Collateral savings in Microsoft license optimisation. Where? How?

I'm going to tell you a story – a story from my own experience. I was working with an enterprise client: 50 000 seats, thousands of servers, five outsourcers. We were looking at how to reduce the cost of their Enterprise Agreement at its renewal.??

The cost breakdown in their EA was something like this:?

• Desktop licenses and subscriptions - 70%
• Server licenses and subscriptions - 30%

These days, the desktop licences share in an average Enterprise Agreement revolves around 70%. That's why most clients want to look at the desktops first, sometimes wholly dismissing the servers. On the surface, it seems logical. If you spend the most considerable sum on desktop licenses, you may want to address it first, if not alone. You know, the famous "80/20 rule" approach.

Of course, addressing desktop licenses is always a splendid idea. You may reduce Microsoft 365 subscription costs by "reprofiling personas" – purchasing only the necessary licenses for your users. Our client, though, was brave and clever enough to also include servers in the review.?

In the draft report, their potential licensing savings looked roughly like this:

• Server license optimisation –?￡1 million per year,
• Desktop and online services optimisation –?￡1 million per year.

Typically, if you include the entire Microsoft license estate in the scope, your savings would be somewhat identical, or with a very little difference, in both desktop and servers. You may also notice that the relative cost reduction in the server part is higher than in the desktops. That is also fairly common, although your results may differ.

So, we were ready to deliver the draft report, and that's when?the magic happened.

I sat down with their deputy CIO responsible for the servers and services. And I presented him our preliminary findings, things we discovered during the exercise.?

What we did is what we usually do:

• Tweaked their new Enterprise agreement, which gave us an additional one-off saving of?￡0.8 million,
• Assessed their predominantly outsourced server infrastructure:
• Are there any legacy hosts?
• Are there any under-utilised resources?
• How optimal is the license allocation?
• Is there anything that should have been decommissioned but still running??

Assessing an outsourced infrastructure often yields unexpected fruits.?It's essential to include it in the scope because it hides costs behind the outsourcing model, sometimes complicated and multi-layered. When you outsource your data centres, you usually pay for all-inclusive services. The billing structure isn't always transparent enough.

When you have asked all the above questions and got the answers, you begin looking at how you can optimise your server estate:

• You plan to decommission redundant legacy hosts,?
• You get rid of hardware and software that you do not use,
• You optimise your SQL servers,?
• You consolidate your development environments.?

Essentially, you put your house in order – that's how you achieve savings in the server part of the Enterprise Agreement. And the usual end goal is to repurpose the otherwise?redundant license costs?into something more valuable:

• Deploying new server farms,
• Procuring necessary software,
• Refreshing the hardware,
• Deploying applications to the Cloud.

But as niche SAM and licensing experts, we sometimes overlook?other expenses?that enable that redundant infrastructure to exist. I had to have a clever client to open my eyes at it:

• Electricity,?
• Rent of space and facilities,
• Security,
• Infrastructure support,
• Hardware maintenance.?

Our sponsor from the servers team looked at the draft report and said,?"Wait a minute! Have we not decommissioned that yet? Do we still pay for these server farms that we don't need?"?You would have thought, the person responsible for data centre estate should be aware of such things. But in his case, the problem was in the opaque multi-layered outsourcing model. The bleeding wasn't in the immediate infrastructure that he managed himself.?

He jumped to an Excel spreadsheet. I was sitting beside him. And I saw numbers quickly adding up: ￡400k from here, ￡500k from there.?He concluded that decommissioning and consolidating the legacy infrastructure could free up?￡1.5 million per year?in addition to?￡1 million per year?saved through the licensing optimisation.

There are often hidden costs in all IT operations, not only in "shadow IT", due to staff not being touched, not being questioned. And when we perform license optimisation exercises, we may uncover them by asking our?nosy?questions:?

• What is it doing here?
• Who is using it, and how?

Finding additional savings in this client was a pleasant surprise for everybody involved (I can't tell for the outsourcers). We didn't have it as a goal for the exercise. And that made me think, why wouldn't we make it our goal in future engagements?

If you manage IT assets, why don't you add that to your business case? When you go to your CIO or your CFO and say, "we need a new tool, we need to make our existing tools work, we need to invite the SMEs to help us reduce our costs". Why don't you also consider these additional benefits? It's hard to underestimate the potential. Because in this exercise, the collateral savings were – and you may notice that yourself – 50 per cent higher than the savings from the reduction of unnecessary licenses.

If this article resonates with you, find us at https://samexpert.com, and let's have a chat.