Competitive Bids: Leveraging AWS & Google Cloud in Azure Negotiations
One of the most powerful negotiation levers a CIO can use in dealing with Microsoft is the presence of viable competitors.
Read our Microsoft Negotiation Guide.
AWS and Google Cloud (GCP) are direct rivals to Azure, and savvy CIOs can leverage this fact to extract better pricing and terms from Microsoft.
This article explores how to introduce and use competitive bids in your Azure negotiations.
We discuss strategies such as soliciting alternative proposals, creating a credible perception that your organization can shift workloads to another cloud, and leveraging that competitive tension to drive down Azure costs.
By intelligently combining AWS and GCP against Azure, you can often secure substantially deeper discounts and incentives (even if you ultimately stay with Azure).
Read Negotiating Microsoft Azure Enterprise Agreements – CIO Advisory.
Why Bring in AWS or GCP During Azure Negotiations?
Microsoft is acutely aware that cloud customers have choices. Azure may be deeply integrated into your IT, but the threat of moving workloads to AWS or Google Cloud is one of the few things that can truly pressure Microsoft’s sales teams.
Here’s why introducing competition helps:
- Increased Leverage: If Microsoft believes there’s a real chance you might take some or all of your cloud business elsewhere, it has a strong business incentive to improve its offer. Azure is still battling AWS for market share, and Microsoft does not want to lose a valuable customer to its rivals. Even hinting that portions of your workload could be migrated can prompt Microsoft to “sharpen its pencil” and offer a better discount or concessions.
- Benchmarking Value: Getting quotes from AWS/GCP provides a benchmark for cloud pricing. It helps you gauge how competitive (or not) Microsoft’s offer is. If, for example, AWS offers a certain configuration at 20% less cost, you have a concrete figure to challenge Microsoft’s proposal. You don’t necessarily have to show Microsoft the exact quote, but you can certainly say, “We have alternative proposals that are more attractive in these areas.” This moves the discussion from vague assurances to hard economics.
- Access to Incentives: Cloud providers often give special incentives to lure customers from competitors. Google and AWS may offer additional credits, complimentary migration services, or substantial one-time discounts to attract large new customers. If Microsoft knows AWS/GCP is courting you, they might counter with their own incentives to keep you. It becomes a bidding war for your business, which is exactly where you want to be as the customer.
- Avoiding Complacency: Without competitive pressure, even the best negotiator can only push Microsoft so far. Microsoft’s sales team knows when a customer has no serious alternative – in such cases, they may hold firm on pricing. By contrast, if they see that you are seriously evaluating others, it prevents complacency and forces them to put their best foot forward. Many organizations make the mistake of “sole sourcing” their cloud deal, and as a result, they never realize that AWS or GCP might have driven the price lower. You don’t want to be in that position.
In short, introducing AWS and Google into the equation gives you negotiating power that purely internal arguments (like budget constraints) may not achieve. It creates an external market check on Microsoft’s offer.
Strategies to Leverage Competitive Cloud Bids
Consider the following tactics to maximize multi-cloud competition in your negotiation. These strategies should be executed subtly and strategically.
The goal is to show you have options without alienating your Microsoft counterparts by appearing disingenuous or overly threatening.
- Solicit Comparable Proposals: Initiate a pricing exercise quietly with one or both other major providers. You may issue a mini-RFP or conduct exploratory discussions with AWS and GCP representatives. Provide them with a profile of your workloads or cloud consumption needs and request indicative pricing for a similar 3-year deal. It’s often best to do this discreetly. The result should be written proposals or quotes that give you concrete numbers. Even if you have a preferred cloud, having formal offers from others arms you with factual evidence. As one negotiation advisor put it, obtaining a credible alternative quote gives you a bargaining chip even if you don’t intend to switch. You can reference the existence of these bids in discussions with Microsoft (you need not share them in full, but letting Microsoft know “others have quoted us better pricing” is powerful).
- Communicate that You Have Options: Let Microsoft’s team become aware, in a tactful way, that your organization is evaluating multiple cloud platforms. This can be done in meetings by asking questions like, “How does Azure’s pricing for this solution compare to AWS’s offering? We’re looking at both,” or mentioning that your board/leadership has requested a comparison of Azure vs. AWS/GCP costs. The idea is to signal that the decision isn’t a foregone conclusion. If you already utilize a multi-cloud approach (e.g., some workloads are on AWS or GCP), mention this and your satisfaction with that arrangement. You don’t need to directly threaten migration, which can sour the tone; instead, subtly drop hints that Azure is not your only choice. Microsoft’s team will likely pick up on these signals and report to management that this deal is competitive.
- Use Migration Feasibility as Leverage: Prepare a plausible narrative (or even a plan) for moving at least some of your workloads to another cloud. You may identify a specific application or environment that can be transferred to AWS or GCP within a reasonable timeframe. For example, determine that “our web front-end and API layer could run on AWS with minimal refactoring” or “our data analytics pipeline can operate on GCP’s BigQuery easily.” With this in your back pocket, you can respond to Microsoft’s offers by noting, “If needed, we can shift X% of our workload to [AWS/GCP] within 6 months.” Even if you phrase it hypothetically, it demonstrates serious intent. Microsoft knows that large enterprises can reallocate workloads if the cost savings are compelling. Even if presented as an option, a believable migration scenario greatly strengthens your hand. (Naturally, do not claim you can move critical systems overnight if that’s false; the scenario must be somewhat credible).
- Highlight Competitive Incentives: Without providing details, you can mention the perks the competition is willing to offer. For instance, “Other providers are offering us significant upfront credits and training support as part of their proposal.” AWS or GCP often offer hundreds of thousands of dollars in credits to new large customers, or free architectural support/migration services. If Microsoft hears this, they might counter with their incentives (e.g., Azure consumption credits, free Azure engineering support, funding for a pilot project) to level the field. In one public example, a major company negotiating with AWS received special pricing on specific services in addition to overall discounts – Microsoft can do similar targeted deals if pressed.
- Maintain Some Mystery: It’s generally wise not to reveal every detail of your discussions with AWS/GCP. If Microsoft asks point-blank, you can say you’re doing due diligence on all options and leave it at that. The uncertainty can work in your favor. As negotiation experts often advise, don’t show all your cards. You want Microsoft worried enough to improve their deal, but not so overwhelmed with information that they call your bluff or dig in their heels. For example, you might say, “We have explored an alternative cloud scenario that would reduce our 3-year costs by 20%. We prefer to stay with Azure if the value is comparable.” This kind of statement is truthful (if backed by the quotes you got), yet doesn’t divulge everything.
- Avoid Burning Bridges: While leveraging competition, maintain a professional tone with Microsoft. Make it clear that your organization will choose the solution that provides the best overall value, and that you’re giving Microsoft a fair opportunity to win that business. Avoid ultimatums like “Match this or we walk.” Instead, use phrases like “We’re interested in continuing with Azure, but given the cost pressure we’re under and the attractive proposals on the market, we need Azure’s offer to be more competitive on these points…”. This invites Microsoft to work with you on a better deal, rather than putting them on the defensive. Remember, you likely want to maintain a good working relationship after negotiation, especially if you remain on Azure.
Read Azure Negotiation Tactics: Commitment Levels & Pricing Discounts.
What Microsoft Might Offer When Faced with Competition
When Microsoft senses a competitive threat, it often responds with improved terms. CIOs should be prepared to evaluate and capitalize on these potential concessions:
- Deeper Discounts: The most straightforward response is a bigger discount on Azure services. If Microsoft originally offered 10% off, it might increase to 15% or 18% for a deal it might otherwise lose. We have seen scenarios where initial Azure discount offers suddenly increased by several percentage points after the customer demonstrated competitive alternatives.
- Increased Credits or Spending Power: Microsoft might include one-time Azure credits (e.g., “$500k in Azure credits to be used in the first year”) or free additional Azure usage if you meet certain milestones. These effectively reduce your cost. They might also extend payment terms or offer financing on the committed spend to make it more palatable from a budgetary perspective.
- Free or Discounted Support and Services: Support costs can be significant, often overlooked in negotiations (Azure’s Unified Support is typically charged as a percentage of your Azure spend, often ~10%). In a competitive situation, Microsoft could offer to include a higher level of support at no extra charge or cap your support fees as a way to add value. They might also offer training services, architecture consulting hours, or fast-track migration assistance at no cost.
- Flexible Contract Terms: Competition can also make Microsoft more flexible on terms. You might secure a clause that allows early termination or reduction of the commitment if you decide to move some workloads out (something they’d rarely agree to in a non-competitive deal). Alternatively, they may agree to more favorable renewal terms, such as locking in the discount rate for a follow-on term. If AWS or GCP offered a shorter contract or more flexible usage profile, you could push Microsoft to match that flexibility.
- Strategic Product Incentives: If your move to a competitor would involve adopting their unique services (for example, using Google’s BigQuery or Amazon’s Redshift for data warehousing), Microsoft might respond by offering its equivalent (Azure Synapse or SQL Data Warehouse) at a steep discount to dissuade you from trying the competitor’s solution. Essentially, they may counter any specific allure that AWS/GCP has presented by reducing the cost barrier to using Azure’s version of that service.
As a CIO, be ready to quantify these offers. A higher discount is straightforward to value, but free support or credits require understanding your usage and support needs to know how much you’re saving.
Always tie it back to the business case: Will Microsoft’s sweetened deal now beat the competitor’s? If yes, you’ve achieved your goal of getting the best value from Azure without ever leaving Azure.
Read Common Mistakes in Azure Contract Negotiations.
Pitfalls to Avoid When Using Competitive Pressure
While leveraging AWS and GCP can be extremely effective, it must be handled carefully. Be mindful of these potential pitfalls:
- Bluffing Without Backup: Do not bluff about moving to AWS/GCP without doing the homework. If Microsoft calls your bluff (“Sure, go ahead and move that workload to Google, let’s see the plan”), and you have nothing, you lose credibility. Always have data or a rational plan to back up your statements.
- Ignoring Solution Differences: Ensure that any competitor comparisons are made on an apples-to-apples basis. Cloud platforms have different pricing models and capabilities; make sure the bids you compare are for the same requirements. Microsoft might try to poke holes: “Are you sure AWS included the same database HA or egress bandwidth level in their quote?” Validate the details so you’re prepared to answer such questions or adjust for any differences. In internal analysis, normalize the proposals so you know your true cost difference.
- Damaging the Relationship: There’s a fine line between assertive negotiation and antagonizing the vendor. If every discussion with Microsoft becomes “AWS this, Google that,” the Microsoft team might become less cooperative or adopt a more assertive stance. Utilize the competitive angle and demonstrate appreciation for Azure’s strengths and Microsoft’s partnership. It’s important that after the negotiation, you can continue working together productively.
- Overemphasizing Price Alone: While price is usually the primary focus, consider also service quality, support, and other value factors. If AWS is cheaper but a move would cause disruption or loss of functionality, that’s relevant. In negotiations, signal that you’re weighing overall value, not just pure cost. This often prompts Microsoft to offer value-added services (such as support, training, or product roadmap alignment) rather than just dropping the price. Those extras can sometimes tip the scales in Azure’s favor, even if the price isn’t the absolute lowest.
- Not Getting Independent Advice: Multi-cloud deal negotiations can be complex. Consider using third-party advisors with experience and benchmark data on all three providers. They can run a confidential, competitive process on your behalf, interpret the fine print of each proposal, and coach you on how to effectively play the vendors against each other. This can level the playing field, especially if your internal team has more expertise with Microsoft than AWS/GCP. An independent cloud negotiation expert (like Redress Compliance or similar consultancies) can ensure you fully capitalize on the competitive dynamic without overstepping.
CIO Recommendations
To leverage AWS and Google as bargaining chips in your Azure negotiations, CIOs should take the following actions:
- Run a Competitive Sourcing Process: Don’t enter an Azure negotiation without a clear understanding. Solicit pricing and terms quietly from AWS and GCP for your anticipated workloads. Even a streamlined RFP or a set of discussions will give you concrete alternatives and prevent you from accepting an uncompetitive Azure deal by default.
- Keep Microsoft Informed (Tactfully): Let Microsoft know you are exploring all options. Professionally signal this – for example, through questions and references in meetings – so they understand they must earn your business. A well-placed hint about reviewing AWS/GCP proposals can prompt Microsoft to significantly improve its offer.
- Identify Migration-Ready Workloads: Determine which parts of your environment can be easily moved. Develop a high-level migration plan, or at least be prepared to discuss how you would execute a shift to an alternative cloud. Use this to lend credibility to your position. The more feasible moving is, the more leverage you have.
- Demand Value, Not Just Price Cuts: When negotiating with vendors, don’t focus solely on unit price. Also negotiate for support cost caps, service credits, training, and flexible terms – areas where one vendor’s offer might surpass another’s. Ensure Microsoft’s final offer is strong, not just cheaper on paper.
- Maintain Professionalism: Use competitive pressure as a tool, but remain factual and respectful in all communications. Make it clear that the goal is to achieve the best outcome for your company, not to antagonize Microsoft. After the negotiation, you’ll likely continue working closely with Microsoft, so it is essential to preserve a constructive relationship.
- Leverage Expert Help: If possible, engage independent cloud negotiation experts or licensing advisors to assist with negotiations. Firms specializing in Microsoft/AWS negotiations can efficiently orchestrate the competitive process and apply the nuanced tactics that work. They can also serve as a buffer, handling some hardball comparisons, allowing you to maintain a positive tone with each vendor. Ultimately, an expert guiding hand can maximize the competitive tension outcome in your favor while minimizing risks.
- Document Everything: When Microsoft concedes better terms due to competitive pressure, ensure that these are included in the final contract. Verbal promises of “we’ll match AWS if needed” are not binding. Get all discounts, credits, and special terms in writing. This protects the value you’ve negotiated, especially if personnel change on the vendor side.
Read about our Microsoft Negotiation Service.
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