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As a result of the slump in Sterling after the Brexit vote, Microsoft announced it will be increasing the cost of using Azure and Office 365, its cloud platforms, by 22% from 1 January 2017. Microsoft will also raise the price of standard software licencing by 13% as a consequence of losing revenues of around 18%.
It isn’t the only area this is happening in. The move comes hot on the heels of the now infamous ‘Marmitegate’, when the maker of the ‘love it or hate it’ spread, Unilever, tried to raise its prices by 10% for the same reason.
The impact of Microsoft’s price rise on IT budgets will be profound. Businesses have become more and more reliant on the cloud and whilst there are other cloud providers, they are more than likely to follow Microsoft’s lead, effectively holding us all to ransom.
Choppy waters ahead
This year, there have been two huge political upheavals – Brexit and the election of Donald Trump – which have left us in a period of flux, and we’ve never been in a period with so much risk coming from multiple sources at the same time – globally as well as in the UK.
UK economic growth has already slowed down. With the UK leaving Europe, there will inevitably be a change in the tax regime, but how far will they go, and will they address the tax avoidance criticisms of the big tech companies like Google and Amazon… and what might the knock-on effects be for us?
How to mitigate unexpected price hikes
Whilst the Microsoft price rise has come as a bombshell, there has never been a better time to think about how you could make your business more efficient in order to save money elsewhere in order to absorb some of the costs. If your server is old, for instance, you could replace it with a newer one which uses less electricity. Perhaps a review of your licensing costs will reveal you are overspending. Or perhaps revisiting your processes will prompt better ways of optimising IT usage.
If you are worried about the rising costs of your IT budget and would like to investigate our IT outsourcing services, contact us to discuss your needs.
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Keidan Harrison LLP
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Lambert Energy Advisory
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