Renewal - Pressure to renew on time
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
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 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 already use 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. Don’t let Microsoft or your partner dictate the terms! Work to a timeline that works for you.
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.