Would Microsoft Customers Really Pay Over the Odds for Office 365?

Would Microsoft Customers Really Pay Over the Odds for Office 365?

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Well, that all depends on how you measure it…

The switch to Office 365 could seem like a very lucrative move for Microsoft. The firm sounded like it admitted as much when the firm’s CFO Amy Hood spoke with Wall Street analysts recently.

Hood said that by subscribing to Office 365, especially the E3 plan, Microsoft could see an 80 per cent increase in revenue over a multi-year relationship with the customer. This E3 plan includes not only the core Office suite of applications but also cloud-based Exchange, SharePoint and Skype for Business.

So, what does it all mean? Well, for every £100 spent buying software the old way, £180 would be spent purchasing software on a subscription basis. Other scenarios painted a picture where customers could pay a 40 or 20 per cent premium over the traditional transactional way of purchasing the software.

However, this is calculating the cost on the price of the subscription and not the total cost of ownership. And that’s an important point. This is probably the biggest missing piece when it comes to working out how much it will all cost over the long term. As license management service experts we guarantee we will save you more and give you a better TCO.

So where can enterprises save money and lower TCO when moving to the cloud with Office 365?

With the move to the cloud, those applications that were running on your on premise datacentre now run somewhere else. This means no longer having to worry about datacentre buildings, hardware costs and maintenance as well as the personnel needed to run the datacentre. Oh, and lets not forget power and cooling for all that infrastructure. There are other costs as well to consider; it is not an exhaustive list.

Another thing to consider is the cost of setting up in the cloud compared with on premise deployment. Setting up Exchange, SharePoint and the rest in the traditional way could take months of careful planning, negotiations, purchasing, testing and deployment. Add in the cost of getting a partner in to help with deployment and system admins, the cost soon mounts up.

Something else to think about when moving to the cloud is do you need all those services? Having an E3 licence subscription means paying for things such as Exchange, SharePoint and OneDrive; if you don’t need them, there is no point in having them.

So a full and frank discussion about what exactly your needs are can achieve a significantly lower TCO.

If your organisation has an annuity agreement in place, it is highly likely that this means that there is some entitlement to a cloud service somewhere in that agreement. This is to encourage customers to move to the cloud.

Undertaking a software licensing exploration with a software asset management partner such as Crayon can reveal the areas where a move to the cloud can be done under existing arrangements. This means you don’t have to pay twice for the same services. It also helps in identifying who in the business can be “cloud super users” and which ones require less.

Finally, many vendors have spent billions of dollars creating cloud infrastructure and they want customers to use this. Knowing exactly what you need from these vendors and their clouds puts the CIO in a much stronger position to negotiate. With this knowledge, the CIO can seek out financial, technical and practical assistance to help their business make the journey to the cloud.

Partnering with a SAM specialist can help in controlling TCO and give you better negotiating power with vendors. This will help not only with maintaining control through the cloud migration but give your business a clear roadmap and end goal for your business in mind.

For more information on how Crayon are already helping their customers to positively leverage the opportunities facilitated by the cloud and to optimise their total cost of IT ownership, go to www.crayon.com or call your local Crayon team today.


I am the Group Chief Marketing Officer at Crayon. My team are focused on driving enhanced lead generation campaigns and nurturing for our sales organisations across multiple geographies though the utilisation and coordination of all online and offline communication channels. We are driving increased brand awareness in the business's core competency areas of Software Asset Management (SAM), cloud and volume licensing solutions and associated consultancy services. I have over 20 years of senior business leadership experience within direct marketing/direct sales and mass distribution businesses, in both the B2B and B2C markets serving on the boards of both private and public multinational corporations.