Tag: pricing

How to Demystify Azure Discounting and Navigate Cloud Contract Negotiation | Blog

Cloud contract negotiation with Microsoft for Azure can be complex. By better understanding the cost reductions available at the contract and resource/functional levels, enterprises can maximize their return on investment. Read on to decipher the discounts and get the best cloud value from Azure.

You can also reach out to schedule a briefing with an Everest Group analyst for guidance on how you can uncover Microsoft Azure discounts and drive significant cost savings. Reach out

Microsoft’s public cloud offering, Azure, grew more than 20% year-over-year in 2022, driven by its long-standing partnerships and deep technical integration across different product portfolios with major enterprises. Over the years, Microsoft has successfully onboarded many existing O365, M365, etc., customers to Azure while attracting a new set of customers. To get the most value from this popular platform, procurement organizations must be aware of the nuances of cloud contract negotiation with Microsoft for Azure.

Cost is an important factor in an enterprise’s decision to move to Azure or any other public cloud. Locking in the right discounts is crucial to lower cloud operational costs and maximize the value generated from cloud. Enterprises should be well-versed in the types of discounts offered to prevent value leakage in their contracts.

Like the other major hyperscalers, Azure uses a dual-layer discounting approach as follows:

  1. Contract level discounts – Azure Commitment Discounts (ACDs)
  2. Resource/functional level discounts

Let’s explore each of these categories further:

    • Azure Commitment Discount – This discount is built into Azure’s contract and is typically contingent on the following criteria:
      • Customer’s total spend commitment
      • Length of the engagement
      • Prior relationship with Microsoft
      • Strategic value (logos and markets) to Microsoft
      • Contracting route – Direct (Enterprise Agreement) or Indirect (via Cloud Service Provider)
    • Resource or functional level discounts – Also known as programmatic discounts, enterprises can take advantage of these reductions by committing to spend a certain amount of time or money on cloud resources.

Microsoft estimates the following discounts are possible using these approaches:

      • Reserved instances – By committing to one- or three-year consumption terms for Windows and Linux virtual machines (VMs), customers can expect cost reductions of up to 72% versus pay-as-you-go rates

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      • Azure savings plan – With a committed spend of a fixed hourly amount on compute services for one or three years, customers can save between 11-65% on pay-as-you-go rates

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      • Spot instances – Customers purchasing temporary VMs for low-priority workloads from a pool of unused spare capacity can get significantly deep discounts of up to 90% compared to pay-as-you-go rates

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      • Azure hybrid benefits – This option can help customers save up to 85% in license costs by reusing on-premises licenses

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In addition to discounts, credits, incentives, and regular promotional programs run by Microsoft also can help enterprises lower their cloud expenditure. Enterprises also should investigate these options to optimize their Azure investment.

By optimizing IT architecture to realize resource and functional level discounts and effectively negotiating contract-level discounts, procurement teams can ensure they get the maximum value from an enterprise’s Azure investment.

To better understand these discount categories on Azure and discuss other cloud contract negotiation tactics, please reach out to [email protected].

Schedule your briefing with an Everest Group analyst for guidance on how you can uncover Microsoft Azure discounts and drive significant cost savings.

The Six Key Pricing Themes Dominating 2023 | Webinar

On-demand Webinar

The Six Key Pricing Themes Dominating 2023

In 2022, the outsourcing industry experienced significant attrition and wage hikes. However, those metrics stabilized in the first few months of 2023, and due to today’s economic environment, the focus has turned to cost control. To make the best decisions going forward and fulfill their cost-cutting mandates, business leaders must stay on top of these shifts.

In this webinar, our experts will discuss the six key pricing and commercial themes observed in the first half of the year and how enterprises can incorporate them into their planning whether entering new outsourcing relationships, renegotiating, or consolidating.

Our speakers will discuss:

  • Which key outsourcing pricing and commercial themes were observed in the first part of 2023
  • How these six themes are expected to play out for the remainder of the year
  • How enterprises can use these themes to plan and execute on their cost-cutting directives

Who should attend?

  • CIOs
  • Pricing heads
  • IT/BPO strategy heads
  • Strategic sourcing leaders
  • Category leaders
  • Solutions heads
  • Procurement managers
  • Vendor managers
  • Presales leads
Arora Achint
Partner
Rahul Gehani Bio Picture V1 2021 03 26
Partner
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Partner
Sundrani Ricky
Partner

IT Deal Pricing May Remain Muted on Slow Spends in FY24 | In the News

Indian IT majors are expected to see significant pressure on their pricing in fiscal 2023-24 due to an environment marked with slow technology spends, said analysts.

Pricing power has shifted from the providers to the buyers, said Peter Bendor-Samuel, CEO of Everest Group. “We are starting to see significant pressure to lower pricing as the vendor consolidation with larger deals is dominating the market and looks to do so for the foreseeable future,” he added.

Read more in The Economic Times.

Key Themes and Pricing Trends in the SAP Services Market | Webinar

On-Demand Webinar

Key Themes and Pricing Trends in the SAP Services Market

Enterprises have leveraged SAP for more than a decade to manage and streamline their core business operations. In recent years, SAP expanded its predominantly on-premise enterprise products to the cloud. In response, providers have invested in tools and accelerators to align with this shift, helping enterprises migrate to the cloud seamlessly – creating a rapidly growing market.

Join this webinar to learn insights into the latest pricing and investment themes, enterprise challenges, and solutioning approaches in the SAP services market.

What questions will the webinar answer for the participants?    

  • What are the key enterprise investment themes and opportunity areas for service providers in the SAP services market?
  • What are the enterprise challenges arising with the SAP and service partner community?
  • What are the approaches and key solution tenets that drive SAP pricing?
  • What are the pricing trends observed in SAP-managed and transformation services?
  • What are the differentiators and value adds proposed by leaders in SAP services?

Who should attend?

  • CIOs, CTOs
  • IT strategy heads
  • Heads of outsourcing
  • Procurement managers
  • IT department heads
  • Global sourcing mangers
  • Vendor managers
  • Heads of SAP services / application services
  • Senior sales leaders
  • Senior members of deal pricing teams
Prateek Gupta
Abhishek Mundra
Raghav Munjal

How can we engage?

Please let us know how we can help you on your journey.

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