June is a such great month – the days are getting warmer, Wimbledon merges tennis with strawberries and cream, the kids are all pleasantly subdued while revising and sitting exams, the football World Cup is just around the corner, and (how could we possibly forget) it’s also Microsoft’s financial year end.
Many of you will already be in the throes of a negotiation with Microsoft for an Enterprise Agreement (EA) renewal. Or perhaps you are looking at the pros/cons of their Office 365 solution. If you’re planning to take the negotiation to the wire on June 30th in order to squeeze the very best deal at Microsoft’s year end, be aware that Microsoft would like you to dance to a different tune. They are pushing really hard to complete negotiations sooner rather than later. In fact, you might well have been told that Friday, June 20th is their deadline.
Microsoft will tell you that they need a few working days to get signed paperwork through their internal system in order to formally book the deal. While there is some truth in this, it’s also true that the Microsoft sales rep and their reseller doesn’t get commission until the deal has been booked and the revenue formally recognized – hence the pressure to get stuff signed by the 20th!
Whichever date you choose to conclude your negotiation, rest assured that the later it is in June then the more stressed your Microsoft rep will become.
Here are four tips to think about while you negotiate with Microsoft in June:
When Cisco began shipping UCS slightly over two years ago, competitor reaction ranged the gamut from concerned to gleefully dismissive of their chances at success in the server market. The reasons given for their guaranteed lack of success were a combination of technical (the product won’t really work), the economics (Cisco can’t live on server margins) to cultural (Cisco doesn’t know servers and can’t succeed in a market where they are not the quasi-monopolistic dominating player). Some ignored them, and some attempted to preemptively introduce products that delivered similar functionality, and in the two years following introduction, competitive reaction was very similar – yes they are selling, but we don’t think they are a significant threat.
Any lingering doubt about whether Cisco can become a credible supplier has been laid to rest with Cisco’s recent quarterly financial disclosures and IDC’s revelation that Cisco is now the No. 3 worldwide blade vendor, with slightly over 10% of worldwide (and close to 20% in North America) blade server shipments. In their quarterly call, Cisco revealed Q1 revenues of $171 million, for a $684 million revenue run rate, and claimed a booking run rate of $900 million annually. In addition, they placed their total customer count at 5,400. While actual customer count is hard to verify, Cisco has been reporting a steady and impressive growth in customers since initial shipment, and Forrester’s anecdotal data confirms both the significant interest and installed UCS systems among Forrester’s clients.
I have been working on a research document, to be published this quarter, on the impact of 8-socket x86 servers based on Intel’s new Xeon 7500 CPU. In a nutshell, these systems have the performance of the best-of-breed RISC/UNIX systems of three years ago, at a substantially better price, and their overall performance improvement trajectory has been steeper than competing technologies for the past decade.
This is probably not shocking news and is not the subject of this current post, although I would encourage you to read it when it is finally published. During the course of researching this document I spent time trying to prove or disprove my thesis that x86 system performance solidly overlapped that of RISC/UNIX with available benchmark results. The process highlighted for me the limitations of using standardized benchmarks for performance comparisons. There are now so many benchmarks available that system vendors are only performing each benchmark on selected subsets of their product lines, if at all. Additionally, most benchmarks suffer from several common flaws:
They are results from high-end configurations, in many cases far beyond the norm for any normal use cases, but results cannot be interpolated to smaller, more realistic configurations.
They are often the result of teams of very smart experts tuning the system configurations, application and system software parameters for optimal results. For a large benchmark such as SAP or TPC, it is probably reasonable to assume that there are over 1,000 variables involved in the tuning effort. This makes the results very much like EPA mileage figures — the consumer is guaranteed not to exceed these numbers.
We’ve all heard software reps blame “revenue recognition” and “Sarbanes-Oxley” as an excuse for not giving an extra discount or contractual concession. IT sourcing professionals may now hear “GSA Rules” and the “False Claims Act” cited as similar justification: “We didn’t give that concession to the government, so we can’t give it to you.” Could that be the worrying unintended consequence of the Justice Department’s action against Oracle: http:/searchoracle.techtarget.com/news/2240019712/US-government-sues-Oracle-for-tens-of-millions-of-dollars?
I can’t comment on the details of the Oracle case, but I’m sure it is complex and two-sided. For instance, I’ve helped clients negotiate reasonable compromises with Oracle to handle special circumstances that won’t apply to many other organizations. These may have involved an extra discretionary discount, if Oracle didn’t have a programmatic way to handle the exception. I wouldn’t expect to get the same concession or discount for another client to whom those special circumstances didn’t apply. For example, this report describes one issue that is particularly important to public sector agencies, but whose impact varies widely: Do Your Software Contracts Permit External Use?