Spend Matters welcomes another guest post from NPI, a spend management consultancy focused on delivering savings in the areas of IT, telecom, transportation and energy.
Last month, Microsoft made big news when it announced a $100M, 100,000-user deal with New York City. But, what makes this deal significant isn't the size -- it's the resulting savings and centralization within NYC's IT operations.
The bulk software purchase will deliver an estimated $50M in savings over the next five years. In the process, it may make NYC a model for purchasing effectiveness.
Here are a few things we can learn from The Big Apple's IT purchasing efforts:
- Increase in Flexibility: Microsoft traditionally sells by the bundle, meaning even if a user only needs access to Word, you still have to purchase an entire Office suite. However, the NYC deal is different. It's structured to accommodate three different tiers of users based on how many applications they use -- power, regular and occasional. In effect, NYC is only paying for how much software is being used.
- Merits of Hybrid: This deal indicates NYC's cautious, yet steady move into cloud computing. The deal combines traditional software licenses with Microsoft's latest cloud-based productivity and collaboration tools. It also includes Microsoft Azure, a platform-as-a-service offering that will enable NYC to develop applications for internal and external use.
- Leverage of Centralization: In this move, NYC has effectively consolidated Microsoft agreements from dozens of agencies. The result is clear -- a more flexible, manageable and progressive vendor agreement that will yield large and immediate savings (not to mention agility).
What do you think about the Microsoft/NYC deal -- landmark or hype? Would tiered usage benefit your enterprise?
-- Jeff Muscarella, EVP of IT, NPI