. But the next key thing is really looking at the software contract itself. And so one of the things, you know, a lot of the times people are going to talk to you about, watch out for ambiguous terms and you know, for things like penalty and audit clauses and things like that. And I spoke about pricing models. Pricing models usually are just different licensing programs or licensing metrics. But a lot of the times what you're trying to do with a software contract is you're trying to figure out how many do, how do I, how many do I need to pay for based on what I'm using and how do I minimize the dollar amount that I'm paying for. Right. And so what you want to be doing is mitigating your cost and your risk through analysis of the contract. And so what do I mean by that? Okay, so I'm going to give you an example here. Right? So I'm, I'm a Microsoft 365 shop. I have a bunch of employees that are very light users and they all have access to a device. Right? So for those of you that know, Microsoft has these licenses called frontline worker licenses or folks F3 licenses for the most part. And so that license basically says that the only way that I can license somebody with an F3 is if a user doesn't have a dedicated device, if they use a shared device, if they use a tablet or they use no device. So if otherwise I have to pay for the E license which is, you know, eight to ten times more expensive. So really what you're doing in the contract is you want to go and look at the language that's in that contract and you want to look at your usage to figure out how do I get an exemption on my users in order to do this? And so a lot of people look at the simple ones and go, okay, I have a bunch of shared devices or kiosks, and all the people on shop floor in my manufacturing facility don't have a PC. They're sharing PCs. So I can just stop there. I can move Those people to F3s or my health care workers. I can move them to F3s because they don't have. The nurses are just sharing desktops at a nursing station. They don't have a dedicated device. I can change those. Well, if you really want to save money, you might have to look at other use scenarios. So like, you might have, for instance, you may be in an industry where you have users that have a dedicated device that assigned that qual or sorry, that would then have to have an E license. But they're very light users of technology. So for instance, they have a laptop because they're a technical person that's going out in trouble troubleshooting. I don't know, problems within the electrical, you know, you know, electricity or whatever. They're a. And so the, the stuff that's on their laptop is really technology that's used to troubleshoot that. They're not creating PowerPoint decks and Word documents. They're using their laptop as an opera, as a, a tool to troubleshoot what's going on out in the environment. Right. And so if you look at that, it's like, okay, in that definition clause, microso, Microsoft has a thing called industry device. Can I fit those users under that industry device clause to decrease the number of licenses or to decrease the number of elicenses then that I have to purchase with F licenses. Now there's a lot that goes into this, but this is what you're trying to do. This is one of the things that I think if you do this correctly, you can decrease your cost, but you have to make sure that you're doing it in a manner to mitigate the risk. And so what do I mean by that is if the vendor has ambiguous licensing terms that, you know, you could read it and go, yep, that device qualifies for an end to device. Or I'm not sure, maybe it doesn't. I could go either way. How do I then work to make sure that there's no ambiguity in there? Because I could look at that and go, I make a call that it's an industry device. I self report. I'm going to report those as industry devices. Microsoft audits you two years later and they declare that they're not industry devices and you're in a heap of hurt. So how do I mitigate that risk? Through language in the contract? For instance, do I try and get them to expand what the industry device clause is so that it's clear? Right. Get rid of the ambiguity. Software companies love ambiguity because it means opportunity to audit and get revenue. Okay. Obviously you have to master negotiation techniques. Some of that is using benchmarks, you know, from, and previous deals for leverage. Right. So what was your previous pricing? Are you able to get benchmarks on pricing that's in market now? I always say caution around benchmarking, right? Because you know, people will tell you that Oracle will negotiate from 0 to 100%. Right? And so let's say you have a, you know, go get a benchmark that says on that purchase you should be able to get a 70% discount. Some Oracle. But there's all kinds of factors that go into Oracle deciding that they're going to give that 70%. And so you should be using it as a guideline, but not as a true, true, true, true benchmark and saying, if I don't get this, I fail. Right. Because for instance, if you look at contract language, change how you license things or find out that you can do things differently, like say that, let's go back to that IBM instance, you know, if they were able to, you know, drop $200,000 out of a, out of a $500,000 renewal by changing the license type, would a benchmark of the pricing even matter if, you know, the IBM decreased the discount in half because they did that? No, because they're still ahead of the game substantially based on making that change. So you really don't want to just focus on the benchmark. You have to understand the whole, the whole view of the contract and what's going on to understand whether a benchmark is even relevant to what you're doing. So if I say that in a simpler manner, if I need to buy a million dollars of software and I'm looking at a benchmark that says I should get a 40 discount and I'm only targeting a 40% discount, let's say I get there and now it cost me 600,000. But if I looked at things and said, okay, actually if I do these things different, the software I need is not a million, it's only, it's only $500,000 and then I only get a 10% discount, I'm at 450 versus 600,000. So that 10% discount is much more valuable than the 40% discount on a bill of materials. That just doesn't make sense. Right. So again, you have to understand there's a lot of nuances to negotiations and lots of techniques and things that you can use. But that's one of the key things is using data to really understand and understand these things. I talked already about timing and negotiations around vendor fiscal cycles. Again, I wouldn't use that as solely the only thing. I actually put that in the slide to basically be contrarian in the marketplace because I don't believe that vendor year ends are the only time that you get the best deals. In fact, I think sometimes it makes it even more difficult. Right. So again, I'll go back to Microsoft, right? Everybody knows Microsoft year ends June. 60% of their deals are in June. There's such a rush for them to do things that what ends up happening is the clock winds out on both them and you. And you know, now all of a sudden you, you didn't get the deal that you wanted, but you got something that you could live with. Well, maybe there's less pressure on them in September or maybe because they're all gone for July and August on vacations and company meetings and things like that, doing a deal in September, maybe you can get a better deal because they're behind on their numbers. They need a deal in order to, you know what I mean? So, so definitely don't just sit there and think that, you know, it's vendor quarter end or vendor year end, I'm going to get my best deal. You know, I don't believe that the benchmarking data suggests that that's the case, at least any significant, significant level. I just think it becomes a default that most people, most people fill. Right. And you have to know your walkaway points are right. And so if this is getting increasingly difficult, particularly as they move to subscriptions, right. So you know, let's go to Broadcom. For instance, in VMware, if I'm on full these subscriptions and I come up for renewal, what is my walk away point? I can't walk away from the licenses because I'll be non compliant when the contract expires. So I need to understand what are my opportunities there. How can I re architect, Can I move stuff to the cloud? You know, what am I going to do and understand what my walkaway points are in a Microsoft negotiation? It may be that, you know, yeah, we're not getting as great of a discount on a deal to stay on E3s but the deal that they're giving us on E5 is not good enough for us to consider. So we're going to walk away. Right. And you know, so, and sometimes that could be very beneficial move in a negotiation, particularly if we played at the right time. Right. So maybe not play it two days before the renewal, but if you do it a couple months, because you've been negotiating for, you know, six months at this point, you may be able to get to the point where it's okay, we're, we're just going to do the E3 deal, send us the paperwork and then they start to panic, right? And then you put the power in your hands. Right. So the next topic is really around optimizing your renewal terms, right. So we talked a little bit about some of these things, but there's definitely some other things, right. So negotiating pricing caps, you know, not to exceeds those sorts of things, those are becoming, I would say, more and more important and more and more difficult to get. Right. So if you look at, let's just go back and pick on Microsoft again. You know, Microsoft is increasing prices. They just announced another 10% price increase on Windows servers when they launch Windows 2025 later, later, you know, next year, right. So they're just going to continue to increase their prices. So getting pricing caps on that stuff becomes important. Important, in fact my opinion is Things like Office 365 are commodity now and the pricing should be going down. Right. But they're not. They continue to increase that price. And so trying to negotiate those things could become very important or they could become a lever, right? So if Microsoft's not doing pricing caps, you know, making that an important thing, having it in your vendor scorecard as one, maybe you can trade that off at the end for a five year deal with longer price certainty instead of a three year deal. Or maybe you can trade that off for a couple extra points of discounting. Right. You definitely want to be looking at SLAs, particularly in SaaS contracts, right. I think a lot of people don't realize that Microsoft SLAs on O365 are broken a lot of the time. And you can actually, you know, if you manage them again, it takes a process and people and stuff like that get money back. Even for us, we, Microsoft and Exchange edits, we put it in and we got, you know, half a month's worth of O365 licensing back because they didn't meet their SLA. So make sure you understand those SLAs, particularly in smaller software vendors negotiate those SLAs depending on what they are, right? Definitely. I've talked a little bit about this, but be clear on the licensing and usage rights. So where they have ambiguity, make sure that you clear up that ambiguity in the licensing. Don't have a conversation with your rep that says, yep, I believe you can do this. But you know, the contract doesn't state it because, you know, the reps gone next year and a new rep comes in. We've seen it, we've seen it happen. A little bit of a, just a, you know, a pro tip here is when you're reading a software contract, by the way, read the software contracts. I don't think a lot of, lot of, a lot of people actually read the contracts, to be honest. They sort of throw them over to legal and let legal deal with that because they tend to be a legal contract, obviously, but you should be reading the contracts to understand the business terms within those contracts. But just a pro tip here is that if, if you see a term that has capital letters, that means you can go to the definition section and see what that definition is. And if it doesn't have a capital letter, there's no definition. And that's where ambiguity comes in. Right. So in that industry device clause, for instance, Microsoft says that they can't be used as a personal computer, but personal computer is not capitalized, so there's no definition. So that means that you can interpret personal computer one way and they can interpret personal computer another way. And that's where problems come in. Right. And then obviously you want flexibility built into, into your agreement. Right? Flexibility to increase entry, increase counts. Maybe if you increase counts to certain points, the discount levels increase, flexibilities to true down. You know, there's all kinds of different flexibility that you could be, you know, you're looking at. But you want to make sure that that's done and that's all done in sort of the terms and conditions of the contract itself. Okay. So the, the next part here is around, you know, ensuring compliance and avoiding penalties. Right. And so, you know, I don't say this because we're in software asset management. I think that a lot of, a lot of the time software asset management teams are focused on different things and, you know, compliance and avoiding penalties maybe a part of what they're doing, but it's just a part of what they're doing. But you do have to have a strong practice here, whether you have a SAM team or not. You should be reviewing your vendors and publishers on a regular basis. For compliance. And you know, not just compliance, but optimization opportunities. Right. So you know, depending on your size, for instance, you know, you might be needing to look at IBM. Like if you're doing PVU licensing, you need to be looking at IBM on a quarterly basis to make sure that your PVU counts are correct, that IMT is reporting or whatever it is. If you're not doing that, you're opening yourself up to compliance and penalties. Right. So you need to look at the vendor and say, how often and frequently do I need to be doing that? That will be driven by the contract. Right. So even if we look at Microsoft, there are parts of Microsoft you should be looking at, monthly parts of Microsoft that maybe you can get away with looking at quarterly, semi, annually or annually. So you need to be looking at. Oh, there's actually parts of Microsoft that you should be looking at daily, almost like with Azure from a cost and compliance perspective. Right. So, you know, making sure that you have that practice in place to look at these things to make sure that you have the right licenses, you have enough licenses, those sorts of things. You also want to prepare for vendor audits proactively, you know, pay attention to who's auditing in the marketplace right now. Right. And then making sure that, you know, you're, you, you're aware of what is going on in your environment with that. So you know, Oracle is auditing everybody on Java. If you haven't got an Oracle Java audit yet, it's coming. You know, IBM's out there doing audits. OpenText said they're doing audits. Micro Focus is still doing audits, you know, so who are the audit happy vendors right now? And make sure, you know, Red Hat's another one that's doing quite a few, Susie, Linux is doing quite a few, you know, so if, if, if you know they're doing that and you have that in your environment, you should be doing a check in, making sure that I know how to get the data that's needed to make a proper license position. And I can do that so that I'm not wasting time and I avoid penalties and compliance because if I can fix it before it becomes a problem, that's the, the best answer. And the vendors like, you know, Oracle now has a program, IBM has their ISAP program where they're basically coming to people saying, go into the program, allow us to audit you without calling it an audit. And we won't put you through audits. We'll just, you know, you go through this program and agree to have one of Our auditing partners build a license position every year and use that as your true up, and then we won't audit you. And, you know, on the surface, those programs may look good. There are definitely instances where it makes sense for you to be in those programs. But you also have to be careful because sometimes the partners that are doing those programs, they're receiving quite a bit of their revenue from those vendors. And so are they really doing, you know, a great job at compliance, license and cost optimization, or are they just looking at compliance? I mean, we've gone into some of these companies where, yeah, they were compliant, but they were overpaying by substantial amounts because there was no optimization. It was just an audit to say, yeah, you were, you're licensed correctly. Right? So then obviously, you know, the main goal that everybody wants to get is ROI out of their software contracts. Right? So how do I get a good strong roi? Right. Obviously, if you can align the software to business goals, that is, you know, a big roi. Avoiding shelfware is the biggest cost ROI and the biggest reason driver of shelfware is organizations trying to get discounts from vendors in exchange to buying stuff that they don't need. I don't know how many deals that I've seen where, you know, buy 20,000 of these, we'll give you for this price. And you're like, yeah, we might need 20,000 of those in 18 months. And 18 months turns into three years, and they've given the vendor millions of dollars that they didn't need. Right? And so that's where understanding your roadmaps and things like that and planning for the crap that just happens. Right. Is it becomes so important. And then also make sure you're reallocating underutilized licenses to other things. Right. Because what I mean here, by the way, this is an important concept that I don't think most organizations do is a lot of the times licenses are applied to a use case when they're bought and they're just left like that, or they're running a license tool that does a reconciliation and says you're compliant, but they're not looking to see if your licenses are underutilized. You know. So, for instance, here's a great example. We're finding a lot of organizations can save money by moving away from data center licenses on Windows servers, right. Microsoft recently did OSE licensing so I can license since the vm, and because of, you know, light virtualization, they bought Data center for unlimited virtualization and server mobility and all that stuff that they avoided. But, you know, now all Of a sudden they're overpaying because of these rules or you know, they have migrated to the cloud, right? So they had data center. So here's a real example of what happens. Let's just take a simple example. I'm. I have a Windows server host. It has 20 VMs on it, 16 cores. So I have 16 cores of data center. I can run those 20 VMs. I decide I don't want to have that server in my own environment, I move it to Azure and I got these Azure hybrid benefits where I don't pay for the Windows server license. Well, that 16 data center cores only allows for two of those VMs to the 20 to be licensed. So now I'm non compliant by 18 if I just move them because the license rules change and what we see a lot of people do is they'll just carry the sample on those Windows data center licenses that just moved over to Azure and then buy for the other 18 standard. Well that is a waste because standard covers those VMS as well for a much more cost effective license. So you really want to be making sure you understand these things and understand how to move around and then you definitely need to be planning for the future because things happen, right? Mergers, divestitures, those sorts of things. So if you're an organization where you're growth strategy is to acquire companies is how's your contract work? Are you allowed just to bring those companies in? Do they the contracts that you know, if you acquire somebody that's a level AEA versus a level D, you know, you being in a level D, can you bring them in? What's the timeframe around that? If you divest people, what's the timeframes around that? Is it just on anniversary date, can it be done? You know, the day that we divest, you know, all of those sorts of things become important depending on your business, right? So maybe you need to look at the M and A clauses in your contracts, right? We want to make sure that the renewal allows for scalability, right. So let's take Azure for instance because we're seeing huge growth in Azure spend. Five years ago it was lucky if somebody was spending a couple hundred thousand dollars a year. Now we're seeing hundreds of millions of dollars a year. So did they have terms that when they went from 100,000 a year and they got a few points discount to 100 million that they're discount skilled, Right. So you want to be thinking through those sorts of things, right? You want to negotiate options for contract termination and things like that. Right. So can I terminate my contract if I need to, for whatever reason and resign? Can I, you know, move product out? Right. If we're no longer using product, am I forced to pay for it for the, the length of the contract? Right. So, and that, that one there is a big one, right? What Microsoft's doing in a lot of cases, we'll give you a discount on this and you buy 10,000. We're not going to let you, you know, decrease it below 10,000 over the term. So even if you decide a year from now that you're not going to use the product, too bad, continue to pay for it. So you want to make sure that there's flexibility in the contract for the future. And then obviously, as you're going through this process with your vendors, you want to develop a continuous improvement strategy. Right. So what did I learn in that renewal that I can use in my next renewal, whether it's a renewed IBM and I'm going to use that in Microsoft? And that could be things like, like, you know, we didn't realize that this team was so important in the overall strategy and the roadmap of where we're going. So in future renewals, we need to make sure that we go and talk to these internal stakeholders. It could be that, you know, we didn't have a conversation with finance to understand the, the impact of, you know, moving from a capital expenditure to an operational expenditure. We didn't realize the, we didn't realize how strong legal could be in negotiating clauses that would help us get flexibility because we have some strong in house counsel. Right. So you want to be making sure that you're documenting those things and so that you leverage those in your future, your future agreements. Right. And then obviously, you know, make sure that you're engaging your stakeholders for regular feedback so that you can collect all that data and continue to use that to get better at these things. Right. And then obviously there's definitely some tools and resources, Right. So for instance, you should be using your SAM tools to understand your utilization and things like that, but you also want to be making sure that you have checklists going into these things. So one of the things that I always suggest is that you have a list of, here's all the things that we need, understand your importance. And then, you know, when did we get those, when did we last talk to Microsoft or IBM or Oracle about that? You know, so I have all the contractual terms, all the business things that we require and things like that. And then, you know, try and start to implement some automated processes to. To monitor and manage this. And so I think that is kind of it. I didn't see. I didn't see. I think I had a couple questions that I did answer. So I don't think I. I don't think if anybody wants to ask any other questions, I'll give about. Take a couple of minutes here. But otherwise, you know, thank you for attending. And I just wanted to kind of recap, you know, when it comes to these contracts, no matter how big, start early. And early. Early is way before you think is early, probably. You need to make sure that your teams are aligned and that you're talking to all the key stakeholders and so that you can negotiate smartly. You want to make sure that you're focused not just on being compliant, but that you're getting maximum value. And, you know, if you need help with these contract renewals, please follow up. We're happy to have a conversation and even just, you know, share what we see in the marketplace that can help you right up to, you know, assisting you with these renewals. So. So thank you very much, everyone. I appreciate you spending this time with us today, and hopefully you found this content to be helpful.