How to get more out of your Microsoft Enterprise Agreement
Successfully negotiating the Microsoft Enterprise Agreement.
Strategies for purchasing and IT.
The Microsoft Enterprise Agreement (EA) is the central component of IT procurement for many companies and often accounts for over 30 % of total software expenditure. Price increases are the norm, while the scope for negotiation is becoming increasingly limited.
Without a solid negotiation strategy, companies risk considerable additional costs, for example due to excessive Azure commitments and contract terms that fall far short of industry benchmarks. Only those who understand Microsoft’s approach can avoid unnecessary costs.
This article explains how to break through Microsoft’s negotiating tactics, which approaches lead to better conditions and how companies can sustainably optimise their IT costs.
Overview: The Microsoft Enterprise Agreement
A Microsoft Enterprise Agreement (EA) is a licence agreement specifically for medium-sized and large companies with 500 or more users or devices. It offers a standardised, flexible and cost-effective way of licensing Microsoft software on a large scale. The term is usually three years, during which companies are guaranteed fixed prices, discounts and centralised management.
The key benefits of an Enterprise Agreement:
- Long-term cost control: Companies commit to a term of three years, which protects against price increases. The costs for licences can be divided into three annual instalments.
- Significant discounts compared to the standard price: High discounts are possible depending on the volume and licensing model. Companies benefit from economies of scale. The discount levels are:
Level A: 500-2,399 users or devices
Level B: 2,400-5,999 users or devices
Level C: 6,000-14,999 users or devices
Level D: 15,000+ users or devices - Software Assurance (SA) always included: This includes:
- Version upgrades at no additional cost during the contract term
- Technical support directly from Microsoft
- Training and deployment benefits to optimise software implementation
- Price stability: An EA ensures stable prices for companies, regardless of currency fluctuations or Microsoft price increases during the contract term.
- Scalability and flexibility: Companies can add additional licences each year (true-up). Some EA models allow a reduction of licences (true-down) if requirements change, for example due to terminations or reorganisations.
What commitments do you make with an EA?
The conclusion of a company agreement is associated with certain obligations:
- Platform commitment:
Companies generally have to purchase a minimum number of licences for all users (e.g. Windows, Office, CALs). A full ‘Enterprise-Wide’ approach can enable additional discounts. - Software Assurance (SA) is mandatory:
All licences within an EA must be purchased with Software Assurance. This ensures that companies always have access to the latest versions and benefits. - Annual true-up payments:
Companies must report the actual licences used once a year. If usage has increased, additional licences must be paid for retrospectively.
However, there is no true-down in standard EA licences – reductions are not provided for during the term (only with a suitable addendum).
What is the difference between an EA and an EAS?
The classic Enterprise Agreement (EA) is based on a permanent licence:
- The licences are paid for in three annual instalments and then belong to the company.
- Software Assurance (SA) expires after the contract term if it is not extended.
The Enterprise Agreement Subscription (EAS) is based on a subscription model:
- Companies pay an annual subscription fee and do not own the licences.
- At the end of the contract, the licences must either be taken over through a buyout option or their use must be discontinued.
Why do you need an enrolment?
A Microsoft Enterprise Agreement alone is not sufficient to purchase licences. It must include at least one enrolment:
- Microsoft Enterprise Enrollment (with subscription option))
- Server and Cloud Enrollment (SCE)
While classic Enterprise Enrollment applies to Windows, Office and Client Access Licences (CALs), Server and Cloud Enrollment (SCE) is specifically geared towards server products such as SQL Server, Azure and Windows Server.
Current discounts in SCE:
- 15 % discount on new licenses with software assurance
- 5 % discount on software assurance renewals
What is Microsoft’s sales approach?
Microsoft pursues a consistent sales strategy aimed at systematically increasing revenue per customer. Every phase of customer interaction is methodically planned. Companies that do not understand this approach run the risk of being forced into disadvantageous contract structures.
How are Microsoft Account Executives (AEs) incentivized?
Microsoft’s sales teams operate according to clear guidelines and financial incentives that focus on predictable sales and long-term customer loyalty.
Centralized control mechanisms:
- Enforcement of the pricing model: Microsoft only grants limited scope for negotiation. AEs are required to largely maintain standard prices and contract terms.
- Promotion of subscription models: The switch from perpetual licenses to subscription models (M365, Azure) is a strategic goal. Customers are specifically steered towards long-term subscription contracts.
- Long-term Azure commitments: Companies are being pushed into multi-year cloud commitments to create stable revenue streams for Microsoft.
- Quarterly-driven negotiations: deals must fall within certain quarters. This leads to artificial urgency and supposedly “final” discount offers.
What timetable is Microsoft following?
Microsoft starts planning internally for the next renewal 18 months before the EA renewal. The main phases are:
- T-18 months: Initial discussions with customers on long-term IT strategy. Microsoft now also offers large customers various free “ideation workshops” to learn as much as possible about upcoming IT projects.
- T-12 months: In the regular phone calls and meetings with Microsoft, upselling offers are now specifically placed in order to anticipate the customer’s own planning. The goal is clear: the customer should not get the idea that the Microsoft portfolio could be consolidated.
- T-6 months: Microsoft increases the pressure to negotiate in order to speed up contract extensions. Suddenly Microsoft starts setting deadlines – time windows that supposedly have to be met urgently. IT departments and purchasing departments are now being called separately to identify discrepancies.
Companies that are unprepared for these mechanisms quickly act passively, while Microsoft’s sales team acts routinely and methodically. How can it be better?
The 5 phases of a successful Microsoft Enterprise Agreement negotiation
Successful negotiation of the Microsoft Enterprise Agreement (EA) requires early planning. Companies that take a structured approach not only secure better conditions, but also minimize contractual risks.
The following five-phase approach ensures that companies go into negotiations prepared and use Microsoft’s sales strategy to their advantage.
Phase 1: Analysis and inventory (T-12 months)
Regardless of whether details of your IT strategy have been shared with Microsoft beforehand, a detailed analysis of the current license landscape is essential as the basis for a successful negotiation strategy. Companies must gain transparency about their actual requirements and check existing contracts for optimization potential.
- Inventory of all Microsoft licenses and cloud services: Recording of all products used, identification of unused or duplicate licensed software.
- Optimize needs-based licensing: Review of user roles, targeted adjustment of E3/E5 licenses and reduction of over-licensed users.
- Check alternative scenarios: Compare Enterprise Agreement with CSP, MPSA and other models to determine optimal cost structures.
- Create a basis for negotiation: Data-based understanding of current usage and cost structure to develop sound arguments for savings and better contract terms.
Phase 2: Definition of the negotiation strategy (T-9 months)
Once the current situation has been assessed, strategic preparation for the negotiation follows. The aim is to define realistic savings targets, explore the scope for negotiation and develop viable alternative scenarios.
- Identify scope for negotiation: Define target discounts and potential savings, analyze contract risks and develop strategies to minimize them.
- Use Azure commitments as leverage: Microsoft is prioritizing cloud growth, so strategic Azure commitments can enable better discounts and value-added services.
- Define Best Alternative to Negotiated Agreement (BATNA): Define alternative scenarios (e.g. CSP or third-party licenses) in the event of failed negotiations.
Phase 3: Alignment with stakeholders (T-6 months)
Close coordination between purchasing, IT and management is essential in order to enter negotiations with a clear, uniform strategy.
- Coordination between procurement, IT, finance and management: define a joint strategy and priorities to avoid contradictions in the negotiations.
- Prepare the budget committee: Ensure that all planned license and cloud costs can be realistically financed.
- Run through scenarios for different contract outcomes: Simulate effects of discount levels, cloud obligations and alternative license models.
- Clarify responsibilities: Ensure that quick approvals are possible during negotiations.
Phase Phase 4: Negotiation with Microsoft (T-3 months)
Negotiating with Microsoft requires a data-based and tactically clever approach. Companies should carefully analyze Microsoft’s initial offers, formulate counter-offers and work towards contract optimizations. Every “ask” must be justified and well thought out.
- Analyze Microsoft offers and compare them with benchmarks: Compare with internal calculations, market data and alternative license models to avoid overpaying.
- Negotiate volume discounts and long-term price caps: Secure best possible discounts and limit price increases in the coming contract years.
- Optimize service conditions: Include support levels, contract flexibility and additional services such as migration support or training.
- Identify weak points in the Microsoft offer: Recognize unfavorable clauses and use them specifically for renegotiations.
Phase 5: Contract conclusion and implementation (T-30 days)
After successful negotiations, the process is not yet complete. Implementation and contract management are crucial in order to secure the negotiated benefits in the long term. Companies should ensure that all contract details are carefully checked and documented.
- Check and document the contract: Ensure that all agreed discounts, price caps and service conditions have been correctly recorded.
- Ensure license management and compliance: Establish processes to manage licenses efficiently and minimize future risks from under- or over-licensing.
- Monitor initial billing and usage: Check whether billing corresponds to the negotiated conditions and address deviations at an early stage.
- Plan long-term optimization: Develop strategies for continuous cost control and future contract renewals to maximize savings potential.
Checklist for the negotiations
1. Cost control through efficient license management
- Identify and clean up inactive or duplicate licenses.
- Optimize Microsoft 365 license tiers: Use E5 licenses only where needed and move over-licensed users to more cost-effective E3 or business plans.
- Consolidate SQL Server: Reduce oversized server structures to cut license costs by up to 40 percent.
Common mistake: Planning negotiations at too short notice. Companies should plan at least 8-12 months in advance.
2. Use Azure as a negotiating lever
- Use strategic Azure commitments: Companies with strong cloud growth can often negotiate additional discounts of 10 to 20 percent.
- Negotiate better support terms: Higher Azure usage can allow for more advantageous SLA levels and reduced support costs.
- Use multi-cloud strategies as a bargaining chip: Weigh up Microsoft’s offering against alternative cloud services (AWS, Google Cloud).
Common mistake: Companies accept high cloud commitments without realistic demand planning.
3. Optimize contract terms in a targeted manner
- Limit price indexation: Contractually limit or exclude annual price adjustments.
- Defuse audit clauses: Reduce Microsoft’s license audit rights to the minimum necessary.
- Optimize support costs: Only book Unified Support to the extent that is actually required.
- Avoid verbal commitments: Put all negotiated conditions in writing in the contract.
Common mistake: Companies underestimate long-term contract terms. Termination rights, price adjustments and compliance clauses can have a financial impact.
4. Strategically utilize Microsoft’s sales strategy
- Know Microsoft’s priorities: High discounts are particularly possible for strategic products such as Microsoft Copilot or Azure Consumption.
- Use pilot projects in a targeted manner: Microsoft programs (ECIF, Azure Migrate Program) for financial support in the implementation of POC or minimum viable products.
- Become a reference customer for Microsoft: Companies that position themselves as a showcase customer for new products often receive exclusive discounts.
Common mistake: Companies are lured by aggressive product discounts without considering the long-term costs. Many introductory discounts often do not apply until the follow-up contract.
5. Protect your own negotiation strategy against Microsoft’s tactics
- Check Microsoft offers critically: Compare internal benchmarks with standard market prices to avoid excessive costs.
- Question Microsoft’s artificial urgency: Many supposedly “final” deadlines are negotiable. Companies should not allow themselves to be put under pressure.
- Streamline internal decision-making processes: Avoid delays in the release phase to strategically take advantage of Microsoft’s quarterly targets.
- Pursue an independent license strategy: Do not rely solely on the reseller (LSP), but build up expertise internally or bring in external consultants.
Common mistake: Companies pass on too much usage data to Microsoft. Too much transparency about the use of licenses reduces your own room for negotiation.
Microsoft Enterprise Agreement: Conclusion and outlook
Microsoft’s licensing landscape is constantly changing. Companies are faced with the challenge of securing competitive contract conditions in the long term. Successful EA negotiations therefore require sound preparation, a data-based decision-making foundation and a clear negotiation strategy. Companies that create transparency about their license requirements at an early stage, make targeted use of Microsoft’s sales mechanisms and evaluate alternative scenarios can therefore achieve considerable savings and establish a future-proof license strategy at the same time.
Small and medium-sized EA customers in particular are facing turbulent times. Microsoft is developing the Enterprise Agreement in a targeted manner and is increasingly trying to place the Microsoft Customer Agreement for Enterprise (MCA-E). The first customers are reporting that they are no longer being offered an Enterprise Agreement at all. The new MCA-E model is a contract without a contract term – it is valid for an indefinite period. As a result, the scope for negotiation for companies is further reduced.
Further price risks arise from the fact that the MCA-E is paid in dollars. Reserves must therefore also be formed for currency fluctuations. Companies should carefully examine whether MCA-E or alternative licensing models such as Cloud Solution Providers (CSP) offer better economic conditions in the long term.
More than ever, the key to successful IT procurement lies in a proactive and flexible license strategy. Those who evaluate all options in good time, base negotiations on solid data and do not allow themselves to be put under pressure by Microsoft’s tactics will not only secure short-term savings, but also sustainable cost benefits and strategic planning security.
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The author
Philipp Garra, Microsoft Practice Lead bei SAMtoa GmbH
