Microsoft pays customer $250,000 to use Office 365

The University of Nebraska is dumping Lotus Notes for Microsoft's Office 365, and getting $250,000 from Microsoft to help make the move.


The University of Nebraska is dumping Lotus Notes for Microsoft's Office 365, and getting $250,000 from Microsoft to help make the move.

"Microsoft is providing $250,000 in Business Incentive Funds to help us migrate from Lotus Notes to Office 365," the school's website says in an explanation of why it is moving faculty and staff to Microsoft's cloud service. "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."

Clearly, customers buying in bulk have some leverage in negotiating contracts with Microsoft, and education customers typically get better deals to begin with. For example, the Google Apps basic service for schools is free, with discounts for security and compliance software. But the scope of discounts provided by Microsoft isn't usually revealed in public.

"I don't know how common it is, but it certainly happens," Microsoft licensing analyst Paul DeGroot of Pica Communications told ComputerworldUK's sister title Network World in an email. "In this case, you can see that it came down to a choice between Microsoft and Google, and Microsoft probably threw in $250,000 in BIFs [Business Incentive Funds] to cement the deal. This stuff generally isn't public, for good reason: customers might get the idea that if they're serious about Google, Microsoft may sweeten the pot to win the deal. Wouldn't want that to get out, would we?"

Nebraska will still be paying, though. The university's current costs for e-mail are nearly $1 million per year, a number that apparently includes both software licenses and internal resources like hardware and staffing. That number will be cut to less than a half-million dollars per year.

"It is estimated that the annual operating costs associated with delivering an e-mail service can be reduced by more than 50% from the current cost, which is just under $1 million," the university says. "There will also be one-time upfront costs associated with migrating current Lotus Notes accounts to a new system, rewriting some applications and providing training, but significant savings will be realized over the long term." Nebraska will start the migration in the fall and finish by summer 2012.

When contacted by Network World, Microsoft would not reveal details of the program that Nebraska used to get $250,000 in incentives.

"MSFT does not disclose terms of individual customer deals," a company spokesperson said in an email. "We do however, support a variety of programs designed to help customers adopt and deploy our solutions."

"Recommended For You"

Microsoft's Office 365 trumps in education, but struggles in enterprise Microsoft, IBM Lotus rivalry heats up before Lotusphere 2010