Microsoft pays $250,000 to seal the University of Nebraska’s purchase of Office 365 — and there’s more where that came from
A recent revelation by the University of Nebraska IT department that the university would receive $250,000 from Microsoft for rolling out Office 365 has much of the blogosphere tittering about incentives and motivations.
Here’s what the university said in a post about email migration:
In its analysis, the campus CIO review team found that both Google and Microsoft offered a superior Web-based interface and enhanced capabilities … Ultimately, Microsoft was able to provide a more competitive pricing structure than Google … Microsoft is providing $250,000 in business incentive funds to help us migrate from Lotus Notes to Office 365. That funding will pay for some consulting and licenses to convert a large percentage of our users from Lotus Notes to Office 365. We will also use that funding to pay for a Microsoft Premier Support agreement covering email and Microsoft Office applications for the entire university.
[ Is Office 365 a good buy without Microsoft’s money reducing the cost? Check out InfoWorld’s hands-on comparison of Office 365 and Googla Apps. ]
Many members of the press — and many of Microsoft’s customers — apparently don’t realize that Microsoft sales teams have copious amounts of business incentive funds (BIFs) at their disposal. The fact that the university received BIFs is hardly unusual, although discussing the amount of the grant in an open blog post must’ve raised more than a few hackles.
Here’s what you and your company need to know about BIFs.
First, BIFs for customers are never in cash. Usually BIFs take the form of credits against product purchases from Microsoft or vouchers that can be used to hire third-party consultants or buy hardware from those consultants.
Second, BIFs don’t always go to the customer. In my experience anyway, BIFs more commonly go to the consultants — the Microsoft partners — that line up a sale, seal it, and provide migration, training, and troubleshooting. Yes, the consultant you hire may be getting additional compensation from Microsoft for the work they’re ostensibly doing for you. That shouldn’t surprise you.
Third, BIFs are used to fund outside research projects. For example, Microsoft used BIF funds to work on cross-platform technology with Hanu Software. Citrix and Microsoft formed V-Alliance with BIF funds to work on desktop virtualization.
Finally, Microsoft sometimes uses BIFs to move old merchandise. They aren’t just deal sweeteners or partner prods.
To see how that works, take a look at the TechNet post earlier this year from Andy McNulty, Microsoft’s partner territory manager for the midwest U.S. McNulty describes how customers who signed up for BPOS — the precursor to Office 365 — qualified for 50 percent off of their first annual subscription fee, up to a maximum of $1,500. The offer was timed to coincide with BPOS officially falling to its last legs, while Office 365 was in the news. These customer BIFs aren’t in cash; they’re used for Microsoft partner consulting fees (vouchers), follow-on licenses, or hardware purchases from the partner.
The BIFs weren’t just for customers. Microsoft partners — consultants your company might hire — could earn extra incentives for landing new customers or helping them with post-sale migration and deployment. And the partners get cash on the barrelhead.
Microsoft BIFs aren’t new. They’ve been around for many years. Four years ago a Microsoft BIF manager posted this come-on, spurring Microsoft partners to close their sales: “Is your sale stalled? We have business incentive funds (BIF) available to help move sales along, which include Exchange, Office, and/or SharePoint.”
While the exact amount of available BIF funds is a closely guarded secret, this LinkedIn post by a programmer who apparently worked on developing Microsoft’s internal BIF reporting software, hints that the amounts are substantial: “Microsoft BIF 6.0 ($500+ million) is designed to drive revenue. BIF is a bucket of funds to support project expenses. It gives a cut short for lengthy approval process to get project fund. The fund is managed by profit centers and profit center head.”
When I compared Office 365 with Google Apps in the InfoWorld review and looked at the price differences, I didn’t take into account the possibility of BIFs. If you’re comparing the two, ask your Microsoft rep for a big BIF. Now that Microsoft has established a precedent with a $250,000 BIF for the University of Nebraska, you certainly have more bargaining room.
It doesn’t hurt to ask.