Pressure to renew: “On-Time Renewal”As a large organization Microsoft’s internal workings are continuously adapted, innovated, and sometimes, changed back. When we still worked at Microsoft some of our bonuses and targets were connected to the ‘on-time renewal rate’; this metric was an important tracking tool for senior management. They then dropped this metric after a few years, in a move to reduce the pressure to finalize renewals on time, but it has been reinstated since April 2022
In this fifth blog in our series we share our insights into the pressure Microsoft puts on clients to renew their contracts. As our job is to support our customers in their negotiations with Microsoft, we want to share some of our major learning from dealing with Microsoft in 2022. We believe in sharing our expertise so you can strengthen your position.
What is the impact?
The move back to a focus on on-time renewal rates not only affects Microsoft customers, but also impacts the Microsoft partner landscape. Microsoft puts pressure on clients to sign a new agreement before the old one expires, or else they will reduce the discount. Recently we have seen more and more examples of this amongst our clients.
Microsoft partners are also being incentivized to make on-time renewals happen, which in turn means they have to put pressure on you.
Each business case is different. For some clients not renewing on time will have a big impact, while for others it can have no impact at all. Especially for companies who are already using a lot of cloud services it can have a big impact, because Microsoft is already inclined to not grant you good discounts during renewal. We just want you to be aware of potential pressure coming from Microsoft and/or partners. You have to decide what level of risk you are willing to take.
If you are unsure what your position is, we are here to help. We can help you analyze your current situation and plan for the future. Having said that, we don’t think the impact is too high for our clients. The biggest impact will be for Microsoft and Microsoft LSPs.
Watch our YouTube video for more context
Prefer to watch a video instead? In the YouTube video below Floris and Erik discuss the pressure clients experience to renew on time. Prepare yourself for any upcoming contract renewals or mid-term new business negotiation in Microsoft’s Fiscal Year 2023.
Are you looking for an unbiased and confidential supporting partner? Drop us a message to see how we can help you and your organization meet your goals and targets.
For even more information
If you want to learn even more, please visit our YouTube channel and our LinkedIn company page. Subscribe to stay up to date. We regularly post free and honest publicly available information and video’s. Let us help you be as prepared as possible for your next round of purchases, contract renewals or other (mid-term) negotiations with Microsoft.