Gartner Information Technology Research

Microsoft Azure Services: A Guide to Optimizing Large Negotiated Deals

Published: 20 March 2020

ID: G00466912

Analyst(s): Dolores Ianni, Marie Sienkowski, David Wright, Stephen White

Summary

To negotiate discounts for Azure, Microsoft customers must commit to a minimum annual spend of $500,000 per year. Sourcing, procurement and vendor management leaders must consider alternate approaches to negotiating commitments and consumption to optimize large Azure contract negotiations.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Build Your Negotiation Strategy Based on Strategic Significance and Scope of Your Spend, Not Just Its Current Size
    • Lower Costs by Negotiating a Tiered Incentive Approach, Using Economies of Scale Consumption Thresholds
    • Only Some Online Services and SLA Terms and Conditions Are Negotiable
  • Leverage a Multiyear Option and Grace Periods to Avoid Loss of Annual Commitments
    • Use the New MACC for a 12-Month Grace Period and the Use of Marketplace Purchases
    • Negotiate a Renewal Discount Term to Mitigate Future Cost Increases
  • Negotiate Unified Support Economies of Scale to Drive Cost Down Proportionately With Increased Consumption

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