Microsoft Enterprise Agreements: Why Retailers May Not Want to Renew

Jeff Muscarella, managing partner, NPI Financial

Each year, thousands of retailers renew their Enterprise Agreement (EA) with Microsoft to support the products that run their back office and POS operations. Once upon a time, renewing your EA with Microsoft was a given. Today, however, you would be crazy not to consider the alternatives. More and more cost-conscious retailers are choosing not to renew their Microsoft EA's. Even those that do choose to renew are finding ways to make their EA's work harder. These five tips show you how:

1. Determine what Microsoft products you will need. Unfortunately, not until companies have an immediate need for software do they start thinking about alternative products, competitive pricing and implementation timeframes. It may take some upfront effort to think strategically about what products you will need in the long term, and the realistic timeframe for implementation - but it's exactly what retailers must do to prevent accruing expensive shelf-ware, paying too much for the products they do need and allowing Microsoft to chart their upgrade course.

2. Don't renew. Many companies only need the most basic of Microsoft's offerings, like Exchange, Office, etc. If that sounds like you, consider dropping the EA. Under your current EA, you already have ownership rights to the next upgrade of these products. If you don't have a need to upgrade beyond that, you may wind up paying thousands of dollars - even millions - for upgrade rights you won't use. But, keep in mind that getting rid of your EA will require close tracking of licenses and functioning without the same level of support. You will need to be EA-less for at least two Microsoft product cycles (typically 3-6 years) for your decision to really pay off.

3. Use the Select Agreement when it makes sense. Typically, EA's require companies to deploy each product across all desktops. For some retailers, especially ones with multiple locations and corporate headquarters, this doesn't make sense. While there may be a need for every computer to have access to the inventory management system, not every computer needs access to CRM. If you plan to purchase applications that don't need to be widely deployed, purchase them under a Select Agreement with Microsoft. Between licenses, maintenance and support, you will pay substantially less.

4. Consider Google Apps, open source and virtualization. Only 10 percent of Microsoft application features are used, proving companies are paying a lot of money for things they don't really need. This is especially true in the retail industry where many applications used in the store environment are used on a limited basis. Consider evaluating your application portfolio to see if there is opportunity to use a cheaper - or free - alternative for in-store use. Google Apps, Star Office and other open source alternatives have all received consistently good industry reviews, integrate with Microsoft and cost little or nothing.

5. Negotiate for basic discounts and soft credits. If you choose to renew your EA, don't forget to negotiate. While Microsoft is known for its pricing consistency, the company often provides up to a 10 percent pricing discount. Don't be afraid to ask for it! Additionally, you should always negotiate for soft credits like training or consulting.

Jeff Muscarella is a managing partner at NPI Financial (www.npifinancial.com), a technology and transportation spend management consultancy serving the retail industry. For more information, contact Jeff at [email protected].