Microsoft licensing success: How a retail giant cut costs with LicenseQ
Snapshot
Industry: Retail
Service used: Enterprise Agreement Renewal + M365/Azure Optimization Services + D365 Optimization Service
Results
- Total savings of 10% on Enterprise Agreement total spend.
- Reduction of Azure spend by roughly 50% through rightsizing, Azure Hybrid Benefits and migration of D365 to SaaS.
- Optional extension of the Enterprise Agreement with additional two years, with a Not To Exceed (NTE) price.
Background
Our client is a prominent retail company with a significant global footprint. They operate approximately 800 stores and 2,500 shop-in-shops across more than 30 countries throughout Europe, Asia, the Middle East and the Americas. Generating roughly 1.5 billion USD in revenue, the company has a centralized IT and Procurement department. Its Microsoft contract represents the largest portion of its IT software expenditure.
Our client’s challenge was to renegotiate this crucial contract under the pressure of maintaining a positive relationship with Microsoft, coupled with a high level of C-level engagement.
Challenges
“We had less than two months to navigate through the renewal and we felt our existing partners would not deliver the desired result. We looked for a partner with in-depth knowledge of Microsoft licensing to guide us through the complex licensing models”
– Senior Procurement Officer.
Our client was approaching the renewal deadline for its Enterprise Agreement Subscription (EAS), which included comprehensive Microsoft 365 (M365) E5 licenses, Azure and Server Infrastructure licenses.
Microsoft’s significant price increases over the last three years posed a further substantial impact on the financial budget allocated for the renewal. The contract also included a five-year Dynamics 365 (D365) Enrollment with a restrictive non-reduction clause. This challenged our client’s flexibility and financial efficiency.
Solution
LicenseQ conducted on a rapid yet comprehensive review and analysis phase, completing it within approximately five weeks. This phase included reviewing the exit position, analyzing the contractual standpoint and conducting profiling workshops. We also evaluated user cloud consumption and server infrastructure.
“The fact-finding assessment conducted by LicenseQ of our Microsoft licensing, contracting and global pricing was invaluable during the negotiation” – Head of Indirect Procurement.
Thanks to our thorough preparation and LicenseQ’s negotiation expertise, the subsequent negotiations took roughly two weeks. Culminating in a signed contract package between the Christmas and New Year’s Eve holidays.
Our strategic advice led to the termination of the D365 Enrollment and the renegotiation of terms for the entire Microsoft stack. This included D365, M365 and Azure, to fortify the client’s negotiation position.
Client Testimonial
The Head of Indirect Procurement at the client company expressed unprecedented satisfaction with the services provided by stating:
“I have never seen an advisory that is so well-educated about all the ins and outs of Microsoft licensing and contracting. We could not have made the right choices without LicenseQ.”
Results
Our approach facilitated:
- A net-cost avoidance of 15% in D365 expenditure through optimization and in-depth workshops.
- A detailed business case that outlined a strategy to reduce Azure spending by about 50% through rightsizing, leveraging Azure Hybrid Benefits, and migrating on-premises D365 to its cloud equivalent.
- Despite Microsoft price increases, M365 spend locked in at the same rate through optimization and the negotiation of fit-for-purpose user profiles, ensuring subscription alignment with actual requirements.
- An optional two-year extension with an acceptable price increase, free from lock-in or mandatory conditions.
Key value
This strategic negotiation and renewal process resulted in an overall contract spend reduction of approximately 10%, significantly improving the contractual terms and conditions for the upcoming three-year term for both M365 and D365. This achievement underscores the importance of thorough preparation, strategic negotiation and the expertise brought by LicenseQ.
“Thanks to LicenseQ’s knowledge of the internal organization of Microsoft, we were able to make strategic choices in the negotiation which led to an amazing end result” – Senior Procurement Officer.
Reach out to our licensing experts today with your specific questions or business case.
