Azure Cost Optimisation Blogging Series Part 4 — Microsoft Azure Consumption Commitment (MACC) Procurement & Negotiation
As we have continued to demonstrate throughout this blogging series, it is increasingly important for IT and Finance professionals to understand key Azure cost saving concepts. Azure charges often captures your attention when spending patterns are trending upwards or spiralling out of control. So, what can you do to stem the outpouring of cash and manage ongoing? This 4-part blogging series aims to provide you with guidance, hints and tips on what to do.
In Part 3 of this blogging series on Azure Cost Optimisation, my colleague Richard Ojo illustrated where using non-production licensing models can reduce your Azure costs. And in this last blog, I’ll highlight what the MACC is and illustrate how important MACC planning and negotiation is for cost optimisation.
Introduction
Since 2015, Microsoft has been changing the way in which it fulfils software and online services. The Microsoft Azure Consumption Commitment or MACC Amendment as it’s known is one such change that many organisations will need to plan for and manage effectively.
But how do you plan for and negotiate with Microsoft and what are the key points to be aware of before you sign the agreement? In this blog and accompanying video, we will answer these questions and provide an overview of the key points to be aware of before signing your MACC.
What is MACC and How Does it Work?
The MACC provides organisations with access to a variety of concessions by making a financial commitment to Microsoft over a specified term, usually one to three years. The MACC is a programme for customers who have either a Microsoft Customer Agreement (MCA) or an Enterprise Agreement (EA).
MACC for EA or Enterprise Motion for MCA amendment is directly negotiated between you and the Microsoft sales teams, so you need to approach the MACC amendment just like any other multiyear licensing programme.
The commitment gives Microsoft a platform to provide flexible payment options while providing you with access to incentives such as:
· Azure commitment discount against the current list price for MACC eligible Azure products and solutions
· MACC amount committed to and the MACC term
· Service level discount which is a targeted discount on services where Microsoft seeks to grow market share
· Azure credits or Microsoft funded consulting services to drive adoption, such as the Azure Migration Programme and the Microsoft Cloud Adoption Framework
· Marketplace benefits where you can purchase eligible offers from Microsoft partners that count towards your MACC
The MACC offers greater flexibility and discounts compared to historic Azure license programmes such as PAYG.
Key points to be Aware of when Planning and Negotiating with Microsoft for the MACC
Before you sign the MACC amendment with Microsoft, consider the following points:
· Your Team — Assemble the right blend of skills to forecast Azure requirements and effectively negotiate with Microsoft. Having either in-house or external licensing experts work in tandem with IT, finance, procurement, business and operations, is essential for full value realisation.
· Cloud Strategy & Road Map. You must have a clear vision of your cloud goals, objectives and timelines. You should also have a realistic estimate of your current and future Azure consumption based on your workload, type, sizes and growth rates, and this will help you choose the right MACC amount and term that matches your cloud strategy and road map.
· Agreement Type & Payment Preference. You need to understand the differences between the MCA and the EA, and the pros and cons of each agreement type. You should also consider your payment preference, whether you want to pay upfront or in monthly instalments, and the impact of each option on your cash flow and budget.
· Eligibility and Usage of Azure Services and Solutions. Understand which Azure services and solutions are eligible for the MACC and which ones are not, including any marketplace offerings.
· Cloud Migration and Adoption Support. Take advantage of the technical and financial support that Microsoft and its partners offer to help you succeed in your cloud journey.
It’s important to remember that MACC is a contract and legally binding obligation where you must spend a predefined amount of money during the term of an agreement. This requires careful planning because overcommitting and underutilizing Azure may result in a shortfall payment at the end of the term. Microsoft do allow you up to 12 months to use up any unused commitment, which does provide a degree of flexibility. However, many organisations fail to track and forecast the risk of a shortfall payment which may impact on cash flow at the end of the agreement.
Under committing and over utilising Azure may result in the loss of more competitive pricing during the term of an agreement. Undercooking a commitment or unforeseen growth can result in a loss of buyer power unless a proviso is made during the contract negotiations to allow for competitive pricing structures in the future, where there is an increase in Azure consumption.
In Conclusion
The Microsoft Azure Consumption Commitment or MACC is a great way to get the most value from your cloud investment and through MACC, you can access lower prices, flexible payment options and other benefits that are not available under programmes such as Pay As You Go.
With the right team of stakeholders and subject matter experts such as Version 1, start planning early to fully understand the art of the possible and to develop a robust negotiation strategy.
Key actions to take before entering negotiations or signing a MACC payment for any current Azure customers:
1. Verify your current Azure consumption position and make sure you are maximising Azure cost optimisation techniques. Root out and eliminate Azure related waste.
2. Take time to independently forecast future Azure demands, such as;
a. cloud strategy and road map
b. agreement type and payment preference
c. eligibility and usage of Azure services and solutions
d. marketplace purchases and benefits
e. cloud migration and adoption support
By doing so, you can ensure that your MACC aligns with your cloud goals and objectives, and that you optimise your Azure consumption and performance.
If you have any questions on any of the topics we have covered in this blogging series including Azure budgeting and forecasting, non-disruptive ways of cutting your Azure costs and using non-production licensing models to reduce your Azure cost, please do not hesitate to contact us and start optimising.
