Microsoft licensing mistakes during Mergers and Acquisitions
Organizations evolve with time, adding to their size in every aspect of the word. From staff strength to asset expansion; this is sometimes as a result of merging or acquiring another business entirely or outright.
In recent times where software licensing & Cloud services are an integral part of operations, it will be financially catastrophic, not to consider your/the Microsoft licensing situations, especially if you are merging or acquiring an entity.
A merger refers to the process of combining two or more entities or business into one unified whole. This will see a combination of operations, assets, and resources to form a united body.
Acquisition, however, means buying over entirely and running the daily operations of an entity. Decisions and deployments with its subsequent effects are shouldered by you.
With the above definitions made clear, going into a merger and acquisition should have you look at Microsoft license(s) as used in your partner company. The inability to check and secure the right answers before and during the process on the licensing stances will bring huge financial implications.
In this blog, as a Microsoft licensing expert and Cloud advisory outfit, we will share with you Microsoft licensing mistakes we have observed organizations committing over the years. Although we can help them identify early and fix the situation, we believe sharing tips with you will empower you to make the right initial moves.
These are a few of the many checks to make to avoid Microsoft licensing mistakes during a merger or acquisition process.
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1. Ignoring initial assessment of existing Microsoft licenses
As you merge or acquire an organization, this is one of the foremost things to look into. It’s important to be updated on the licensing status or position. This is crucial as it will inform you of compliance status, renewal, or expiry dates as well as user or device access licenses deployed informing you of immediate or future decisions.
You get to understand if there is the need to purchase new licenses, why you should explore second-hand licenses knowing you will save, or how to sell unused or underused licenses to plough back some cost, cutting down on the entire process cost.
Also, it is at this stage you get to know the licensing models operational in both entities and if they can combine comfortably into the merged operations as an entity going forward. If not, which one should be adopted, why, and if it will allow for optimization and save on costs eventually.
Licenses purchased for software versions or configurations when inconsistent will have a significant impact on business operations and data integrity. Licensing mistakes can be avoided at this stage with careful planning and coordination between IT teams across the merging companies.
2. Not conducting an internal Audit immediately
Microsoft as an entity has an Audit clause in its license agreement, so be sure that at a point, you will be sent a request in line with this. However, you do not want to wait till then as this can be costly.
The good thing is you can commence an audit internally to remedy any issues including compliance before Microsoft comes in. What an audit does is that it helps you determine your license status and remedy any actions. The two companies should do their own internal audit that will give them the right information on their current license position. It would be a mistake doing the auditing without seeking expert support to give you an independent and unbiased view of things.
An audit affords you the opportunity to know if the other organization you are merging with or acquiring has no hidden cost in the form of non-compliance fines waiting to explode after the entire process.
3. The effect of Microsoft Optimization & consolidation during acquisition and mergers
In the above text we talked about the risk if you do not do an internal audit during mergers and acquisitions. After the audit you now have some answers to some questions; How many licenses do we have? How are they installed? How are they in use and by whom? What is the compliance status?
From this point you now can optimize and consolidate some of the contracts and licenses. The two parties should consult each other on their current license position. In a best-case scenario, the two parties have a workgroup. A group of people from different departments who are responsible for the integration of the parties.
4. Not detecting License Portability among entities
In a merger and acquisition scenario, you are likely to be pre-occupied with financial standings between the entities and ignore licensing transfer rules. Microsoft has clear cut rules in connection to these and in the heat of the moment, transfer legalities can be overlooked.
However, this is not an excuse when you are found out. During the merger and acquisition process, conversations must be had about which Microsoft licenses can be maintained because transferability is possible, which one has an expiration or renewal date, close and future projections to optimize and save.
Also not understanding the rules of change in ownership, the implications of licensing agreements, and potential impacts on software deployments and updates will inhibit continuity and smooth functioning of software services and operations.
5. A lack of/poor integration plan
During and after the merger and acquisition stage is where continuity of the entity is important. Not having an integration plan looking at if Enterprise Agreement, CSP or any other form of Microsoft programs is the way to go will be costly. In many cases Microsoft Enterprise Agreement is interesting for larger organizations from 500+ users.
You should observe if the process by way of integration allows for license optimization and ultimately savings. A bad integration plan can lead to either hesitating or not making the move between migrating to cloud-based solutions or maintaining on-premises environment.
Also, after the entire process of integration will be the noticing of Microsoft license duplication performing the same functions and how to explore ways to sell your used software as second-hand licensing.
6. Not engaging an independent Microsoft expert
You stand to gain when you engage an independent Microsoft licensing expert during the merger and acquisition process. The expert supports you with guidance to ask and get answers to all Microsoft licensing related issues.
The expert has no stake in the process compared to individuals like the IT Managers from both parties, so can approach issues from a neutral and unbiased point. Vendors from both sides will be engaged thoroughly on your behalf and you are sure of all “hidden things” brought to the fore.
Also, an expert has many business cases as benchmarks and can know which licenses, which bundle combinations, which cloud products and the renewal or negotiation approach will benefit the two parties during this project.
Our team of experts at Q-Advise can support you by reviewing all existing contracts to ensure they remain valid and acceptable even after the merger or acquisition. Additionally, any new license agreements negotiation and review is done well to ensure they meet the specific needs of the merging companies.
Reach out and we will assist you with all answers to your questions.