Today Chief Innovation Officers (CIOs) are faced with a myriad of decisions to make on a daily basis, as they seek to reduce costs, maintain workflow efficiency and improve service offerings through new digital tools – whether that be implementing new automation strategies or sourcing tools to support the businesses’ digital transformation efforts.
For many CIOs simply weighing up the pros and cons between different software vendors and the tools on offer, can be a challenge within itself, with others caught up in current contracts unsure of how to maximize their value.
Choosing between Microsoft 365 and Google Workspace productivity/collaboration tools, for example, is a tough decision for many. Both services boast a variety of features, and it can be difficult to decide which is the best fit for your organization to optimize its efficiency and return the best value for money.
So, where to start?
Strategy Consultant, and Max Sankey, Principal at Efficio.
Maximizing value from your current platform
To get the most out of existing technology, regardless of provider, it is important to look for opportunities to bundle features and remove tools you don’t need; consider functionalities such as comms platforms, identity and access management, Single Sign On, file storage, telephony, data visualization, EUC cybersecurity, and even EUC hardware. Businesses can look at periodic or automated harvesting of licenses to limit unnecessary new purchases. For businesses that have yet to implement this, there is often up to a 20% opportunity to harvest users to avoid new purchases and maximize value from the existing platform.
Knowing when the time is right to reevaluate
Google Workspace and Microsoft 365 may have comparable license prices for standard users, but to effectively evaluate the cost of either platform, it is important to compare the total cost of your wider tech stack.
For a more nuanced review, it is important to review user profiles, employee mix (full-time or part-time, for instance), hiring seasonality, and turnover. For example, Microsoft offers a more modular license model for specific roles in a business environment (for instance, F vs E, M365 vs O365, and any combination of add-ons), which can drive significant cost reductions if you are currently only utilizing a single license type. The cost of fully migrating between platforms can be considerable – anywhere from one to three times your annual license cost plus internal resource effort.
One-year or three-year contract agreements?
When it comes to managing costs and selecting a productivity tool that will ensure optimum efficiency for your business it is also important to consider the contract agreement. If you look at Google and Microsoft’s agreement plans, for example, Google’s one-year agreement is similar to the three-year, but it may take away discounting in exchange for the flexibility of a shorter commitment.
Meanwhile, Microsoft’s one-year New Commerce Experience (NCE) or Cloud Solution Provider (CSP) is even more flexible, allowing for month-to-month commitments. This can be advantageous for seasonal license requirements or mid-year reductions. That said, if you are using the NCE/CSP, it is vital to review usage monthly. Businesses often sign up for the monthly NCE/CSP at a higher unit price for the added flexibility, without taking advantage of the true-down opportunities.
Both Google and Microsoft’s three-year agreements are typically more suitable for larger enterprises with a consistent or growing employee base. Advantages include better overall unit pricing and longer-term price protection. One key difference is that Microsoft’s Enterprise Agreement also allows clients to true-down their subscription licenses at the anniversary of the three-year agreement.
Understanding Cloud spend to leverage negotiations
Another recommendation would be for companies to leverage their entire Microsoft or Google spend and footprint during negotiations, especially to see if they can co-term their various agreements.
While cloud teams typically rely on reservations, savings plans, and forecasts to optimize their commitments, companies should make sure they understand any advantages they can use in their licensing models. For example, Azure’s “bring your own license” may make buying Server or SQL through EA more advantageous than on-demand.
Microsoft Copilot or Google Gemini pricing?
Microsoft Copilot (powered by OpenAI‘s advanced LLMs, such as GPT-4) and Google Gemini (powered by Google’s AI technologies) both aim to boost user productivity through AI integrations within their respective ecosystems. They offer a comprehensive list of features, such as content generation, summarization, analysis, and contextual suggestions to empower teams and create efficiencies.
Microsoft and Google are currently offering fixed per-user prices for each AI module, allowing businesses to pick and choose which users can use the AI functionality. The list price for each AI module is similar to that of the productivity license (Workspace or Microsoft 365), effectively doubling your monthly spend. However, many of these new add-on products, for example, GCP’s Anthropic, Google’s Gemini, Microsoft’s Co-pilot, Microsoft Power Automate, are effectively being used as ‘sweeteners’ during negotiations to help secure improved discounting on core products.
In order to reduce costs and optimize efficiency across the business, CIOs need to be able to understand the options they have before proceeding, particularly when it comes to productivity tools, to avoid unnecessary headaches and lengthy contract agreements. Without understanding the features and benefits new digital tools provide and the costs associated, many CIOs unknowingly agree to contracts which could cost them more than what they’re already paying and be less efficient.
Before looking into new digital platforms or services, especially productivity tools, it is important to reevaluate the current service and identify if improvements can be made to maximize value to avoid purchasing anything new. If this isn’t an option, then CIOs need to identify when the time is right to change and whether it is more valuable to agree to one or three-year contract agreements.
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