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Cloud Optics Proprietary & Confidential
Cloud Optics Proprietary & Confidential
Planning & Negotiating with the Mega Vendors
Discover a powerful optimisation, methodology that will significantly c. 39% reduce your mega vendor spend.
Cloud Optics Proprietary & Confidential
Introduction to the presenter
▪ Gareth has over 15 years’ industry experience with software licensing.
▪ During his career Gareth has helped clients optimize spend, develop a future strategy and take control over high profile vendor negotiations, including one of the largest Gov contracts.
▪ Successfully managed UK Wide Government EWA Contracts (2009 – 2011)
▪ More recently, Gareth has developed a proven methodology for cost Optimisation which has successfully delivered huge success across EMEA wide clients.
▪ Gareth developed and grew largest LSPs practice for:
1. Microsoft Government / Small and Medium Enterprises (SME) Consulting between 2014 and 2018 across EMEA
2. Cloud Commercial Optimisation in 2016
3. Responsible for the largest LSPs License Consulting UK, Ireland & Nordics between 2016 and 2018
Gareth Redshaw, Director of Public Sector, Microsoft & Cloud Consulting
Cloud Optics Proprietary & Confidential Cloud Optics Proprietary & Confidential
Agenda - Outline
▪ Introduction
▪ CO Overview
▪ Market Update Microsoft’s Cloud Business Today Factors Impacting Commercial Negotiations
▪ Large Government Department Project, Exec Summary (multi- vendors) Briefing / Objectives Focus On MSFT: Commercial Impact Methodology and key findings/hurdles along the way Output examples
▪ Summary and next steps
Cloud Optics Proprietary & Confidential Cloud Optics Proprietary & Confidential
CO Overview
Cloud Optics Proprietary & Confidential
The Story So Far…
Intelligent Benchmarking
Audit Defence
Cloud Cost Optimisation
Negotiation Support
Contract Management
Total Savings Delivered
£302m
Savings Delivered39%
Tax Savings Delivered
£37m
Seats Negotiated
1.36m
EMEA, APAC, Americas, Africa
139 Countries
Cloud
Cloud Optics Proprietary & Confidential
What Our Clients Say…
Global Telecoms Company150k Seats
Contract Value $63m
Big 4 Accounting Firm190k Seats
Contract Value $180m
Large Global Bank 300k Seats
Contract Value $90m
“Cloud Optics have led twoconsulting engagements, both veryhigh profile and large dollar value. Toboth engagements Cloud Optics havedelivered significant value. We wouldrecommend Cloud Optics to anycustomer that is looking to obtainboth strategic as well as tacticalguidance in order to optimise theirlicensing agreements…”
“Cloud Optics have led a Global dealwith one of our main Softwarevendors. They provided exceptionalleadership with strategic technicaland financial solutions to maximizeprofits while decreasing operationalexpenses. They have managed togenerate significant savings on taxesand exchange rates. We would highlyrecommend Cloud Optics...”
“Cloud Optics have the ability toquickly assess and understandcomplex situations andrequirements, coupled with theirability to clearly communicate at alllevels, we would highly recommendthem to any company. We stronglybelieve they are a strong asset to anycompany looking for SoftwareLicensing Advisory Services andNegotiation Support…”
Cloud Optics Proprietary & Confidential
Tier 1 Vendor Focus: Single Point & Managed offeringsO
ur
Focu
s
o o o o o o o
Full Licensing Estate Analysis
Future Requirement & Optimised Current State
Negotiation & Benchmarking Support
Licensing, Product & Contract optimisation
Independent of software sales or rebates
Best in class savings Proven and unique methodology
▪ Cloud services legal impact & locking
▪ Deep Server estate analysis
▪ Global Benchmark contract database
▪ Contract & Global pricing optimisation
▪ Future needs & SA dependency assessment
▪ Deep contract analysis and review
▪ Review agreement license rights
▪ Advice on infrastructure & cloud optimisation
▪ Alignment of Licensing to current strategy
▪ Subject matter negotiation advice
▪ True user profile to license alignment
▪ Review user usage & behaviour changes
▪ Future requirement & growth assessment
▪ Product & usage dependencies
▪ Optimisation based re-configurations
▪ Target the high value portfolio analysis
▪ ILMT configuration optimisation
▪ Yearly spend trend analysis
▪ PVU and sub-capacity assessment
▪ Contract and negotiation optimisation
▪ Define & manage renewal process
▪ Analysis of current entitlement and contracts
▪ Usage entitlement v’s demand
▪ Global pricing and contract optimisation
▪ Negotiation advise and support
▪ IaaS/PaaS rightsizing
▪ O-365 forensic profiling
▪ Trend analysis adjustment
▪ Modernisation and waste management
▪ Regional price benefits
▪ Utilisation vs Entitlement
Cloud
Cloud Optics Proprietary & Confidential Cloud Optics Proprietary & Confidential
Vendor Update: ▪ Microsoft Market Position ▪ Go-To-Market Trends
Cloud Optics Proprietary & Confidential
Microsoft’s Cloud Growth
Cloud Optics Proprietary & Confidential
Microsoft has seen Tremendous Growth in Cloud Revenue
▪ Aggressive growth - 60% YoY (‘17-18)*
▪ MSFT – 15.5% (was 12.7%)
▪ AWS – 47.8% (was 49.4%)
▪ Utilize dominant markets (e.g. O365) to gain share for growth in cloud markets
▪ Higher IaaS revenue past 12 months ($5B versus $3B)
▪ IaaS % of total cloud revenue:▪ 25% MSFT ▪ 60% of AWS
▪ Azure growth 68.0% & Dynamics 48% -Q4, FY19
▪ Focus on premium cloud growth (Dynamics365 / Azure) by multi-year prepaid commitments driving adoption and revenue growth - $10M+ over three years
▪ Incentivizing growth through ECIF funding & AHUB
▪ Up by 21.0% vs 2018 (continuous growth)
▪ Still lower than on-premise
▪ Discounting subject to smaller bandwidth by factoring in COGS (43.0% for cloud versus 15.0% on-premise)
▪ Still customers do not “fully” consume cloud services so actual COGS should be lower
▪ Second generation cloud customers
▪ Clients no longer only contracting cloud, but are also now consuming
▪ Focus on public sector as cloud consumption is belowexpectations set three years ago
Market Share - IaaS Growth Clients Profitability
Sources: Gartner July 2019, ZDNet, Aug 2019, MSFT Earning reports (Q4, FY`19 & Q1, FY’20)
Cloud Optics Proprietary & Confidential
“Not Contracting Cloud is not an Option” according to Microsoft
Strategic growth areas for Microsoft▪ Azure▪ Dynamics365 (incl. PowerApps)▪ Cloud E5 Suites (e.g. EM&SS E5)▪ Cloud Telecom offering
Clients who are already consuming cloud have less leverage than new cloud customers unless willing to adopt additional cloud services (e.g. Office365 E5, Azure) in order to maintain at least current discount levels
Public Sector Focus on growth / Market share▪ Azure growth measured against existing run rate▪ Office365 growth through premium services▪ Overall revenue commitment versus reduced
flexibility
Microsoft is more confident in negotiations –letting negotiations slip to the last minute by making clients worried about “day one” after contract expiration (e.g. service interruption)
For on-premise customers or customers who have licensed cloud but not deployed … … costs will increase.
DTA pricing favours Cloud only and on premise can expect a sizeable cost increase (vs CTA)
Licensing strategy support / aligns with “pushing” clients into cloud i.e. bespoke use rights (e.g. Ext. Security Updates for SQL Server 2008)
Cloud Optics Proprietary & Confidential
Microsoft’s Typical Sales Tactics
1. Side tracking client’s requirements
2. Only offer based on:
▪ Ambitious Azure prepaid commitment
▪ Dynamics365 prepaid commitment (1,000+ Seats)
▪ Richest cloud bundles (E5)
3. Stalling
4. Limiting contractual concessions on “OST” (*)
5. Discount reduction ambition if no growth
6. Limiting flexibility during term of agreement
7. Commit to deploy in return for lower pricing
8. Multi-level selling (e.g. EBC)
(*) Online Services Terms
Cloud Optics Proprietary & Confidential
Commercial Optimisation Journey - Using A Recent Government Project As Example
14Department for xxxxxxxxxx
Technology
Asset Management
£
1 Establish Control Point 2 Optimised BOM 3 Negotiated BAFO
Cu
rrent
Baselin
e
Com
plia
nce
Issu
es
&G
row
th
Ve
nd
or
Price
Incre
ase
s
Dem
and
Incre
ases
Or
Gro
wth
Ne
wTe
ch
no
logy
De
ma
nd
Re
du
ctio
ns
Use
r L
ice
nsin
gA
ssig
nm
en
t
Fa
vo
ura
ble
Co
ntr
act
Imp
rove
dL
ice
nse
Met
rics
Ne
go
tiat
ed D
isco
un
ts
Co
nce
ssio
ns / A
me
nd
me
nts
Re
ne
wa
l (O
utg
oin
g P
rice
s)
Co
ntr
ol P
oin
t R
en
ew
al (A
s-i
s)
Op
tim
ise
d B
OM
BA
FO
Microsoft Methodology: Optimisation Journey
Phase 1 Report Phase 2 Report
Cloud
Cloud Optics Proprietary & Confidential
Methodology Adopted
16Department for xxxxxxxxxx
Technology
Asset Management
PHASE 1Situational Awareness & Strategy
Validate strategy
• Control Option Approval
Requirement GAP Review
• Product Terms / SA Dependency / Software Products
Final BAFO Review
▪ Executive Review & Impact Assessment
PHASE 2 / 3Commercial & Contractual Solution
BOM Optimisation:
▪ Products licensing metrics
▪ User profiling
▪ Agreements / Frameworks (CTA/DTA
Vendor & Contract Reseller Tender ▪ Agreement /
Framework Review
▪ Concessions
▪ Price Books & Rebates
▪ Market Trends
▪ Future Protection
Cloud & User Profiling
Current Estate Analysis
Deployment Planning
Technology & Strategy Workshops
Entitlement Analysis
Server Install Base
Azure ConsumptionAssessment
Government Microsoft MethodologyC
urr
ent
Stat
eFu
ture
Sta
te
Co
st
Op
tim
isat
ion
BA
U /
P
roje
ct
Han
do
ver
Cloud Optics Proprietary & Confidential
Phase 1: Typical outputs
Cloud Optics Proprietary & Confidential
Phase 2: Typical outputs
Cloud Optics Proprietary & Confidential
Output from Workshops / Strategy Discussions – Azure Forecast
▪ Sample view of UK Government CO Assisted Azure Forecast
Cloud Optics Proprietary & Confidential
Example From Recent Government Project
TODAY
Cu
rren
t C
on
tract
Sp
en
d
(3 Y
ears
)
£ 34.7 M
Op
tim
ised
B
.O.M
.
£ 14.4 M
£ 1 M
Phase 1 : Renewal w/New Demands Phase 2 : Optimised BOM
Price
In
cre
ase
s
Ne
w T
ech
no
log
y
Sh
ort
falls
£1 M
£ 2.5M
£ 6.3M
Gro
wth
REVIEWED &
APPROVED
£ 32.3 M
Targ
et
B.O
.M
£ 5.8 M
Re
du
ce
/ R
em
ove
Un
ne
ed
ed L
ice
nse
’s
Fa
vo
ura
ble
Co
ntr
act
Imp
rove
Lic
en
se
Me
tric
s
Total Savings
£ 48 M
Ren
ew
al C
ost
(Contr
ol P
oin
t)
£62.5 M £107 M £59.9 M £54 M
Total Increases
£ 44.5M
£
Ne
go
tia
ted T
erm
s
Phase 3 : Negotiation Support
Cloud Optics Proprietary & Confidential
Learning Points from this engagement?
Ensure all product owners are engaged in the process
Include “ALL” Cloud spend
Undefined product owners
Time: Plan 6 to 12 months ahead of renewal
Consumption ‘vs’ need not challenged
Develop a realistic Cloud budget
Key
Learnings
Be clear AND be open minded
Product owners require help in defining ‘future’ plan
Challenges Overcome
Remediation’s
Cloud Optics Proprietary & Confidential
Summary and next steps
Cloud Optics Proprietary & Confidential Cloud Optics Proprietary & Confidential
- Summary –Three Key Take Away’s From Today
1. Mega Vendor cloud business is the driving force during ALL negotiation’s
▪ Vendors may try to isolate offers favouring cloud only spend
2. Leverage & Control multi-stakeholder selling strategy to your advantage
3. Focus is no longer on just selling cloud > cloud consumption is key
Cloud Optics Proprietary & Confidential
Why Cloud Optics ?
ValidationBenchmarking Vendor Offer
IndependentFunded Exclusively By Clients
Methodology Proven Across All Engagements
PersonnelEx-Vendor Negotiation Team
Negotiation Expertise Every Contract Pushed to Maximum Commercial
Impact
Focused Specialism Mega Vendor Only Focus.
2nd Gen Cloud ExpertiseExperienced At Negotiating Contracts With
Limited “Walk-Away” Position
Commercial Focus Pricing and Agreement Optimisation
BOM Optimisation Reduce Contract Cost Pre-Vendor Negotiation
01
02
03
04
0506
07
0809
39%Savings
Cloud Optics Proprietary & Confidential Cloud Optics Proprietary & Confidential
Questi n’sAny
Cloud Optics Proprietary & Confidential Cloud Optics Proprietary & Confidential
Cloud Optics – Contact Details
Rachel WhiteheadCommercial Manager
M: +44 7738 [email protected]
Gareth RedshawDir. MSFT & Cloud Optimisation
M: +44 7853 834 [email protected]