Gartner Research

Microsoft Azure Services: A Guide to Optimizing Cost in Large Deals

Published: 16 October 2017

ID: G00340296

Analyst(s): Ted Chamberlin , Dolores Ianni

Summary

Microsoft has shifted negotiating discounts for Azure deals primarily to those with significant spend of approximately $500,000 per year or more. Sourcing and vendor management leaders must consider alternate approaches to commitments and consumption to achieve optimal contract results.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Build Your Negotiation Strategy Based on the Scope of Spend and Not Just Size
    • Negotiations With Microsoft Result in Lower Discounts Than in Previous Years
    • Top Leverage Areas in Microsoft Azure Deals
    • Drive Deeper Discounts and/or Credits With a Scaled Discount Approach, Using Consumption Thresholds
    • Only a Limited Number of Online Services and SLA Terms and Conditions Are Negotiable
  • Use the Three-Year Pay-Up-Front Option to Avoid Loss of Annual Commitments When Cost-Effective and You Are Certain to Exhaust the Funds by End of Year 3
    • Reduce "Use-It-or-Lose-It" Financial Risk With a Three-Year Commitment
  • Ensure All Discounts Apply to Overages, and Negotiate Discounts for at Least One Renewal Term
    • If You Negotiate Discounts of 10% or More on Azure, Negotiate a Price Cap on Renewal Terms to Mitigate Future Cost Increases

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