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Hey everybody, and welcome back to the Operational ITAM Podcast.

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I'm Bill Van Nort, and today we're going to do something deeply unreasonable.

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We're going to ask a software quote to explain itself, before the discount,

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before the account team brings in somebody with a more impressive title,

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before anyone says, this offer expires Friday.

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Microsoft's July 1st, 2026 pricing changes are now meeting customers at renewal.

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Oracle has an October licensing transition planned for updates to Java 21,

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and a VMware renewal still requires you to understand exactly which physical

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capacity you're buying.

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Those are different commercial situations. Treat them as one generic price increase,

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and you'll spend the meeting arguing about the wrong thing.

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The title today is Challenge the Bill Before You Negotiate the Discount.

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Because a generous discount on a quantity you never needed is a very polished way to overspend.

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Good morning, good afternoon, or good evening, wherever you're listening from.

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This is the show where we take the unglamorous machinery of enterprise technology

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and make it make sense. Grab your coffee.

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In episode 13, I promised the rate case. We've read the meter.

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We've looked at how to describe the bill in a common language.

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Today, we sit on the customer's side of the table and ask what we're actually being charged for.

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One limit on our grid analogy. Software publishers aren't regulated utilities,

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and your renewal meeting doesn't come with a commission that can set their price.

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I would enjoy watching that meeting.

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But we have to work with the agreement we actually signed. So bring the agreement,

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the current quote, the last invoice, and your evidence of the estate.

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The question is simple enough to say out loud. Can we explain the movement from

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what we paid to what we're being asked to pay?

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Let's start with Microsoft because the date on the announcement and the date

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on your bill may be different.

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Microsoft's current pricing FAQ says existing customers see the July changes

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at their next renewal after July 1st.

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Existing multi-year agreements keep their current pricing until renewal.

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That distinction belongs in your forecast. Microsoft's published commercial

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table puts Office 365 E3 with Teams at $26 per user per month, up from $23.

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Microsoft 365 E5 with Teams moves from $57 to $60.

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Those are published prices for those specific suites. Your negotiated price,

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currency, agreement, and billing arrangement still need their own check.

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Here's how I'd work the quote. Start with the exact product on each line,

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with Teams or without, which tier, which add-ons, then reconcile the paid population

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to the people and service requirements that justify it.

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An inactive account is an investigation, not automatic permission to remove

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a license. Somebody may be on leave.

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A retention or security requirement may depend on that assignment.

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Ask the owner, establish the requirement, and document the decision.

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Then check what the new suite includes. Microsoft's packaging announcement adds

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security and management capabilities to selected plans.

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If you already buy overlapping functionality separately, there's a possible decision to make.

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Somebody still has to establish that the included capability meets the requirement

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and can replace the existing service.

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An included feature has to survive contact with the people using it.

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And one near-term item, narrowly scoped. Microsoft's August partner announcement

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says an October 1, 2026 uplift of 5% applies to annual term software subscriptions

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billed monthly through its cloud solution provider channel,

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including products such as Windows Server and SQL Server.

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Existing subscriptions are affected at renewal on or after that date.

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This is a separate software subscription billing change. Don't paste it onto

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every Microsoft 365 line.

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At the end, you should be able to say how much changed because of price,

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how much because of quantity or product mix, and how much because of the terms.

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If the explanation is still, Microsoft went up, keep working. Now Broadcom.

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VMware's published transition announcement explains the move away from selling

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perpetual licenses towards subscription offerings, but separate a new purchasing

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model from the rights you already hold.

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Broadcom's own support article on perpetual licenses says support expiration

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doesn't revoke the underlying entitlement or automatically shut down the licensed environment.

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Access to support and new updates is a separate matter.

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That's a meaningful distinction, and it doesn't make unsupported production

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infrastructure a sensible long-term plan.

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For VMware Cloud Foundation and In vSphere Foundation, Broadcom's current core

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counting guidance uses physical processor cores, with a minimum of 16 per physical processor.

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It also provides a counting tool.

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Here's a small illustration using that rule. A host has two processors with

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12 physical cores each, 24 actual cores, but 32 cores for the minimum licensing calculation.

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That's the floor applied separately to each processor.

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Now suppose you delete a virtual machine. Have you reduced the licensed physical core count?

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No, you've changed a workload. To change the subscription quantity,

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you need a supported change to the licensed physical footprint,

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reflected in the commercial arrangement.

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That means the infrastructure team belongs in this conversation before procurement asks for a discount.

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Can workloads be consolidated safely? Can a host genuinely leave the license to state?

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What happens to recovery capacity, resilience, and peak demand?

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An idle host might be waste. It might also be why payroll survives a hardware failure.

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I would like us to settle that question before we unplug it.

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Get the required cores, the proposed bundle, any separately chargeable storage

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capacity, and the subscription term onto the same page.

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Reconcile the vendor's count to a dated export you can reproduce.

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Where the quote uses a minimum or condition you can't find, ask for the applicable document and version.

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You are allowed to ask what a number means. Calmly. More than once.

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For a current example of an alternative being developed, look at Tottenham Hotspur.

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In September, HPE and the Club announced an infrastructure modernization involving

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networking, compute, storage, and Morpheus software.

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HPE's announcement describes consolidating eight locations into two core environments.

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That's the supplier's announcement, so treat it as a described customer project,

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not an independent savings study.

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I'm deliberately not turning it into a percentage you should expect.

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What matters for our discussion is the scope.

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A virtualization alternative lives inside an operating environment.

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Backup, recovery, skills, application support, and the migration schedule all come with it.

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Your credible alternative needs that work behind it, even if you ultimately decide to stay.

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Let's take a quick break because this is where I want to connect the show to

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something you can actually use.

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The Operational ITAM Store is my collection of practical operating resources

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for the work we discuss here, covering hardware, software, and the AI estate.

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For this episode, start with the software, SaaS, and cloud toolkit.

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So you can join us for the next one. All right, Oracle.

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This is where counting fewer installations can leave you paying exactly the same bill.

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Oracle's Java SE Universal subscription uses an employee-based metric.

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Oracle's published definition includes your full-time, part-time,

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and temporary employees, plus the specified personnel of agents,

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contractors, outsourcers, and consultants supporting your internal operations.

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The quantity isn't limited to the people who use Java.

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That last sentence changes the investigation. An installation inventory tells

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you where the runtime is.

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It doesn't, by itself, calculate an employee-based subscription.

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Oracle's price list also has volume bands. $15 per employee per month is the

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starting band, not a universal rate.

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Get the applicable population and band right before you multiply anything.

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Have procurement and legal validate how the definition applies to your organization,

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including the relevant entities and third parties.

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Then step back. Do these installations actually require the subscription being proposed?

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Java is an ecosystem. Oracle JDK is a particular distribution,

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and the version, update, license, and use matter.

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JDK means Java Development Kit. An inventory entry that just says Java hasn't

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answered the commercial question yet.

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Here's the timely part. In its August 14th announcement, Oracle says updates

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to Oracle JDK 21, beginning with the October 2026 critical patch update,

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are planned to use its Oracle Technology Network license.

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That change concerns subsequent updates. It doesn't retroactively replace the

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license attached to a release you already received under the no-fee terms.

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The decision is about the exact release you're using and the rights for the

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update you intend to deploy.

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Oracle also identifies uses and existing entitlements that can cover those updates.

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So please don't translate the announcement into, "everyone with Java 21 must buy a subscription."

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That statement skips the actual licensing analysis. And please don't make Stop

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Patching the savings plan.

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Bring the application owner and security team into a supported decision before the update goes out.

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You might retain Oracle support. You might move to an appropriate newer Oracle

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release under its applicable terms.

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You might validate another distribution, such as Eclipse Temurin.

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Adoptium publishes Temurin's Availability Roadmap and directs organizations

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needing contractual support commitments to commercial providers.

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Whatever route you choose, test the application, establish who supports it,

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and prove what changed in production.

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A successful download is the beginning of a migration plan. It's a fairly small beginning.

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For an employee-based subscription, removing some Oracle installations may reduce

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technical dependency without reducing the required employee quantity.

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And removing the last installation doesn't, by itself, cancel an agreement or

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resolve past obligations.

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Follow the contract and retain the evidence.

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This is the effective license position from Episode 3, applied before the purchase.

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Establish what you have, what rights apply, and where the gap actually is.

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Then ask what it costs to close that gap.

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Reversing that order lets the proposed sale define the problem.

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Now, I promised we'd look at where the customer's side has changed the outcome.

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Microsoft's Teams commitments provide a concrete example, although the mechanism

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was regulatory action, not a buyer asking nicely at quarter end.

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Microsoft's September 2025 announcement describes the commitments agreed with

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the European Commission.

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The resulting changes include suite options without Teams at lower prices and

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additional switching and discount protections for customers in the European Economic Area.

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Microsoft's current licensing FAQ says eligible customers there on multi-year

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contracts can switch at their anniversary while retaining their discounts.

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Geography and purchasing channel matter, so have the account team identify the

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provision that applies to your agreement.

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For everybody else, the purchasing lesson still holds. Ask for the configuration

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you actually need and compare it with the cost of the services you'll retain or add.

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A suite without teams is only a useful alternative if the replacement collaboration

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arrangement works and the combined cost makes sense.

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The precedent shows packaging can change. It doesn't guarantee your preferred concession.

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That's why we distinguish a documented option from something we'd like the vendor

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to offer. Let's bring this back to your next renewal meeting. I wouldn't walk in with a dramatic speech about vendor behavior,

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I'd walk in with a short explanation of the quote and the evidence behind each disputed line.

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The speech can wait. It usually isn't getting cheaper while we rehearse it.

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Here's a deliberately fictional example, using round numbers so you can check

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it while the coffee's still warm.

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Last year, a service cost $100,000. This year's opening quote is $150,000.

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The account team offers 20% off.

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That's $120,000, which is still 20% more than last year for the assumed unchanged scope.

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Now suppose your verified requirement can be met by 800 units instead of the

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quoted 1,000, and the offer permits that reduction.

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At the same net rate of $120 per unit for the year, the recurring charge becomes $96,000.

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Against the opening quote, you've avoided $54,000. Against last year's actual

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spend, the recurring reduction is $4,000, before any transition costs.

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Those are different comparisons. Finance deserves to know which one you're reporting.

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And that calculation only works because the fictional contract allows those units to come out.

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A minimum commitment, an employee metric, or a physical core floor could change it.

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That's the point of doing the contract work before celebrating the spreadsheet.

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Keep the alternatives on the same time horizon. Include implementation,

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overlapping subscriptions, retained services, internal effort,

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and the recurring cost after any introductory offer ends.

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Ask finance how to account for them.

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A cheaper first invoice can still buy a more expensive decision.

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My opinion, clearly labeled. A renewal team should be able to explain why staying

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is the right decision as clearly as it can explain why leaving would be difficult.

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The counter-argument is fair. Sometimes the incumbent is operationally excellent,

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the alternative would consume scarce people, and the business needs stability

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more than a lower line item.

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Fine. Put that rationale in the decision. Staying can be a good answer.

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It needs an owner and an explanation.

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What if you can't get the evidence before the deadline? Then describe the uncertainty honestly.

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Identify the disputed scope, the missing records, and the consequence of delay.

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Ask whether a short extension or bridge arrangement is available,

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and compare its full cost in terms. You might not get one.

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Don't promise a migration date the delivery team hasn't accepted just to make

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the negotiation sound stronger.

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This is why Episode 9's 18-month clock starts so early. Finding an alternative

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and being ready to use it are separate milestones.

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When you take the position to procurement, make the ask specific.

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Correct this quantity. Explain this charge. Price this configuration. Preserve this right.

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Confirm when we can reduce the commitment.

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Some items are corrections to

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the bill. Others are changes you'd like negotiated. Label them accurately.

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An unused feature might be a reason to seek another bundle. It doesn't automatically

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make a properly contracted charge invalid.

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And keep the tone civil. The person receiving the spreadsheet may be the person who helps get it fixed.

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Give them something they can take into their own organization without having

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to translate your frustration first.

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One last step after the signature. Compare the first invoice with the final

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order. Did the corrected quantity reach the billing system?

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Did the agreed credit appear? Did the old subscription stop or have you accidentally funded both?

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Keep the signed change, the implementation evidence, and the invoice together.

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Then check the following billing period if the correction depends on timing.

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That's how an agreed concession becomes an observed result.

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Until then, you have a promise in a document. A useful promise,

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hopefully, but I'd still like to see it on the bill.

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Which brings us to today's principle, scrutiny. Scrutiny means being curious

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enough to examine the calculation, and disciplined enough to accept the answer

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when the evidence supports it.

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Sometimes your count is wrong. Sometimes the charge is valid.

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Better to establish that while you're preparing than discover it in front of

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everyone who approved your position.

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The habit I want you to take away is this. Before you ask how much the vendor

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can take off, establish what belongs on the bill.

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Class dismissed. Here's your homework. Give this about an hour,

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using the records you already have permission to access.

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Pick one upcoming renewal. Find the latest quote, the current agreement,

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the last invoice, and the best available quantity evidence.

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On one page, explain the movement from the old total to the new total.

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Separate the rate change from

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the quantity change, then identify anything caused by packaging or terms.

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Pick one line you can't substantiate. Write the exact question that would resolve

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it, who needs to answer, and the date you need the answer.

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Record the notice deadline separately from the renewal date.

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Date your page, put your name on it, and take it to the person who owns the decision.

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You can do that exercise without buying anything. If you want procedures and

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tools to help make it repeatable, visit the Operational ITAM store at operationalitam.com slash store.

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Start with the renewal procedure, or the software, SaaS, and cloud toolkit.

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The product links are in the show notes.

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And with that, we're heading out of the grid. We've spent enough time looking

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at how the machinery works.

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The next question is, who gets together and decides what to do about it?

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Episode 15 begins, The Decision Table. I promised we'd get to the control room

00:18:24.180 --> 00:18:27.140
and the operating model connecting ITAM and FinOps.

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We're keeping that promise and bringing it into an actual working meeting.

00:18:31.410 --> 00:18:36.010
FinOps is the practice of managing technology value and cost through collaboration

00:18:36.010 --> 00:18:38.920
between technology, finance, and business teams.

00:18:39.490 --> 00:18:42.650
We'll put that practice beside asset management, procurement,

00:18:42.920 --> 00:18:47.380
and the service owner. Then work through a decision they can't responsibly make alone.

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Who brings the usage evidence? Who validates the rights? Who accepts the operational

00:18:52.790 --> 00:18:55.640
risk? And who has the authority to say yes?

00:18:56.290 --> 00:19:00.040
We'll build a meeting that ends with an owner, an action, and a date.

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I think we've all attended enough of the other kind. The case files are open

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too. One situation, one page.

00:19:07.540 --> 00:19:12.520
The constraint, what you did, and what happened. Remove company names and sensitive

00:19:12.520 --> 00:19:14.470
details before you send it through the website.

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Send me one worth working, and I'll build an episode around it.

00:19:18.440 --> 00:19:20.869
I'm Bill Van Nort. This is the operational ITAM Podcast.

00:19:20.865 --> 00:19:21.865
Check the quantity, read the terms.  Bring a position you can defend.

00:19:21.865 --> 00:19:22.865
I'll talk to you next week.  Take care.