Tag: pricing

How to Navigate the Huge Price Uplift of Microsoft 365 Copilot: Software Contract Negotiation Tips for Enterprises | Blog

Microsoft’s recent rollout of its Artificial Intelligence (AI)-enabled productivity tool Microsoft 365 Copilot for enterprise customers has generated a lot of buzz. Its steep US$30 monthly charge per user has ignited debate about how its cost will impact IT spend, the Return on Investment (ROI), and the expected benefits for employees. Continue reading for recommendations on successful software contract negotiation for Microsoft 365 Copilot. The webinar, Adapting to Change: Boost Value in Outsourcing and Software Contracts When Uncertainty Persists, also explores how enterprises can drive more savings from their outsourcing contracts.

Microsoft 365 Copilot is a productivity enhancement tool backed by generative AI and integrates with the Office 365 Suite (Word, PowerPoint, Excel, Outlook, Teams, etc.). It aims to transform employees’ daily tasks by unlocking creativity, boosting productivity, and enhancing skills.

By leveraging Large Language Models (LLMs) content in Microsoft Graph (emails, chats, attachments, documents, etc.) to generate contextualized human-like responses, and touted by Microsoft as the “most powerful productivity tool on the planet,” the tool boasts numerous applications and use cases.

How can enterprises buy Copilot?

Copilot is available for Microsoft 365 E3, E5, Business Standard, and Business Premium customers. It is an add-on license on top of these M365 editions and isn’t available as part of any bundle.

Price Surge for Copilot Adoption

Microsoft 365 Copilot comes with a hefty price tag of US$30 per user per month. The following table summarizes the additional costs that enterprises are looking at when considering buying Microsoft 365 Copilot licenses. (Based on list prices.)

M365 Bundle M365 List price (per user per month) Cost uplift
M365 E3 US$36 83%
M365 E5 US$57 52%
M365 Business Standard US$12.50 240%
M365 Business Premium US$22 136%

This does not paint a very attractive picture for IT and procurement departments as the cost increase can be greater than a company’s current spend on the M365 suite.

Adding to the complexity, Microsoft has yet to reveal how they will apply the contracted volume discount on the Copilot licenses an enterprise purchases.

Software contract negotiation tips

Everest Group helps clients across geographies and industries with software contract negotiation techniques to optimize their software spend. Almost all our enterprise customers have large deals with Microsoft. We help them navigate price increases at contract renewal, negotiate best-in-class discounts, and optimize key contractual terms like price protection clauses, etc.

Below are some measures enterprises can take to mitigate this significant cost increase and assure a robust ROI when adopting Microsoft 365 Copilot in their organizations:

  • Optimize spend for the overall Microsoft portfolio of an enterprise: Microsoft’s move to limit the eligibility to purchase Copilot solely to customers with M365 E3 and E5 subscriptions subtly pushes other enterprise customers to upgrade to these options, thus increasing their spend with Microsoft.

Even for existing M365 E3 customers (many of whom settled for this lower-cost option compared to E5 licenses), the total cost of M365 E3 plus Copilot ($66/user/month) is more than the M365 E5 license ($57/user/month). As a result, justifying investing in this new tool is financially difficult. Enterprises looking to buy Copilot licenses should ask Microsoft to improve their overall cost to make it easier to seek budget approvals and drive Copilot adoption

  • Optimize Copilot licenses: While Copilot benefits look promising, the actual impact is yet to be assessed. Given the different nature of work of employees across an organization, the tool might be more effective for some user groups. Therefore, enterprises should conduct a thorough persona profiling to determine the correct number of users who should be given access to this tool to maximize ROI. This step will help ensure enterprises get the most out of the M365 Copilot licenses required
  • Seek training investment: Given its wide range of applications and methods of use, Copilot will require training and support for employees to uncover the true potential of this tool. Enterprises should ask Microsoft to provide complementary training and workshops to increase M365 Copilot adoption

Microsoft Copilot is undoubtedly a futuristic tool aimed at streamlining daily operations and helping employees focus on tasks that add real value. Nonetheless, understanding its licensing, pricing strategy, and the value it can generate for an enterprise is imperative.

To discuss software contract negotiation and for a detailed analysis of your software contracts, please reach out to [email protected]. Explore more about Everest Group’s contract benchmarking offerings.

To learn current pricing trends and how enterprises can find greater value and lower costs in their outsourcing, cloud, and SaaS contracts in the new year, Adapting to Change: Boost Value in Outsourcing and Software Contracts When Uncertainty Persists.

Choosing the Right ServiceNow Model for your Organization: Comparing Shared and Dedicated Instances | Blog

Deciding between ServiceNow’s dedicated and shared instances can be challenging for organizations. By comparing the options against seven key parameters ranging from organizational size and business process complexity to the cost of ownership and customization options, enterprises can make a well-informed decision. Continue reading to learn more. 

For assistance with benchmarking the ServiceNow implementation and managed services effort and price, contact us at [email protected].

In recent years, ServiceNow has significantly expanded its portfolio to move beyond IT Service Management (ITSM) and IT Operations Management (ITOM) to offer comprehensive enterprise solutions that help clients drive business growth, improve employee efficiency and productivity, increase resilience, and enhance customer experience.

The ServiceNow platform represents a major organizational cost that includes securing the platform license, initial implementation, and maintenance. As cost optimization becomes increasingly important, many enterprises considering ServiceNow adoption grapple with deciding between a dedicated instance model or a shared instance model to save cost.

To make an informed decision, let’s first understand what defines the shared instance and dedicated instance of ServiceNow. By comparing certain key parameters, organizations can choose the most suitable option.

  • Shared instance here refers to the managed services provider’s (MSP’s) domain-separated ServiceNow offering. It is a multi-tenant environment that is shared among multiple customers of SP (Service Provider), with each customer having a separate domain of their own
  • Dedicated instance implies a single-tenant environment used exclusively by one customer. This means that all the infrastructure resources, databases, and application processes are reserved solely for individual customer use

Based on our research and discussions with industry leaders, we recommend enterprises consider the following seven key parameters when evaluating which model to choose in adopting the ServiceNow platform:

Key parameters Shared instance Dedicated instance
Organizational size Better fit for small to mid-size organizations with simple and straightforward requirements Large enterprises with varied requirements, needs, and complex operations benefit more from dedicated instance
Business process complexity More suited for organizations that have simple workflows and are looking to implement basic ITSM processes like incident, problem, and change management More ideal for organizations with complex workflows and ever-changing business processes and integration requirements
Total Cost of Ownership (TCO)

(Inclusive of licensing, implementation, ongoing maintenance, upgrades, etc.)

Low TCO as the cost associated with setting up, maintaining, and managing domain separated instance is spread across multiple customers Large enterprises with dedicated budgets for these initiatives usually prefer this higher TCO option
Customization and flexibility Minimum customization is possible on shared instance   as this is a standard one-size-fits-all offering from the MSP Offers the highest level of flexibility, customization, and personalization tailored to the organization’s needs
Privacy, security, and compliance Due to the shared nature of the instance, data segregation and protection measures need to be very well configured to achieve security and ensure privacy

 

Dedicated instance is solely for one enterprise, and the control elements are assigned to that enterprise alone

From a compliance point of view, enterprises operating in highly regulated industries usually prefer this model

Time to floor This plug-and-play model allows enterprises to quickly onboard Organizations can efficiently transition onto the ServiceNow platform, but making the platform live and operational takes some time
Scalability and future vision Scalability can be limited for any particular enterprise as multiple customers share the same resources It can easily be expanded to accommodate an enterprise’s changing user base, service offerings, and resource requirements

Even though the shared instance model can cost 35-75% less (as shown below) based on our research, price should not be the only consideration when implementing a ServiceNow solution. Enterprises should consider all the parameters discussed and take a holistic view.

Picture1 4

Many enterprises struggle with choosing between the shared or dedicated instance model, as both have their own set of advantages and drawbacks. While each organization has unique requirements, considering the key parameters outlined above will help enterprises select the best setup for their needs and move them in the right direction.

For a more detailed analysis and assistance with benchmarking the ServiceNow implementation and managed services effort and price, please reach out to [email protected].

Also, don’t miss our annual webinar, Key Issues 2024: Creating Accelerated Value in a Dynamic World, to learn the major concerns, expectations, and trends for 2024.

Forward-looking Sourcing for 2024: Outsourcing, Location, and Pricing Strategies in APAC | Webinar

ON-DEMAND WEBINAR

Forward-looking Sourcing for 2024: Outsourcing, Location, and Pricing Strategies in APAC

Following a muted 2023, business leaders in the Asia-Pacific (APAC) region are cautiously optimistic about 2024. Within the current APAC sourcing market, as buyers prepare for the coming year, they are actively leveraging inventive commercial models, emerging location trends, and innovative pricing constructs to optimize the value they achieve from service providers.

In this on-demand webinar, Everest Group analysts will explore how APAC buyers can develop forward-looking sourcing strategies with the potential of advancing innovation in their outsourcing relationships and portfolios as value acceleration takes priority in 2024.

What questions will the on-demand webinar answer for the participants?

  • What are the top forward-looking strategies in APAC for outsourced services buyers for 2024?
  • What location strategies are sourcing leaders planning to adopt in 2024 to achieve increased value from their service provider portfolio?
  • What are the pricing trends and forecasts in APAC?
  • What are the new-age commercial models observed in the APAC market?
  • How should APAC-focused procurement leaders shape their contracting and negotiation strategies in 2024?

Who should attend?

  • CIOs, CTOs, CPOs, heads of procurement, and heads of outsourcing
  • Category managers
  • Indirect sourcing leaders
  • Buyers of outsourced services
  • Strategic sourcing leaders
  • IT and BPO department leaders
  • Supplier management leaders
  • GBS leaders managing IT and BPO outsourcing contracts
  • Price-to-win teams from service providers
  • Service Providers’ sales leaders and country heads
Ashutosh Dhoot
Bhanushee Malhotra
Ashish Sehdev
Mihir Sinha

Deciphering Voice Networks – Unravelling an Often Misunderstood Aspect of Enterprise Networking | Blog

Enterprise buyers frequently misunderstand voice network services and incorrectly group disparate services under a single resource unit (RU). Accurately defining and pricing RUs is essential to ensure both the enterprise and service provider benefit. To shed light on this often-cloudy aspect of enterprise networking, read on.

Voice technologies like Private Branch Exchange (PBX) and Voice over Internet Protocol (VoIP) have been integral to enterprise operations for many years now. Network voice managed services can make up a sizable portion of an enterprise’s IT infrastructure outsourcing expenditure – consisting of up to 10% of the overall network managed services spend and as high as 5% of the overall IT infrastructure outsourcing spend.

Historically, outsourcing voice managed services has been trickier than network services. From our observations, enterprise buyers typically are unaware of the depth and nuances involved with voice services. Let’s explore this further in this blog.

While traditional network RUs like switches, routers, etc., are well understood and standardized, blind spots exist across the industry over defining RUs and pricing voice managed services. Enterprises often lack a comprehensive understanding of all the RUs involved in voice managed services and group disparate services under a single resource unit, such as voice endpoints.

This broad classification can create the following two types of challenges:

  1. An enterprise may overpay for services because the intricate details were disregarded.

An internal enterprise telephony service can have a significantly different price point and RU compared to an external-facing contact center. Service providers also have distinct price points for on-premises versus cloud-based versions of the same services.

For instance, prices for an on-premises CUCM-based VOIP system can vary widely from a Cloud Cisco Webex-based system. Similarly, an on-premises contact center will attract a completely different price point than one that is cloud-based.

Elements like voice gateways and session border controllers that require additional management effort and pricing can further amplify the complexity of voice networks. This creates a scenario in which the chances of applying an inappropriate RU rate are very high.

Picture1 3

Fig. 1. Cloud-based instance of the same technology can be priced differently compared to the on-premise instance

  1. Combining different services under one RU can also lead to scope misalignment and ambiguity regarding the responsibilities of the enterprise and service provider

This may cause issues during the actual delivery and lead to unanticipated renegotiation between the parties.

Appropriate RU definition and pricing is important because it ensures mutual value is created between the enterprise and service provider and neither comes away from the engagement feeling shortchanged.

Below are some common RUs and the associated pricing metrics that should be leveraged when outsourcing voice managed services:

Resource Unit

Pricing Metric

PBX System (Legacy) Per device
VOIP (such as CUCM-based systems)      Per endpoint
VOIP – Cloud-based phone systems      Per endpoint
Cloud contact center Per agent
Session Border Controller  Per device
Voice Gateway      Per gateway
Video Conference System  Per device
Video Conference System with Telepresence  Per device

Table 1. Commonly used voice network resource units

Enterprise buyers or service providers of voice managed services who want to better understand the pricing model and price benchmarks across geographies, please email [email protected].

Don’t miss our webinar, Key Issues 2024: Creating Accelerated Value in a Dynamic World, to learn major concerns, expectations, and trends for 2024 and provide recommendations on how to drive accelerated value from global services.

The Services Pricing Outlook for 2024: Are the Waters Finally Calming? | Webinar

ON-DEMAND WEBINAR

The Services Pricing Outlook for 2024: Are the Waters Finally Calming?

The slowdown in demand in 2023 had a significant impact on services pricing trends. Simultaneously, changing pricing models, coupled with the rise of generative AI and the financial constraints faced by enterprises due to escalating SaaS costs, compelled service providers to tighten solutioning and pricing – leaving everyone wondering what the outlook of services pricing will be.

Watch this panel discussion to hear Everest Group’s pricing experts discuss the most compelling pricing trends observed this year and hear the outlook for IT and BPO services pricing in 2024.

What questions has the webinar answered for the participants?

  • How has outsourcing services demand evolved in 2023?
  • What are the top learnings and open questions around pricing model changes, generative AI, SaaS pricing, and their impact on solutioning and pricing of IT and BPO services?
  • What is the outlook for pricing?

Who should attend?

  • CIOs, CTOs, CDOs 
  • Pricing and solutioning leaders
  • IT heads and executives
  • BPO department leaders
  • IT and BPO outsourcing contract managers
Gehani Rahul
Partner and Co-head of Pricing Assurance
Pant Rohan 01
Practice Director
Sharma Abhishek 1
Partner and Co-head of Pricing Assurance
Sinha Nirati
Practice Director

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