‘Check your contracts now’ is the warning from tech lawyer Daniel De Saulles of HCR as cloud service providers face having to tie themselves into long software licence commitments to mitigate against monthly Microsoft subscription price rises from March.
The changes, heralded last autumn, reflect Microsoft’s move to a new commercial approach; price rises are on average 15-20% higher than current subscription prices paid by Tier 2 providers (cloud solution providers who buy the subscriptions via Tier 1 providers). Those price rises would have to be passed on to the Tier 2 providers’ customers .
If the Tier 2 providers commit to a longer licence, of between one and three years, they could be protected from the price rises.
Daniel said: “The problem arises if any of the Tier 2 providers’ customers become insolvent or default on the contract they have with the Tier 2 provider, because ultimately the providers will lose money as a result of purchasing the licences from Microsoft in full and in advance.
“We are already working with clients who are amending their contracts to take account of the changes between them and Microsoft around the provision of Software as a Service (SaaS) and also to provide as much protection as possible from the price increases.
“These increases are likely to affect hundreds of providers across the UK and Europe; I would urge anyone in this situation to move quickly to get their contracts reviewed and amended.”
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