The Microsoft Office 365 Value Gap

Hey there. Mike Austin, CEO of Metrix Data 360. In today's video, I'm going to show you how to create a value gap and how to use that value gap in your negotiations against Microsoft in order to drive yourself to the best deal possible. So just a disclaimer before we get started. The team around here says that my handwriting is sort of like a doctor's. So don't worry if you can't read what I put on the paper over here. I'm sure editing will take care of that. Okay, so the first thing I'm going to do is I'm going to take a look and I'm going to make this value gap. And so how do we actually create the value gap? And so I'm going to take and create an axis here, and on this axis, it's value. And down here is the number of users. Users could be changed with devices or whatnot. Okay, so the way that software publishers work. And I'm going to use. Let's just use an old product. Let's use Microsoft Office as an example here. Okay, so if I take Microsoft Office, there is a user base that is fairly narrow that sees a ton of value out of Office. So these will be users that are creating content all day. They're doing all kinds of pivot tables and fancy work inside of Excel, doing all kinds of reporting. This might be things like financial analyst. So there might be a financial analyst here. It could be, I don't know, some product supply chain analysis person. There's lots of people that kind of do this, but there's not. There's not a whole ton in the organization where they're using it every day and using all the features or most of the features. What you're going to find then next is that there's a number of users, probably a little bit more. They get a fairly decent amount of value out of it. But they create content, but they're not using all the features. So a good example in here might be, for instance, marketing people. So marketing people create a lot of product brochures. They'll create PowerPoint decks that sales teams use and things like that. So they create quite a bit of content, but they're not using all the features. So these people create content, but not all features. Okay. And then next we get a group that's probably a little wider still that creates some content, but, you know, it mostly consumes. Okay, so these are probably people like salespeople. They take PowerPoint decks from marketing. They might change them around a Little bit. They might write a proposal, but they're not using, you know, know, not creating a lot of content. It's mostly editing, maybe creating a little bit, but nothing too, too complicated. So here they create some, but mostly consume. Okay, now where the vast majority of your users go in is in this group out here where all they're doing is consuming content. So they don't actually use the content, they're consuming the content or, sorry, they don't actually write content, they're consuming it. Right. So they might just open up a Word document because it was sent to them, but they don't, they don't do anything other than read it. They might open an Excel file, maybe look at some numbers in it, but they're not editing it. They may look at a PowerPoint deck. Now if we look at a real world example here in a hospital in this category here, the users that are consuming using all the features, those might be again, business analysts, financial analysts, maybe even researchers, people that are researching diseases and stuff like that, using the full features of Office. Okay, so then you're getting into our second category, which are people that create a fair bit of content, but maybe don't use all the advanced features. So again, in a hospital, you're probably still looking at things like your marketing department, it might be your billing department, maybe hr, maybe some IT people that are creating policies and things like that. And so again, you still got a number of users there. But then we're going to get into the create some, but mostly consume. So again, in a hospital environment, maybe salespeople, it could be purchasing people, you know, people that use Office, maybe added a Word document. So I got to send a purchase order or I'm going to write an RFP or something like that. But again, not using a lot of the features. And most of the times they're just using it to open up an Excel file or a price sheet or something that's been sent to them. And so then you get into where most of the users in that environment are, which is your healthcare workers themselves, so your doctors, your nurses. It would even include janitorial staff and security staff in the hospitals where they actually don't even do much in Word, if they do anything or in Office itself, they're really just looking to open a document and read what's in it. They're not actually even editing it. And that's where the vast majority of the user base in a hospital works. When talking about Office specifically, Microsoft prices the product about here. So for this user here, those Power Users, it's probably not expensive enough. They would be actually willing to pay more for this set of users. In here, it's probably a little bit more expensive than they want to pay. But, you know, you might try and negotiate a few points, discount and things like that. But out here, there's really, you know, they're really overpaying because they're not using many of the features. So if we sort of look at it like this, all this area in here, that's our value gap. So is Microsoft going to give you, or is any software publisher going to give you all of that? If we actually figured out the number of users and sort of actually calculated that, are they going to give you all that back? A negotiation? No. But if you actually are working far enough in advance with them and sort of having these sort of conversations with them, you can actually use this to your advantage to really push the vendor in the negotiation. So one of the things I get asked is, how do I use this within my organization itself? So one of the things is you can. You want to go out and you want to get enough data to be believable and that the results of this are actually something that you could defend. So you could actually go out and do a full analysis of your user base. Probably not the best use of your time. But you can actually look, if I go back to that hospital example here, we could look and say, well, we have 40,000 doctors and nurses and medical staff and, you know, security. So you can look at roles and sort of see how many people you have in the roles and then fit the roles within that. So you might say, okay, well, here, you know, our sales team, you know, it's this. Our IT HR teams are this number of users, and then the rest are that. So if we know we have 50,000 doctors and nurses, 20,000 sort of corporate employees, we can kind of put those in buckets. And so you want it to be believable with some data. And there are some things that you can do. For instance, with Office365, you can actually look at usage stats and things like that that are available in the Office365 portal to start to create and paint this picture. Now, this is not a strategy that you can deploy three or four weeks before a negotiation is up for renewal or contracts up for renewal. You're going to want to be working on this nine to 12 months beforehand and communicating this to the vendor throughout. But it is an effective strategy that can be leveraged in those negotiations. So I'm Mike Austin CEO of Metrix Data360. I hope you enjoyed how to Create a Value Gap. Until next time, have a great day.