Healthcare systems operate in a very competitive marketplace. So they are extremely motivated to find any cost savings that can be redirected to patient care. But IT technology can be a bit of a blind spot – and cost overruns can occur if there is no hardware or software asset management team looking for it.

The Problem

By not knowing the details of their O365 licensing, the hospital conglomerate overpaid $1.5M across their 3-year ESA.

The group in question was already over a barrel. They had been audited by Microsoft and penalized for unlicensed MS Office installations throughout the organization. Consequentially, they were quickly forced into an Enterprise Subscription Agreement without enough time to properly vet the agreement. Worse, at the time, they had no effective IT Asset Management (ITAM) nor Software Asset Management (SAM) program to push back on Microsoft’s findings.


The Chief Operating Officer knew he had a problem, and decided he didn’t want to be in this position ever again. An ITAM team was spun-up – leveraging the Pragmatic ITAM Method – with the goal to prevent such un-budgeted penalties from ever happening again.

While preparing for the Year 2 true-up, the ITAM team found the issue. When the ESA was originally drafted, Microsoft identified only two use cases:


  • Knowledge Workers are what anyone would think of as end-users. They were all assigned a corporate-issued laptop or desktop and a O365 account for emails, Word documents, Excel spreadsheets, etc.


  • Medical Terminals were PCs scattered strategically throughout the hospital buildings so healthcare providers could access the electronic medical records as quickly and efficiently as possible.

Turns out there was a third use-case: doctors and nurses that use the Medical Terminals instead of a corporate-issued laptop or desktop. This created an overlap of the Client Access License (CAL) component – Microsoft’s use-right for their operating system to communicate with other Windows computers within the same corporate network.

The Solution

The Pragmatic ITAM Method made it easy and apparent to find license conflicts like this. Cross-comparing the login activity against the hospital’s Active Directory logins, to the O365 portal logins, and the hardware asset data within the Configuration Management Database (CMDB) highlighted this exact population. Further, thanks to advanced Azure reporting, there was no question these CALs were coming from Medical Terminal computers.

The Result

When confronted with this third use-case, Microsoft capitulated and offered the following:


  • The existing ESA agreement would be modified, adding this third end-user category


  • Year 2 and Year 3 payments would be reduced by $500,000 each


  • Year 1 payment would be too costly to return, so an ‘in kind’ offer was extended


But what services could be useful?

The Chief Information Security Officer (CISO) already had a line item in his budget for improved cybersecurity defenses. Microsoft, then, offered to assist with:


  • Lift-and-shift of on-premises Exchange servers to Azure cloud


  • Advanced Threat Protection through the rest of the agreement


  • White Glove 24x7x365 response for technical issues and outages

We Found The Overspend!

Thanks to the Pragmatic ITAM Method, the hospital group expanded the scope of ITAM and found even more savings.

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