Microsoft Office 365 G1 – 2024 Price Increases for the Public Sector
As software increasingly becomes mission-critical, users will bear the brunt of software inflation rates, and vendors will continue to be empowered to raise prices without sacrificing their demand. Anglepoint has tracked some of these recent software price increases in our recent article, Your Guide to Software Price Inflation in 2023 and offered recommendations to optimize spending to reduce the impact of these changes. As we anticipate further price hikes in 2024, effectively managing software spend remains a top priority, particularly for those software users in the public sector.
In the public sector, these Microsoft office price increases will take effect beginning in March 2024, with a 10% price increase for Microsoft Office 365 G1. In March 2025 prices will increase yet again by 5%. These increases may amount to millions of dollars for Microsoft users in the public sector who have contract renewals due in 2024 and 2025. Government agencies will need to begin prioritizing value for taxpayers’ money to address public scrutiny on government spending.
Various initiatives like software and cloud cost optimization can help to address these public sector price increases. Having an organization-wide adoption of FinOps supported by a team with a clear focus or a ‘FinOps Center of Excellence’ provides a progressive cultural practice focused on cloud financial management, aiming to maximize business value by aligning engineering, IT, finance, and business teams.
We understand the impact software inflation rates will have on your organization and have provided additional key considerations that can help drive down spending and counteract the Microsoft 365 price hike:
- Plan Ahead: Allow enough time to plan the renewal
Depending on the size of the renewal, allowing at least 6-12 months to plan a renewal will give your team the runway to gather information on all the necessary contracts and paperwork. This time can be used to effectively optimize your estate, ensuring that you are only purchasing what you need, counteracting the effects of software price increases. - Detailed Bill of Materials (BoM): Create an accurate and detailed Bill of Materials (BoM)
Take into consideration your current use and projected use. Go into the negotiation knowing exactly what you need and avoid being distracted by offers that result in unnecessary spending further down the line. - Vendor Negotiation: Negotiate with the knowledge of your software vendor
It’s important to keep a good relationship with your vendors and understand what their drivers are, but more importantly what they can discount. Always include the terms and conditions in the negotiations, as ambiguity in contract clauses may cause issues further down the line. Consider buying the newest release to avoid future software support costs. More detailed recommendations for these areas can be found in Anglepoint’s article on 5 Key Considerations When Planning a Major Contract Negotiation. - Seek Expert Advice: Reach out to an independent expert
As renewals like these only happen every 3-5 years, staying up to speed on how vendors and publishers operate can be difficult. An independent expert will provide guidance and an industry benchmark to ensure you are getting the best commercial and contractual agreement, so you maximize your software cost savings.
Anglepoint’s experts work with Government organizations of all sizes to optimize IT spending, enhance operations, and manage risk. This is accomplished by addressing the public sector’s financial challenges and ensuring that organizations are prepared when Microsoft 365 price increases do arrive. To find out how Anglepoint can support you with the recent software inflation rates, get in touch with our team to discuss your renewals today.