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Public sector unhappy with Microsoft price rises

Public sector IT group hits out at price rises and has some criticism of the role of resellers in communicating it

Microsoft's price increases have not gone down well with public sector customers and the channel has also come in for some criticism for failing to spell out the extent of the impact of the changes.

The software vendor revealed earlier this year that it was making changes to its pricing structure from the start of last month, with the aim of simplifying things. That meant that there would be an introduction of single prices in some areas and the removal of complicated discount structures in others.

At the time of the announcement the firm also indicated that Government pricing was going to be offered at the lowest commercial pricing and customers would be given a price sheet that guides them through breaking down the cost of a purchase.

With some of the commercial prices of Office 2019 increasing by as much as 10% the prospects that public sector customers would also have to pay more were high. 

That situation appears to have left some in the public sector far from satisfied with Microsoft, with The society for IT practitioners in the public sector (Socitm), sharing its reaction to price increases and the pressure to sign up before next month, or risk further hikes.

The software vendor had wanted contracts for Office 2019 sealed before next month or those delaying would face the prospect of an additional 5% price increase. The lobby group has called for an extension to be made until March next year.

The group also hit out at the channel, complaining that resellers had not been the best at communicating what was going to happen with pricing.

"Communication (via resellers) of changes needs to be improved in the future to help customers understand change and impact, so that they could plan for it in a timely manner," Socitm stated.

The public sector has faced years of austerity and constrained budgets and Socitm is asking Microsoft if that sector can "receive the same discounted rates as education and the third sector".

Socitm and Microsoft met at the end of last month and the vendor indicated that it was mindful of the position of the public sector and told the group that it would be looking to reduce costs and improve services for that customer base where it was possible.

For those in the channel with software asset management skills this might be the moment to target public sector clients.

Speaking back in September, Matt Fisher, SVP product strategy at Snow Software, said that those customers that did not keep a grip on their software spending could end up paying more.

“With Microsoft running in nearly all enterprises, many customers in both the private and public sector will feel the pain of the price adjustments...Microsoft Office 2019 price hikes will result in increased spend for organisations, especially those who are not measuring their software usage and reconciling it against what they are paying for," he said.

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