Why your monthly IT expenditure has gone up – it’s all about Office 365
If you use a managed service provider (MSP) for your small business’s IT needs, you may have noticed that your monthly spend with them has increased. This is because Microsoft has raised the price of the monthly subscription licence for the Office 365 suite.
Previously, your Office 365 licences would flex with your business. For example, if you initially bought ten user licences for your company’s ten users and you hired more staff who needed access to the software, you could add new licences to the monthly subscription easily. Similarly, if people left your business, you could remove their licence and you’d no longer be required to pay for it.
Microsoft has now changed that model, with businesses expected to either commit to a number of years using its products or pay 20% more for the flexible solution. So if your business is still on this flexible model, then this is the likely reason why you’re now paying more per month.
If you haven’t noticed a price increase, it’s likely that your MSP has committed you to a minimum number of licences over a one or three-year period. While this will keep your monthly costs at the same level, it does mean you’ll pay for that minimum number of licences even if all of them aren’t being used.
On a positive note, committing to the three-year minimum number of licences means there’s full clarity of what you’ll be spending over that period.
But that’s a stark choice: pay the increased subscription fee or make the long-term commitment.
The latter choice won’t suit every business. There will be some seasonal businesses, for example holiday parks, which may employ people for only nine months of the year and which then take a three-month licensing break when they are out of season. This option is now no longer available. However, there are ways around this; we work closely with the holiday park industry and we have committed a bulk number of licences to the one-year model to save our customers the 20% price increase, while leaving some of the licences on the flexible model.
Knowing these changes were coming, we decided to renew all our customers’ licences ahead of the deadline to ensure that they won’t be impacted for at least the next 12 months.
Another challenge which small businesses should consider is the difficulty in changing MSPs and then having to request new licences for your Office 365 subscription. It’s not possible to switch licences between MSPs, so your new provider will have to request the licences from your previous provider. This is not particularly efficient, so it’s important to ensure the MSP you choose to work with is able to commit to this dialogue to ensure you’re not paying out for your licences twice.
While these changes have already been implemented, I’d encourage small businesses to talk to their MSP about which model they are now committed to and whether there are better options for deploying Office 365 when their contract is due for renewal.