Case Study – Microsoft EA Renewal Service Argentina Telecom Provider – Microsoft EA Overhaul Reduces Spend 15% and Optimizes Azure Commit
Background
A leading telecommunications company in Argentina, with headquarters in Buenos Aires and operations throughout South America, engaged Redress Compliance to refine its Microsoft Enterprise Agreement strategy.
The company has 10,000 employees and serves millions of mobile and broadband customers. Annual revenue is around ARS 150 billion (approximately USD 1.5 billion).
The Microsoft landscape at this telecom includes Microsoft 365 for all corporate and regional office staff (mostly E3 licenses, with some E5 for IT and cybersecurity teams), extensive Azure usage for hosting internal applications and some customer-facing services (like digital customer support bots), and a variety of other Microsoft products such as SQL Server, SharePoint, and Power BI utilized across different departments.
The existing EA covered all these aspects and was mid-term; however, due to corporate cost-cutting initiatives and an upcoming Azure renewal, the company wanted to proactively renegotiate key aspects to avoid overspending.
They were especially keen to ensure their Azure commitment matched their actual consumption patterns and to eliminate any “bloat” in licenses that weren’t fully utilized.
Read our guide to Microsoft EA renewals.
Challenges
The telecom firm’s challenges centered around Azure overcommitment and license under-utilization. In the last EA negotiation, Microsoft had encouraged a sizeable Azure consumption commitment, projecting growth that didn’t fully materialize. As a result, the company found itself using only about 80% of the Azure credits it paid for – leaving a 20% chunk as essentially wasted IT budget.
With the Azure portion up for renewal, they wanted to correct this course rather than rolling over an inflated commitment.
Simultaneously, the M365 side had its inefficiencies: a significant number of users had been upgraded to E5 during a push to adopt Microsoft’s advanced security (including using Microsoft Teams Phone System for some call centers), but not all those features were rolled out. This meant that some departments were paying for E5 without utilizing features such as voice capabilities or advanced analytics that justified the cost of E5.
In addition, being a large organization, typical issues such as inactive accounts and duplicate licenses after mergers of regional offices were present, contributing to shelfware.
Microsoft’s stance in preliminary talks was to maintain or increase commitments, citing new services (like Azure AI services, Power Platform expansions, etc.) that the company “could” use. Still, the company was cautious about buying promises instead of actual needs.
Another challenge was contract rigidity: the EA was not very forgiving if they wanted to drop services.
For a telecom business, it can adapt to technological changes – e.g., if they decommission an on-premises system, they might no longer need certain server licenses, or if they outsource a function, some M365 seats may be reduced. The current EA didn’t allow any reduction, only additions.
They sought more commercial flexibility and better terms, such as rate protections against currency volatility (inflation in Argentina is a concern, making predictable pricing crucial).
They also wanted to align Microsoft spending with revenue generation – ensuring that investments like Azure were tied to actual projects that improved operations or customer experience, not just shelfware, “because it was in the EA.”
How Redress Compliance Helped
- Azure Consumption Analysis: Redress Compliance dove into Azure usage reports. They confirmed that, indeed, the company was utilizing roughly 80% of its annual Azure commitment. The unused 20% translated to several million ARS of paid but unused cloud resources. Redress identified areas that were underutilized: for example, a significant portion of reserved capacity for a planned analytics platform remained unused because the project was delayed. They projected realistic Azure needs for the next 1-2 years, factoring in planned projects and the company’s cloud adoption pace. The analysis suggested that instead of the current commitment (let’s say 100 units), a commitment of 85 units would be more in line, with the ability to burst beyond if needed. They also evaluated Azure resource efficiency – checking if any running services were over-provisioned. In doing so, they found opportunities to optimize, such as rightsizing certain VM instances and cleaning up orphaned resources, which would further reduce actual consumption without impacting performance. This gave the company confidence that a lower commitment wouldn’t hurt operations.
- Microsoft 365 and License Audit: Redress also assessed M365 and other licenses. They found approximately 1,000 E5 licenses assigned, but roughly 300 of those users weren’t leveraging any E5-exclusive functionality; they primarily used email, Office apps, and Teams, just like any E3 user. This indicated the potential to downgrade them to E3. Meanwhile, approximately 200 users truly required E5 (security, compliance, voice, and analytics roles). The remainder (~500) were borderline cases where either some training or feature rollout was needed to justify E5 or else they too could be downgraded. Redress noted that advanced security features from E5 were not fully deployed – the security team was still in transition to Microsoft’s tools. They recommended focusing on E5, where the company could utilize it, and not renewing it elsewhere until ready. The audit also flagged ~500 inactive or duplicate accounts (users who had left or had multiple accounts from different regions, which were consolidated) – those licenses would be reclaimed. Some other products: The company had several Power BI Pro licenses, but many were assigned to individuals who rarely used Power BI (perhaps they only viewed reports via free licenses). This was an area where licenses could be trimmed (utilizing shared capacity or free viewer roles for those users). Additionally, on SQL Server, the EA included a certain number of SQL licenses with Software Assurance. However, the company had migrated some databases to Azure SQL services, resulting in some on-premises SQL licenses being idle – an opportunity to potentially trade those in or reduce support on them, thereby saving costs.
- Negotiation – Azure Restructure and License Optimization: With data in hand, Redress went to bat. They negotiated to reduce the Azure commitment by 15% (from the overcommitted level) while securing the right to ramp up if needed. Microsoft, keen not to lose cloud business, agreed to a structure where the company would commit to, say, 85 units now. However, if they consumed above that (up to, say, 100 or more), they’d still get the same discounted rate – essentially pay-as-you-go with commit pricing up to a threshold. This removed the waste while allowing growth without penalty. On Microsoft 365, Redress negotiated maintaining an E5 footprint only for the ~200 confirmed users who needed it and converting the rest to E3, which significantly reduced costs. They pushed Microsoft for a compromise: since Microsoft originally wanted more E5s, they offered to leave the door open – if the company later decided to add E5s back, Microsoft would honor a promotional discount. However, for now, pricing has been adjusted to primarily E3. Overall, the negotiation resulted in a 15% reduction in the client’s annual Microsoft spend. This was a big win given the scale of their contract. Redress also secured improved terms, including a clause for currency protection (such as pricing in USD or a rate cap mechanism) to guard against the effects of hyperinflation on local currency payments, and a more lenient true-up policy. The company got the ability to true-down a small percentage of licenses at renewal if certain large projects (like a business unit spinoff) occurred – a concession acknowledging the dynamic business environment.
- Long-Term Cost Management Plan: Redress provided the telecom with a plan to keep costs aligned going forward. For Azure, they recommended implementing Azure cost management tools and holding regular governance meetings to review cloud spend, ensuring the company never drifts into overcommitting. For Microsoft 365, they outlined a rollout plan for E5 features to those 200 key users to maximize the value of those licenses (for example, fully deploying Defender for Endpoint or making use of Teams Phone if available). They also set key checkpoints: in a year, re-evaluate E5 vs. E3 usage. If the security team has rolled out more features and finds it beneficial, consider shifting some resources to E5 (with negotiation); otherwise, keep it lean. The plan emphasized continuous optimization – not to sign and forget, but to treat the EA as something that can be tweaked with data. They also empowered the client’s IT finance team with templates to track license assignment and identify unused ones every quarter (e.g., leveraging scripts to find users with no logins in 90 days and reclaim their license). This will maintain the hygiene achieved.
Outcome and Impact
- 15% Spend Reduction: The renegotiated terms resulted in a 15% reduction in Microsoft spending, which for this telecom equated to a substantial amount (in the range of tens of millions of ARS saved annually). These savings were realized without detracting from any mission-critical IT capabilities; they came from eliminating waste and paying only for what was needed. Given the economic pressures in Argentina, such savings were also very welcome from a financial planning perspective. The CFO’s office could reallocate those funds to network infrastructure upgrades and customer-facing initiatives that had clearer ROI.
- Azure Investment Realigned: By trimming the Azure commitment to match actual usage, the company essentially stopped the bleeding of wasted cloud spend. Now they pay for ~100% of what they use, not 120%. In the first year after renegotiation, they indeed found their Azure costs matched the commit well, with a little headroom for new projects. They avoided the previous scenario of scrambling to use up credits on low-priority tasks (something they had done late in the year just to not waste it). This discipline also encouraged more careful cloud planning internally – project teams became more aware of cloud costs and started optimizing, knowing excess wouldn’t be automatically covered by overcommitment. If new projects ramp up, the flexible terms ensure they can scale without needing to renegotiate each time. Overall, Azure is now a well-managed utility rather than a lump-sum expense, partly going down the drain.
- Lean Licensing and Improved Utilization: The shift back to predominantly E3 licenses for most staff members lowered costs without hindering productivity. Many users notice no difference – they have all the tools they use daily. The IT security team and others who kept E5 are now committed to leveraging those advanced tools fully, which should yield better security and insights for the company. The license utilization rate (licenses assigned vs actually needed) has improved markedly: those 500 inactive/duplicate licenses are gone, so almost every license now corresponds to an active employee. And with the new tracking process, any new idle ones will be quickly re-harvested. The Power BI and other ancillary licenses were trimmed so that now mostly actual practitioners hold them. This means each peso spent on Microsoft licensing is tied to an employee deriving value from it – a big improvement in ROI.
- Greater Commercial Flexibility and Control: The newly negotiated terms gave the company more control. The currency protection clause provided predictability in budgeting – a crucial factor in an inflationary environment. The ability to adjust (even if limited) for major changes like divestitures or acquisitions is a safety valve that they didn’t have before. They also feel more in control of the Microsoft relationship: rather than passively accepting proposals, they have proven they can steer the conversation using their data. This proactive stance will serve them well. Internally, this case raised the profile of software asset management and cost governance. The CIO formed a small licensing committee to monitor these issues, an outcome influenced by Redress’s engagement. That means the benefits of this optimization are likely to persist and even increase over time.
- Strategic Refocus on Value: Cutting out the fat in the Microsoft EA refocused the company on where Microsoft technology truly adds value. For example, they identified that using Azure for certain customer-facing bots yielded a high ROI and wanted to invest more in this area. In contrast, some internal projects using Azure with unclear benefits were deprioritized. Similarly, they reinforced that advanced M365 capabilities are great, but only if fully utilized; otherwise, stick to what’s necessary. This clearer understanding helps them plan their digital strategy more effectively. They’ll likely engage Microsoft for help in areas that matter (like optimizing their data AI for customer service) rather than simply buying whatever Microsoft suggests. It’s a shift to a value-driven adoption of technology.
Client Quote
“Redress Compliance helped us take back control of our Microsoft spending. We knew we were overspending on Azure and licenses, but Redress showed us exactly where and how much, then negotiated a solution that made an immediate impact. We’re saving approximately 15% on our Microsoft costs, which is significant for us, and no longer paying for unused cloud resources. What I appreciate most is that we achieved these savings without cutting any corners – all our critical tools are still in place, just streamlined and right-sized. Redress’s independent expertise and tough negotiation on our behalf leveled the playing field with Microsoft. Now our EA fits our business, not the other way around.” – CFO, Argentina Telecom Provider
Call-to-Action
Are you concerned that your Microsoft cloud spend or licenses are more than you truly need? Contact Redress Compliance for a free Microsoft EA Optimization Assessment. We specialize in helping telecom and large enterprises reduce wasteful commitments, negotiate flexible terms, and align their Microsoft investments with actual business usage. Don’t let overspending on software eat into your innovation budget – let Redress Compliance help you optimize and save.
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