UK Insurance Company Pushes Back on Microsoft EA Uplift and Wins 3-Year Price Lock
Industry: Insurance | Country: United Kingdom
Challenge: A major UK insurance provider with thousands of employees engaged Redress Compliance to assist with an urgent Microsoft Enterprise Agreement (EA) renewal.
Microsoft’s initial renewal quote came with a significant cost uplift reflecting recent price increases on Microsoft 365 and other products. The proposed terms threatened to raise the company’s IT spend well above budget, despite no increase in headcount or usage. The insurer was determined to avoid this unwarranted hike and secure price stability. Specifically, the company sought to:
- Avoid the price increase at renewal and keep licensing costs flat year-over-year.
- Optimize their license count by eliminating unused products (“shelfware”).
- Ensure a predictable 3-year IT budget for Microsoft services (a critical need in the cost-sensitive insurance industry).
- Maintain compliance and support new business initiatives without overpaying for software.
The Process:
- Usage Audit & Optimization: Redress Compliance comprehensively reviewed the insurer’s current Microsoft deployments (Office 365, Windows, etc.). This audit identified numerous underutilized licenses for example, hundreds of Visio and Project seats allocated but rarely used. The team recommended a true-down, removing or downsizing these licenses before renewal. This rightsizing immediately reduced the renewal baseline cost.
- Value Benchmarking: The insurer’s procurement lead worked with Redress to benchmark Microsoft pricing and discounts against similar insurance firms. Armed with industry insights, they established a target price for renewal that would negate the list-price uplift. This included setting a goal to match their previous per-user spend, effectively demanding a 0% increase despite Microsoft’s general price hikes.
- Strategic Negotiation Planning: A multi-level negotiation strategy was developed. The team prepared alternative scenarios to leverage in talks, such as moving certain workloads to a Cloud Solution Provider model if Microsoft wouldn’t budge. They also timed key discussions to align with Microsoft’s fiscal year-end, maximizing leverage. Internally, executives up to the CFO were briefed and ready to escalate the issue to Microsoft’s senior management, underscoring how critical a price lock was to the business.
- Engagement & Pushback: During negotiations, the insurer pushed back firmly on the “uplift” line items. They presented their usage findings and cost-saving measures as evidence that a price increase was unjustified. Using data and the benchmark targets, they countered Microsoft’s offers multiple times. The procurement lead, backed by Redress’s licensing experts, challenged every assumption – from projected user growth to the need for costly product additions – until Microsoft reconsidered its position.
- Securing the Deal: After several rounds, the insurer achieved a breakthrough. Microsoft agreed to remove the proposed uplift and extended a special concession: a 3-year price lock on all major licenses. In effect, the insurer would pay the same unit prices as the previous term for the next three years. Additionally, the final agreement included improved discounting on certain products and flexible terms for adding new licenses if needed, all of which are documented in the EA amendment. This outcome turned a potential budget nightmare into a big win for the company.
Results:
- Cost Avoidance: The aggressive negotiation and optimization efforts avoided an estimated 15% cost increase in Microsoft’s initial proposal. Over three years, the insurer saved approximately £9 million compared to accepting the original uplifted quote.
- Price Stability: The company gained full budget predictability by locking in prices for three years. Even if Microsoft’s global price list rises during this term, the insurer’s rates remain fixed. This stability is especially valuable in the insurance sector, allowing the CFO to confidently plan IT expenditures.
- Optimized Licensing: The pre-renewal license cleanup means the company no longer pays for unnecessary licenses. They reduced their EA footprint by roughly 20% without impacting employee productivity. All Microsoft services are fully utilized and necessary, improving overall ROI on software spend.
- Maintained Compliance: Throughout the process, the insurer ensured it fully complies with Microsoft’s licensing rules. By aligning licenses with actual usage, they saved money and minimized compliance risks (no over-deployment). Microsoft appreciated this proactive stance, which helped preserve a positive working relationship despite the tough negotiations.
Quote from the CFO:
“Securing a three-year price lock from Microsoft was something we initially thought impossible. Redress Compliance’s expertise made it achievable. They guided our team to push back with facts and confidence.
As a result, we avoided millions in incremental costs and gained price stability for our Microsoft investments. It’s been a game-changer for our IT budget planning.”
Key Results:
- Savings Achieved: Approx. £9 million cost avoidance over three years (relative to Microsoft’s initial quote).
- Budget Predictability: 3-year price lock secured – 0% price increase throughout the new EA term.
- License Optimization: ~20% reduction in unnecessary licenses, ensuring every pound spent is productive.
- Strategic Win: Demonstrated that even a large vendor’s proposals can be negotiated, setting a precedent for assertive vendor management in the company.
This case demonstrates Redress Compliance’s ability to help insurance industry clients defy expected cost increases and achieve stable, optimized agreements. By combining detailed data analysis with hard negotiation, even a “price hike” scenario was turned into a cost-neutral outcome, delivering substantial financial benefits and peace of mind for the UK insurer.
