Blog What Microsoft Didn’t Say About Its M365 Price Increase Dec 9, 2025Microsoft Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend. Microsoft has set the stage for another major shift in M365 pricing—one that many enterprises will underestimate unless they zoom out and look at the full sequence of changes. The newly announced M365 price increase (effective July 1, 2026) may appear modest at first glance, but when stacked on top of Microsoft’s November 2025 restructuring, the real budget impact is far more dramatic. If you haven’t reviewed NPI’s full analysis yet, read this bulletin now for a more detailed breakdown. A Second Wave of Pricing Pressure Microsoft confirmed that it will raise commercial M365 pricing globally in July 2026. This isn’t related to November’s retirement of the long-standing price waterfall. That change is already in effect and quietly forced large customers into Level A pricing overnight. Without volume-based discounts, many organizations saw immediate increases between 13% and 17%, depending on the SKU. The July 2026 increase arrives on top of that reset, creating a compounding effect many customers aren’t prepared for. For a deeper look at how these increases stack across F3, E3, and E5, download the full bulletin. Why This Matters: The “Floor and Ceiling” Just Changed What makes this moment so consequential isn’t just the addition of another round of higher per-user pricing. The structure of Microsoft’s commercial pricing has fundamentally shifted. A few realities now dominate the landscape: 1. Renewal costs are heading sharply upward Even if headcount stays flat, renewal numbers will rise meaningfully. Budget owners should expect their FY25–FY27 planning cycles to absorb double-digit increases. 2. Discounts tied to scale are gone Microsoft’s old model rewarded large deployments with lower per-user pricing. That mechanism has been removed. Everyone pays the same rate—regardless of size, maturity, or long-standing customer status. 3. E5 and Copilot will be pushed harder With pricing flattened and higher baselines set, Microsoft has every incentive to lean into premium SKUs and Copilot. Expect more bundling, stronger cross-sell motions, and targeted discounting designed to steer customers toward consolidation. 4. Planning complexity increases materially Budgeting can no longer be done in isolation. The November 2025 and July 2026 changes must be modeled together to understand true cost exposure. Multi-year agreements may look more appealing—but only if negotiated carefully. Click here to see the pricing progression from October → November → July and the total impact across licensing levels. What Enterprise Customers Need to Do Now This moment calls for proactive planning. Enterprise customers should: Build new multi-year renewal cost scenarios immediately Reassess Copilot deployment strategies given higher baselines Validate F3/E3/E5 mappings to eliminate costly misalignment Review security tooling for redundancy as Microsoft pushes E5 Engage Microsoft early—discount cycles may take longer These steps are not optional if the goal is to mitigate the cumulative impact of two consecutive structural pricing moves. Latest M365 Price Increase Signals New Era for Microsoft Pricing Behavior When viewed on their own, each price adjustment is notable but not alarming. Combined, they represent a reset; one that raises both the floor and ceiling of Microsoft’s commercial licensing model. If enterprises want to avoid being caught off guard, they need to understand these shifts in context and recalibrate their licensing strategy well before July 2026. Need help assessing the impact of these pricing changes? NPI’s Microsoft licensing and cost optimization experts can help. Contact us. Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend.
Bulletin Microsoft’s New M365 Price Increase Masks a Far Larger Budget Shock Dec 9, 2025Microsoft Download PDF Download My Copy Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend. Microsoft’s latest M365 pricing increase is bold, coming on the heels of the elimination of waterfall discounts. For enterprise customers, the cumulative impact is much bigger than advertised and requires immediate action. Microsoft announced that commercial customers will face yet another global price increase, effective July 1, 2026. And no, this isn’t a misunderstanding of the November 2025 changes. The elimination of the long-standing price waterfall already happened. This is an additional increase, stacked on top of November’s pricing reset. And when you evaluate the numbers together, the cumulative impact across M365 F3, E3, and E5 is substantial. It’s larger than any single Microsoft 365 price change in over a decade. Understanding the November Price Waterfall Elimination Effective November 1, 2025, Microsoft removed the discount structure that had been in place for years across Levels A, B, C, and D. Previously, large organizations enjoyed meaningful per-user price advantages at Levels C and D. All customers now pay the Level A price Volume-based discounting has effectively been eliminated Many enterprises experienced an immediate increase of 13-17%, depending on SKU This alone was a major shift in Microsoft’s commercial licensing strategy. But now we know it was just the beginning. The percentage increases on their own are meaningful, but when layered onto the November 2025 changes, they reveal the real story. Microsoft’s July 2026 Increase Compounds The Impact The newly announced July 2026 price increase affects many of the same products and applies to the uniform (post-waterfall) pricing. The new per user/month prices will be: M365 F3 ➜ $10.00 M365 E3 ➜ $39.00 M365 E5 ➜ $60.00 The percentage increases on their own are meaningful, but when layered onto the November 2025 changes, they reveal the real story. Pricing Progression Across October ➜ November ➜ July 2026 Below are the prices for each suite at three milestones: October 2025 (pre-waterfall, Level D pricing) November 2025 (post-waterfall, single price) July 2026 (announced future pricing) Here is the consolidated table summarizing the total increases: These are not incremental adjustments. These are step-function increases layered across successive price resets. If Microsoft enterprise customers want to mitigate or minimize the cumulative cost impact of these changes, they MUST revisit their licensing strategy before July 2026. The Strategic Implications For Enterprise Customers Enterprises will feel these changes in multiple ways: Renewal baselines will rise sharply Even with stable user counts, organizations should expect meaningfully higher renewal budgets. Volume-based pricing advantages are gone Microsoft’s historic rationale (rewarding larger deployments) has been removed. Every customer now pays the same per-user price. Microsoft will lean harder into E5 and Copilot As Microsoft seeks growth, E5 and Copilot adoption will continue to be heavily incentivized. Expect more bundling, more targeted discounting, and more messaging around security consolidation. FY25–FY27 planning becomes more complex The combination of the November 2025 and July 2026 changes means: Budget models need to account for cumulative, not isolated, increases Multi-year agreements may become more attractive, but should be negotiated carefully Enterprises need updated internal TCO and ROI models for E3 vs E5 vs F3 users Organizations must revisit their licensing strategy This is an ideal inflection point to: Reevaluate user segmentation Review historic purchase patterns vs. actual consumption Model alternative configurations (e.g., mobility and frontline workforce optimization) Ensure governance and provisioning practices align with licensing reality What Customers Should Do Next To prepare for these changes, enterprise customers should: Run new multi-year renewal cost scenarios now – runway is required to minimize cost impact Reassess Copilot rollout strategy in light of higher baseline costs Engage early with Microsoft – discounts and incentives take longer to secure Validate SKU assignments (F3/E3/E5 mapping errors can now cost much more) Review security tooling redundancy – Microsoft will use this moment to pitch E5 consolidation The earlier organizations prepare, the more leverage they retain. Conclusion: A Structural Reset, Not Just Another Increase When viewed independently, the November 2025 changes and the July 2026 increases each appear modest. But together, they represent a meaningful structural reset in Microsoft’s pricing strategy. The November 2025 change reset the floor.The July 2026 increase raises the ceiling. Enterprises should take a proactive approach, model the combined impact, and revisit their licensing strategy now – long before renewal negotiations begin. Download PDF Download My Copy Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend.
Blog Software License Audits Will Surge in 2026 – Prepare Now Nov 24, 2025Audit Defense Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend. Enterprise software audits are entering a new phase of intensity. In a recent survey, 62% of companies were audited by a major software vendor in the last year, a dramatic increase from just 40% year over year. Flexera reports 45% of companies have spent over $1M in audit expenses over the last three years. Is this trend easing? Not even close. Vendors are doubling down and 2026 is on track to be even more aggressive. Across our client base, NPI is observing a significant rise in audit activity from several top-tier suppliers. The drivers are clear: slowing license growth, large-scale AI and infrastructure investments, shifting revenue models, and mounting pressure to meet Wall Street expectations. For many vendors, audits have become one of the most reliable (and lucrative) paths to revenue recovery. As customers adopt subscription and cloud-based models (which are harder for vendors to monitor), audit programs are scaling in both frequency and aggressiveness. Which Vendors Are Most Likely to Audit? Based on NPI’s visibility across hundreds of enterprise IT estates, the vendors showing the most pronounced increases in audit activity include: Microsoft IBM SAP Oracle (Java) Red Hat VMware (Broadcom) Each of these vendors are tightening audit controls, increasing compliance checkpoints, and expanding the triggers used to initiate reviews. Three macro forces are shaping vendor behavior: Cloud and Subscription Complexity: Usage is harder to track, and vendors are leaning on audits to validate consumption, entitlements, and deployment accuracy. Financing AI and Infrastructure Investments: The buildout of AI platforms, compute infrastructure, and new product lines requires capital. Audits help fill the gap. External Market Pressure: Public vendors in particular must maintain revenue momentum. Compliance findings often translate directly into incremental bookings. As a result, 2026 is shaping up to be one of the most active compliance years we’ve seen in the last decade. What Enterprises Should Do Now Audit readiness is no longer optional. It’s a strategic necessity. To reduce risk and maintain control over audit outcomes, NPI recommends enterprises take the following steps immediately: 1. Review Compliance Positions Across Key Estates Identify deployment or entitlement gaps, especially ahead of major renewals. Vendors often initiate “soft audits” or informal checkpoints well before a contract cycles up. 2. Validate Entitlements and Usage Ensure deployment data is accurate, up to date, and properly documented. Over-licensing inflates spend and under-licensing invites audits. Both make negotiations more difficult. Changes in environment, M&A activity, renewal proximity, shifts to new platforms, and SKU realignments can all prompt a vendor to initiate a review. 4. Establish an Audit Response Plan Define team ownership, escalation paths, and response protocols before an audit letter arrives. Vendors move fast once a notice is issued, and internal confusion often leads to missteps. If you haven’t reviewed your license positions for major software estates in the past 18 months, now is the time. A license position assessment helps you: Identify compliance gaps before they become findings Quantify and mitigate risk exposure Define remediation strategies Predict which suppliers are most likely to initiate an audit next Strengthen negotiation leverage around renewals and true-ups Remember: IT procurement plays an important role in audit risk mitigation. With proactive visibility and remediation runway, you can ensure every vendor interaction is approached from a position of strength as well as avoid the unnecessary financial and operational disruption that audits can cause. If you’re looking to proactively reduce software audit risk, NPI can help. Contact us. Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend.
Blog Smartsheet’s Loyalty Benefit: Leverage or Lock-In? Nov 18, 2025Contract Negotiation, Price Benchmarking Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend. Smartsheet’s transition from its legacy Advanced Work Management (AWM) licensing model to the User Subscription Model (USM) has created both confusion and cost pressure for enterprise customers. In recent months, the company’s Loyalty Benefit has become a key mechanism to offset the financial impact of this shift — but with strings attached. What the Loyalty Benefit Really Is The Smartsheet Loyalty Benefit is being included in new proposals as a temporary discount designed to cushion the move from AWM to USM. It’s positioned as a reward for “loyal” customers, but in practice, it also serves to drive customer behaviors that benefit Smartsheet’s revenue predictability and renewal cadence. Customers can maintain this discount only if they meet certain ongoing requirements, including: Regular user audits: Periodically reviewing and removing inactive, duplicate, or low-usage accounts before renewal. Accurate role alignment: Ensuring license assignments reflect actual usage and roles. Controlled growth: Avoiding paid seat expansion beyond agreed thresholds; significant overages can void the benefit. On-time renewal: Adhering to renewal or negotiation deadlines. Acceptance of USM terms: Participating in true-up and reconciliation processes as part of the model transition. Failure to meet these conditions can lead to Smartsheet rescinding the Loyalty Benefit, effectively penalizing customers for administrative lapses or delayed negotiations. For procurement and IT sourcing leaders, the Loyalty Benefit introduces a new dynamic. It rewards compliance and discipline while reducing flexibility and negotiation leverage at renewal. The incentive structure also makes Smartsheet “stickier,” discouraging churn and placing more burden on customers to manage seat counts in real time. Meanwhile, Smartsheet’s sales teams are leveraging the Benefit as a defensive talking point — especially in response to executive-level admissions that pricing rollout issues have created friction in the market. Customers questioning recent price increases or licensing changes will likely hear about the Loyalty Benefit as a reason to stay the course. Where Procurement Can Push Back Enterprises should view the Loyalty Benefit not as a gift, but as a negotiation variable. By understanding how the discount is calculated (and what thresholds or usage metrics influence its size) buyers can push for a higher Benefit to offset upcoming cost escalations under USM. Key actions to build leverage include: Request transparency into how Loyalty Benefit values are determined and applied. Benchmark discount levels against other customers of similar scale and profile. Quantify transition costs and frame the Benefit as partial compensation for migration-related disruption. Negotiate flexibility around usage thresholds and renewal timelines to preserve eligibility. A Loyalty Program That Works for Smartsheet — Not Necessarily for You The Smartsheet Loyalty Benefit may look like goodwill, but it’s also a sophisticated pricing lever that reinforces vendor control. Procurement teams that treat it as a negotiable component of total cost — not a fixed perk! — will be better positioned to manage spend, preserve flexibility, and maintain leverage in the transition to Smartsheet’s new licensing model. Have a negotiation planned with Smartsheet? NPI can help. Contact us. Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend.
Blog Datadog’s Playbook for Lock-In and How to Negotiate Around It Nov 13, 2025Price Benchmarking Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend. Datadog’s latest earnings report offers more than good news for investors in the form of 28% YoY revenue growth. It’s a blueprint for how modern software suppliers engineer growth by deepening their grip on enterprise customers through pricing, packaging, and customer success strategy. For sourcing and procurement leaders, it’s a reminder that the power imbalance in vendor relationships isn’t accidental. It’s built into the operating model. Datadog has made a business out of multiplying dependencies. In just 7 years, the company has grown its product catalog from a handful of monitoring tools to dozens of monetizable SKUs spanning observability, security, and analytics. Customers are nudged (often effortlessly) into expanding usage across adjacent products. With 31% of customers now using six or more Datadog products (up from 26% just a year ago) and large enterprises adopting more than three times that number, this isn’t organic growth. It’s a deliberately engineered revenue architecture, where each incremental tool is positioned as the “natural next step.” The deeper the adoption, the higher the switching cost. For procurement, this creates a familiar challenge: visibility lags behind expansion. What starts as a targeted observability investment can evolve into a sprawling, multimillion-dollar estate before anyone blinks. Multi-Year Momentum and the New “Land and Expand” Datadog’s latest compensation structure rewards sellers for winning larger, longer-term enterprise deals. It’s a smart growth lever and a caution flag for buyers. While multi-year deals have not yet become the norm for large enterprises based on our own deal analysis, it’s clear the vendor is incentivizing its sales teams to move in that direction. Enterprises that sign broad platform commitments upfront often find themselves negotiating renewals from a position of dependency, not leverage. Datadog’s account teams will be well-trained to make sure of it. The countermeasure: anchor every agreement around usage transparency and commercial checkpoints. Structure renewals so that growth in spend is conditional on realized value, not vendor ambition. Datadog is employing Big Tech account management tactics. A 7-person team spanning sales, technical account management, and customer success works each relationship with precision. Their mission is to identify new workloads, spot tool overlap, and position Datadog as the consolidation hero. It’s an effective strategy, but one that leaves procurement perpetually reacting. The moment a new use case appears, Datadog already has the business case and integration narrative ready. Enterprises that want to maintain leverage must match that readiness with their own data: utilization metrics, pricing benchmarks, and a clear picture of where Datadog adds differentiated value—and where it doesn’t. Procurement’s Leverage Equation Datadog’s Q3 growth is impressive, but it’s not mysterious. It’s the result of operational excellence in sales motion, account coverage, and value framing. None of that is inherently bad, but it does require buyers to operate with equal sophistication. NPI helps enterprises do exactly that. Our experts benchmark Datadog pricing and discount levels against peer transactions, identify cost and usage misalignment across product lines, and guide clients in structuring contracts that preserve flexibility. In a market where suppliers are growing by design, leverage belongs to the buyer who plans just as deliberately. Have a Datadog deal on the horizon? NPI can help. Contact us. Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend.
Blog GCP Gains Enterprise Ground and Credibility with Google’s Anthropic Partnership Nov 3, 2025Cloud Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend. Recent announcement of a major cloud deal between Google and Anthropic made headlines for its AI implications, but there’s a bigger story here for enterprise IT buyers. It signals how far Google Cloud Platform (GCP) has come in its evolution from challenger to contender. For years, GCP was the “third option” in the hyperscaler market, a technically viable platform with strong AI credentials but limited enterprise traction compared to AWS and Microsoft. That dynamic is changing quickly. GCP Steps into Enterprise Cloud Prime Time Anthropic’s multibillion-dollar expansion on Google Cloud, anchored by access to a million Tensor Processing Units (TPUs) and more than a gigawatt of compute power, confirms that GCP can deliver at scale. It is the kind of deal that used to belong exclusively to AWS or Azure. From NPI’s vantage point advising Fortune 500 clients, we’re seeing GCP gain credibility across industries. Enterprise buyers are taking a second look, and in many cases, they’re finding Google to be a more flexible and negotiable partner than its competitors. Negotiating with a Hungry Provider One reason GCP is gaining ground is that it is still hungry for enterprise wins. That hunger translates into negotiation flexibility and meaningful opportunity for sourcing teams that know how to use it. Service-specific discounts: GCP is often open to aggressive discounts by service or even by individual SKU, not just broad commitments. Bundling opportunities: Many of Google’s first-party products such as Workspace, Apigee, Unified Security, and Looker can contribute to or offset committed cloud spend. Credits and funding programs: Google frequently offers credits and investment funds tied to customer needs, such as training, implementation, partner services, or milestone-based incentives. To make the most of these levers, procurement teams need detailed visibility into forecasted spend by service category. That is the same playbook used with AWS and Azure, but GCP’s negotiability makes the payoff potentially greater. Cloud diversification is becoming a strategic imperative. Companies want to avoid overexposure to a single provider (a headline-making AWS outage is on no one’s wish list!), and GCP’s growing maturity gives them a legitimate path to do it. Even if Google’s list prices are in line with AWS or Azure, its willingness to negotiate on structure, incentives, and credits makes it a viable competitive option. Enterprises also value the chance to align with a provider that is advancing rapidly in areas like AI, analytics, and data security. GCP’s pace of innovation, and now its ability to secure and deliver on mega-scale enterprise contracts, positions it as a more balanced and stable choice than it once was. What This Means for IT Procurement Leaders For sourcing teams, the message is clear: GCP deserves a seat at the table in your next cloud negotiation. Including Google in competitive scenarios can yield leverage with all three hyperscalers. At NPI, we are seeing real traction across our client base. Google’s offerings are more mature, its pricing models are more flexible, and its enterprise incentives are more creative. For buyers, that adds up to new leverage in a market that has long been dominated by two players. If you are exploring opportunities to optimize your cloud strategy or want to evaluate how GCP fits into your broader mix, NPI can help. Contact us. Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend.
Blog How to Strengthen Your Leverage in SAP Negotiations Oct 29, 2025SAP Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend. SAP runs mission-critical systems for the world’s largest enterprises. Not coincidentally, it also runs one of the most complex and unforgiving commercial models in enterprise software. Between shifting licensing metrics, opaque audit tactics, and contracts designed to keep customers off balance, even seasoned procurement teams struggle to stay ahead. This post unpacks how the vendor keeps leverage on its side, and how customer can take it back during SAP negotiations. Understanding the Core Problem with SAP At the heart of the issue with SAP is their control over the licensing landscape. They define the rules of engagement, tailoring licensing models, metrics, and names according to their strategies. This flexibility means SAP can change the conditions at any time, making it difficult for clients to fully grasp their commitments and obligations. As a result, many customers feel overwhelmed and concede to the complexity that SAP intentionally introduces into their enterprise agreements. Licensing and Compliance Traps are Part of Their Strategy SAP’s strategy involves using complexity as leverage, often employing information asymmetry to maintain an advantageous position. Here are a few traps to be aware of: User Classification Complexity SAP requires businesses to classify their users, which becomes a leverage point during audits. For instance: In basic audits, SAP relies on the law report, counting users based on the validity date in the user master table, often leading to over-counted licenses for inactive users. But in enhanced audits, the focus shifts to user authorizations, which involves scrutinizing user activities without clear guidelines from SAP, causing potential misclassification risks. Vague and Confusing Licensing Metrics Let’s start with Full User Equivalents (FUEs). Cloud FUEs are not a 1-to-1 conversion from Named Users. As customers migrate to S/4HANA, many are finding the conversion from on-premise to cloud is leading to unexpected cost-overruns. SAP’s licensing metrics are diverse to say the least and they change frequently. Moreover, outdated metrics or changing licensing models can lead to compliance violations. Additionally, self-declaration exercises for measuring usage lend themselves to over-declaration risks, primarily due to misunderstandings of complex metrics such as ‘cores.’ This one is significant. Digital access represents SAP’s model to monetize automated processes connecting external systems to SAP. The challenge arises from the unpredictable growth of automated document creation, often leading to compliance risks and shelfware, particularly when SAP’s Digital Access Note overcounts document usage. Inaccuracies – both in count and rule interpretation – is exceedingly common as SAP assesses Digital Access across a customers’ SAP estates. When we analyze SAP’s findings, we typically find errors that save clients 20 to 60%. Tips for Building Leverage During SAP Negotiations Given SAP’s strategies to capitalize on complexity, businesses must take a proactive approach to leverage building. Here are a few tips: Define Your IT Strategy Independently: SAP should not dictate your IT demands or future roadmap. Establish an internal, independent strategy concerning your needs and future roadmaps to prevent SAP from embedding unnecessary products into your environment. Proactive License Management: Utilize software asset management tools to continually track your license usage, thereby avoiding last-minute scrambles during audits. Though finding a perfect tool might be challenging, a well-chosen SAM tool can provide substantial clarity. Create Alternative Plans: Explore alternatives, such as assessing hyperscalers for supporting your S/4HANA environment or negotiating with competitors. Introducing competitive pressure can elicit better terms and discounts from SAP, as illustrated by significant concessions from SAP when Oracle was involved in an active RFP. Seek Expert Guidance and Resources: Given the inherent complexity of SAP licenses, engaging SAP subject matter experts that can help decode contracts, terms, and metrics, providing clarity and negotiation leverage. Here are two resources you can tap into right now at no cost: Don’t Get Played by SAP – The Truth About Pricing, Licensing, and What You Can Control The SAP Clarity Playbook: How Smart Enterprises are Taking Back Control Successfully managing a relationship with SAP requires an understanding of the complexities they introduce and learning how to navigate and counter them effectively. For more detailed guidance specific to your SAP estate, contact us. Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend.
Blog Reading Between the Lines: An Update on Microsoft’s Online Services Pricing Changes Oct 27, 2025Microsoft Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend. Microsoft’s latest pricing update for online services (effective November 1, 2025) is more than a simple list adjustment. It’s a structural shift that will ripple through enterprise renewals over the next 12 to 18 months. For years, Microsoft’s Enterprise Agreement (EA) customers have operated within a tiered pricing model (Levels A through D). That waterfall is now gone. Starting November 1, Microsoft will standardize all online service pricing to Level A — effectively eliminating volume-based discounts that many large customers have long relied on. For a more detailed recap of this major price shift, check out this blog post. The Short Version Here’s a 10,000-foot view of the impacts of this change: Customers on higher discount levels will see price increases at renewal, roughly 6% to 13% depending on prior tier. While existing EAs are protected until term end, future renewals will align to the new model. But as we’ve heard in recent conversations with sourcing and licensing leaders, the bigger story isn’t the price increase itself — it’s what this signals about Microsoft’s evolving commercial strategy. What’s Driving the Change Microsoft is steadily reshaping how it transacts with its largest, most profitable customers. The move away from EAs toward the Microsoft Customer Agreement (MCA) reflects several underlying forces: Cost Efficiency and Control – Supporting the EA model is resource-intensive. MCA streamlines ordering and lowers Microsoft’s internal cost to serve. Margin Pressure – Reseller subsidies have long eaten into margins. The new model shifts economics away from resellers and toward direct, digital transactions. AI Infrastructure Investment – Microsoft is offsetting the capital cost of its AI build-out and data center expansion. Simplification (for Microsoft) – Fewer pricing levers mean fewer exceptions, less flexibility — and higher predictability for Microsoft’s P&L. For customers, that simplification often translates into less flexibility and less personalized support. What Customers Are Seeing In recent client conversations, several patterns are emerging. Most notably, large enterprises are realizing that this “pricing consistency” update functions as a de facto price increase. Level D and C customers are losing the discounts they’ve long depended on, and even Level B customers are seeing 6–7% uplifts at renewal. Compounding the issue, public pricing transparency has been inconsistent. Some SKUs show list prices higher than historical Level A pricing, and we’ve seen instances where discounts are being calculated against those inflated baselines — creating a double hit for buyers. Reseller dynamics are also shifting. As Microsoft reduces its reseller subsidies, many partners are exploring separate fees for support and professional services that were previously bundled under EA. The result is a quiet but significant change in the total cost of ownership. Finally, renewal experiences are uneven. While Microsoft is allowing some near-term renewals to proceed under pre–November 1 price lists, the long-term direction is clear: standardized Level A pricing, fewer exceptions, and reduced negotiability. What You Can Do Now 1. Audit Your Renewals (Immediately): Identify all Microsoft online service renewals over the next 12–18 months. For near-term renewals, request that Microsoft use the pre-November 1 price list or negotiate equivalent concessions — and get it in writing. 2. Validate the Baseline: Work with your reseller or advisor to confirm your pre-change effective list price and discount levels. Compare every renewal quote line-by-line to ensure discounts are being calculated against the correct denominator. 3. Prepare for Reseller Shifts: Talk to your reseller now about post-subsidy support models and potential new fees. Budget accordingly. 4. Evaluate Strategic Alternatives: For major workloads (e.g., collaboration, CRM, AI tools), benchmark competitive options. Even a light market scan can strengthen your negotiation leverage. Who Should Own What (and When) A coordinated response is essential; this isn’t a pricing update you can delegate to one team. Here’s how to align roles and timelines across procurement, finance, IT, and your reseller partners: Procurement / IT Licensing Lead: Take ownership of the renewal inventory and baseline validation process. Catalog all Microsoft online renewals and confirm current discount levels. Start immediately! Reseller / Account Team: Request written confirmation from Microsoft or your reseller on which price list is being used for each renewal quote. This should be done immediately for pending renewals. Finance / CFO Office: Model the expected P&L impact of these pricing shifts across FY26 and FY27 budgets. Build scenarios that account for 6–13% increases and possible new reseller service fees. Target completion within 2–4 weeks. IT Leadership: Prioritize which SKUs are most critical (e.g., M365, Dynamics, Copilot licenses). Decide whether any pre-effective date purchases make sense to lock in legacy pricing. This cross-functional coordination not only minimizes budget shocks, it ensures your organization enters renewal discussions with clarity, documentation, and a unified negotiation strategy. The Bigger Picture Microsoft’s pricing “simplification” is the latest step in a multi-year effort to move customers into its modern commerce ecosystem — one that gives Microsoft more control and predictability, but less flexibility for enterprise buyers. For procurement, the challenge is twofold: understanding where the hidden costs will surface, and recalibrating negotiation strategy around a fundamentally new commercial model. Those that move early — validating baselines, documenting pricing history, and negotiating protections — will be best positioned to limit exposure and preserve leverage. Looking for more clarity around Microsoft’s recent licensing and pricing changes? Contact us – our Microsoft licensing experts can answer your questions. 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Blog Application Rationalization Guide for SaaS Portfolio Optimization Oct 24, 2025Application Rationalization, SaaS Management Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend. For most large enterprises, SaaS has become both a catalyst for innovation and a source of runaway cost. As portfolios expand across business units, procurement and IT leaders face mounting pressure to optimize spend without slowing progress. Rationalizing the SaaS landscape is no longer optional — it’s essential. By identifying redundancies, consolidating licenses, and aligning investments with business priorities, organizations can reclaim control, strengthen negotiation leverage, and drive measurable value across the enterprise. Here’s a primer on what enterprises need to know about application rationalization, its benefits, and pragmatic actions IT and IT sourcing can take right now. The Growing Challenge of SaaS Spend Skyrocketing SaaS App Usage Over the Past Decade Enterprise SaaS portfolios have expanded significantly over the last 10 years. What were once tightly controlled software environments have evolved into complex, decentralized ecosystems. Global IT Budgets & Increased Scrutiny on Software Spend Despite ongoing digital transformation efforts, enterprise IT budgets are under heightened scrutiny. Finance and procurement leaders are expected to demonstrate clear ROI on every software purchase. Procurement Teams Under Pressure to Do More with Less IT procurement teams are being asked to deliver greater results with fewer resources. They must find cost savings, speed up decision-making, and maintain compliance, all while managing increasingly fragmented SaaS environments. Redundancies & Underutilization of Software Tools In most organizations, redundancy and low utilization are widespread. Tools with overlapping functionality often coexist, and unused licenses quietly drive up costs. The Rise of AI & Cloud Is Accelerating the Need to Rationalize AI-driven platforms and cloud-first strategies are driving rapid SaaS adoption across business units. Without rationalization, the result is more complexity, higher spend, and lower ROI. Benefits of SaaS Application Rationalization Spend Optimization Rationalization identifies unused, redundant, and unnecessary applications. This enables procurement teams to eliminate waste and redirect budget toward higher-priority initiatives. Stronger Negotiation Leverage A clear view of usage and needs provides leverage in contract negotiations. Procurement can right-size agreements and eliminate shelfware before renewals. Process & Governance Improvements By rationalizing applications, organizations can improve procurement governance and establish clearer policies for tool adoption and usage. Improved Productivity & User Experience Reducing the number of overlapping tools minimizes friction for end users. Teams get access to more relevant, better-supported solutions that align with business needs. Where SaaS Tool Overlap Hides Tool Overlap Across Functions Different business functions often procure similar tools independently, creating overlap that drives cost and complexity. Duplicate Usage Across Teams Multiple departments may use different versions of the same software, or unknowingly purchase licenses for identical tools through separate budgets. Cross-Departmental or Regional Redundancy Redundancies often surface across business units or geographies, especially in global organizations with decentralized procurement. Hidden Similarities & Missed Alternatives Without comprehensive visibility, organizations miss opportunities to consolidate tools with overlapping capabilities or replace them with better alternatives. The Step-by-Step SaaS Application Rationalization Roadmap Step 1: Build a Comprehensive SaaS Inventory Start by capturing a complete inventory of SaaS tools in use across the enterprise. Include contracted applications, free tools, and shadow IT. Step 2: Analyze for Redundancy and Consolidation Evaluate functionality, usage, contract details, and user feedback. Identify overlaps, underused tools, and consolidation opportunities. Step 3: Validate Findings & Align Internally Review findings with stakeholders. Align procurement, IT, and business leaders on priorities, risks, and next steps. Two Paths in SaaS Rationalization to Consider Path 1: Maintain for Now, Optimize for Later In some cases, immediate removal is not feasible. A longer-term approach may be necessary. What to Do: Maintain, Monitor, and Leverage. Continue to monitor usage and value. Use findings to inform future renewals, renegotiations, and governance frameworks. Path 2: Remove or Consolidate Now Where clear redundancies exist and stakeholder alignment is strong, immediate action is warranted. What to Do: Rationalize, Reinvest, and Simplify. Eliminate redundant tools and reinvest savings into strategic initiatives. Simplify the application landscape to reduce administrative and operational overhead. Why SaaS Rationalization Requires Expertise SaaS rationalization is complex. It requires a deep understanding of vendor pricing, licensing terms, and negotiation strategies. Without specialized knowledge, organizations risk overlooking opportunities, underestimating risks, or disrupting business continuity. Get the Most from Your SaaS Investments NPI helps enterprise procurement leaders rationalize their SaaS portfolios with confidence. We help you create an application rationalization roadmap that identifies current- and future-state candidates for rationalization…all while strengthening your negotiation position regardless of consolidation intent. This is combined with vendor-specific pricing benchmarks, licensing insights, and negotiation guidance to ensure clients eliminate costly redundancies and maximize the value of their software investments. Need help creating a SaaS application rationalization roadmap? Contact NPI to get started. Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend.
Webinars Balancing Cost and Value in Tech Sourcing Contract Negotiation, Price Benchmarking Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend. Fortune 500 enterprises face relentless pressure to reduce IT costs — but not at the expense of innovation, agility, or vendor relationships. For sourcing leaders, the challenge is finding equilibrium between short-term savings and long-term value creation. In this session, NPI’s experts will share practical frameworks and negotiation strategies that help IT procurement teams make smarter, value-aligned decisions. You’ll learn how to quantify vendor value, use data-driven benchmarks to strengthen your position, and unlock savings that don’t compromise performance or partnership quality. Here's what you'll learn: The Cost-Value Paradox in IT Sourcing: How to evaluate cost decisions through a broader value lens. Tools and Frameworks for Measuring True Vendor Value: Methods for scoring vendor performance, innovation potential, and risk reduction — not just spend. Using Price Intelligence and Benchmarking to Drive Smarter Negotiations: How market data can reveal hidden inefficiencies and give your team the upper hand at the table. Negotiation Strategies That Preserve Value and Relationships: Proven approaches to achieve meaningful cost savings while strengthening long-term supplier alignment. Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend.
Webinars AI Negotiations: How IT Sourcing Can Gain Leverage with Top AI Suppliers AI, Contract Negotiation Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend. AI is transforming enterprise IT — and reshaping how suppliers price, package, and position their offerings. From generative AI platforms to embedded AI functionality within cloud and SaaS contracts, pricing complexity and deal structures are evolving fast. In this webinar, NPI’s experts will unpack what sourcing and procurement leaders need to know now about the AI market landscape, vendor pricing models, and negotiation dynamics. You’ll see real-world benchmarking examples and learn how top enterprises are building leverage and ensuring value alignment across their AI investments. Here's what you'll learn: How leading IT suppliers are embedding and monetizing AI — and what that means for your enterprise roadmap and budget. How vendors are defining (and redefining) SKUs, usage metrics, and renewal terms to maximize revenue. Proven tactics enterprises are using to rebalance leverage, manage uncertainty, and secure commercial flexibility in AI deals. Pricing examples and negotiation outcomes that highlight where customers are winning — and where they’re being overcharged. Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend.
Webinars SIG Podcast: Mastering Vendor Communication – How to Control the Message and Protect Your Leverage with NPI Contract Negotiation Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend. How to Control the Message and Protect Your Leverage with NPI Share This Article Subscribe For Updates Uncover negotiation leverage and unlock savings across your IT spend.