Background
The client is a leading telecommunications company headquartered in Buenos Aires, Argentina, with operations spanning mobile, broadband, and fixed-line services across South America. With approximately 10,000 employees serving millions of subscribers and annual revenue of approximately USD $1.5 billion (ARS 150 billion), the company is one of the largest telcos in the region and a significant Microsoft enterprise customer. The telecom industry operates on razor-thin consumer margins with enormous infrastructure costs, making cost optimisation on every vendor contract — particularly recurring software spend — a strategic priority rather than a mere procurement exercise.
The company's Microsoft estate was substantial and multi-dimensional. Microsoft 365 licences covered all corporate and regional office staff — predominantly E3, with approximately 1,000 users on E5 for IT, cybersecurity, and teams that had adopted Microsoft Teams Phone System for call centre operations. Azure formed the backbone of the company's digital transformation: hosting internal applications, customer-facing services including AI-powered customer support bots, data analytics platforms, and development/test environments. The EA also included SQL Server licences (some on-premises, some migrated to Azure SQL), SharePoint infrastructure, and Power BI Pro licences distributed across various departments.
The existing EA was mid-term, but two converging pressures created urgency for proactive renegotiation. First, the company had launched a corporate-wide cost-cutting programme that required every business unit to identify savings — IT procurement was under particular scrutiny given the scale of Microsoft spend. Second, the Azure commitment was approaching its renewal window, and the company's cloud consumption team had identified that actual Azure usage was running significantly below the committed spend level, meaning they were paying for cloud resources they were not consuming. The CFO directed the IT leadership to engage Redress Compliance to quantify the waste, restructure the agreement, and negotiate terms that reflected actual business needs rather than optimistic projections.
The Challenges
Azure Overcommitment
The company was consuming only approximately 80% of its annual Azure commitment — a 20% gap representing millions of pesos in paid-but-unused cloud resources. The overcommitment stemmed from projections during the original negotiation that assumed a faster cloud migration pace than actually materialised, including a major analytics platform that was delayed by 18 months.
E5 Licence Waste
Approximately 1,000 users held E5 licences, but analysis showed only ~200 genuinely used E5-exclusive features (Defender for Endpoint, advanced compliance, Teams Phone). The remaining ~800 used email, Office apps, and Teams — identical to E3 functionality — yet the company paid the substantial E5 premium for each.
Ghost Accounts & Shelfware
Approximately 500 inactive or duplicate accounts persisted across the estate — accumulated from employee turnover, regional office mergers, and a partial organisational restructuring. Power BI Pro licences were similarly over-allocated: many holders only viewed reports (available on free viewer roles) rather than creating them.
Currency & Inflation Risk
Argentina's hyperinflationary environment meant that ARS-denominated payments created unpredictable cost spikes when the currency devalued against USD. The existing EA contained no currency protection mechanism, exposing the company to significant budget volatility that made multi-year financial planning extremely difficult.
Microsoft's preliminary stance in renewal discussions compounded these challenges rather than addressing them. The Microsoft account team proposed maintaining or increasing the Azure commitment, citing new Azure AI services, Power Platform expansions, and other capabilities the company "could" adopt. They also pushed for retaining the full E5 footprint, arguing that the advanced security features were essential for a telecommunications company handling customer data. There was no proposal to address the overcommitment, the ghost accounts, the Power BI waste, or the currency exposure. The approach was, as in many large EA renewals, to protect and grow Microsoft's revenue from the account rather than to optimise the client's investment.
The company additionally faced structural inflexibility in the existing EA. The contract permitted additions but not reductions — if the company decommissioned on-premises systems (eliminating the need for certain SQL Server licences), outsourced a function (reducing M365 seats), or divested a business unit, it would still pay for those licences until the term expired. For a telecom operating in a dynamic market with ongoing transformation, this rigidity was commercially unacceptable.
How Redress Compliance Helped
Azure Consumption Deep-Dive
Redress conducted a granular analysis of Azure consumption using Azure Cost Management data, resource-level utilisation metrics, and the company's internal project pipeline. The analysis confirmed the 20% overcommitment and identified the specific drivers: a planned analytics platform that remained in pilot rather than full production (consuming 40% of its projected capacity), over-provisioned virtual machines running at 30–50% CPU utilisation that could be right-sized without performance impact, and orphaned resources — storage accounts, stopped VMs, and unused IP addresses — that were accruing charges with no business value. Redress projected realistic Azure consumption for the next two years, accounting for confirmed projects, cloud migration timelines validated with the infrastructure team (not Microsoft's optimistic assumptions), and the company's actual adoption velocity. The analysis concluded that reducing the commitment by approximately 15% from its current level — with a pay-as-you-go mechanism for consumption above the new threshold — would align spend with actual usage while preserving flexibility for growth. Redress also identified approximately $200K in immediate Azure cost savings from right-sizing VMs, eliminating orphaned resources, and switching appropriate workloads from pay-as-you-go to reserved instances.
Microsoft 365 and Licence Portfolio Audit
Redress audited the full M365 and ancillary licence portfolio using Azure AD sign-in analytics, Microsoft 365 usage reports, and the company's HR system for headcount validation. The audit identified three categories of waste. First, E5 over-licensing: of the ~1,000 E5 users, only approximately 200 were actively using E5-exclusive features — the security team leveraging Defender for Endpoint, the compliance team using advanced eDiscovery, and the call centre units using Teams Phone System. The remaining ~800 E5 users showed identical usage patterns to E3 users: email, Office apps, Teams messaging, and SharePoint. Second, ghost accounts: approximately 500 accounts were inactive (no sign-in for 90+ days), duplicated across regions, or orphaned after the organisational restructuring. Each ghost account consumed a paid licence. Third, ancillary licence waste: Power BI Pro licences had been distributed broadly, but analysis showed many holders only consumed published reports — a function available through free viewer roles or Power BI Premium capacity. Several SQL Server licences with Software Assurance were maintained on-premises for databases that had already been migrated to Azure SQL, creating a dual-payment situation. Redress quantified the total waste across all categories and mapped a licence reallocation plan that matched every licence tier to the role and usage profile of the assigned user.
Negotiation: Azure Restructure, Licence Optimisation, and Commercial Terms
Armed with comprehensive data, Redress led the negotiation with Microsoft. The negotiation addressed four dimensions simultaneously. On Azure, Redress negotiated a 15% reduction in the Azure commitment with a critical structural improvement: consumption above the new commitment threshold would be charged at the same discounted rate up to a defined ceiling — effectively pay-as-you-go with committed-spend pricing — eliminating the waste of an over-sized commitment while protecting the company from premium rates if demand spiked. Microsoft agreed because the alternative was losing the committed spend entirely. On M365, Redress negotiated maintaining E5 for only the ~200 confirmed power users and downgrading ~800 users to E3, with a promotional clause allowing the company to re-upgrade to E5 at a preferential rate if future feature rollouts justified it. The 500 ghost accounts were deprovisioned, and Power BI Pro licences were reduced to match actual creators (switching viewers to free roles). Idle on-premises SQL Server licences were identified for either retirement or Azure Hybrid Benefit credit application. On commercial flexibility, Redress secured a true-down provision allowing the company to reduce a percentage of licences at renewal if major business changes occurred (divestitures, outsourcing, or large-scale workforce reductions) — a concession that acknowledged the telecom's dynamic operating environment. On currency protection, Redress negotiated a rate-cap mechanism that limited the impact of ARS devaluation on payments, providing budget predictability in a hyperinflationary economy. The combined impact of all four dimensions delivered a 15% total reduction in annual Microsoft spend.
Long-Term Cost Governance Framework
Beyond the immediate negotiation, Redress established a governance framework to prevent cost drift from recurring. For Azure, this included implementing Azure Cost Management alerts and budgets at the subscription and resource-group level, scheduling monthly cloud governance reviews with the infrastructure and finance teams, and establishing a VM right-sizing cadence (quarterly reviews using Azure Advisor recommendations). For M365, Redress provided automated scripts to identify inactive accounts (no sign-in for 90 days) and flag them for reclamation quarterly. The governance plan also included a 12-month checkpoint: if the security team completed its Defender for Endpoint rollout and demonstrated value, specific user groups could be upgraded to E5 at the negotiated promotional rate. If not, the E3 allocation would be maintained. The CIO formalised a software licensing committee — a direct outcome of the Redress engagement — responsible for monitoring licence utilisation, reviewing Azure consumption against commitment, and ensuring that any new Microsoft purchases were validated against actual usage data before approval. This structural change ensures that the optimisation gains persist beyond the engagement period and become embedded in the organisation's procurement discipline.
Outcome and Impact
| Metric | Before Engagement | After Redress Advisory |
|---|---|---|
| Total Microsoft EA spend | 100% (baseline) | 85% — 15% reduction achieved |
| Azure commitment vs. consumption | 80% utilisation — 20% waste | ~100% utilisation — waste eliminated; pay-as-you-go for bursts |
| E5 licence count | ~1,000 users | ~200 confirmed power users (800 downgraded to E3) |
| Ghost accounts | ~500 inactive/duplicate accounts | All deprovisioned — licences reclaimed |
| Power BI Pro licences | Over-allocated — many assigned to report viewers | Reduced to actual creators; viewers on free roles |
| Currency exposure | No protection — full ARS devaluation risk | Rate-cap mechanism providing budget predictability |
| Commercial flexibility | No ability to reduce — additions only | True-down provision for major business changes; Azure burst pricing |
The 15% total spend reduction was substantial for an organisation of this scale, representing tens of millions of ARS in annual savings that the CFO's office could redirect to network infrastructure upgrades and customer-facing digital initiatives with clearer return on investment. The savings were achieved entirely through waste elimination and structural renegotiation — no mission-critical capabilities were sacrificed, and no business functions were disrupted.
The Azure restructure was particularly impactful. By aligning the commitment to actual consumption, the company stopped the haemorrhage of paid-but-unused cloud resources. In the first year after renegotiation, Azure costs tracked the new commitment almost exactly, with a small amount of burst consumption handled under the negotiated pay-as-you-go terms at committed-spend rates. The behavioural impact was equally valuable: project teams became more disciplined about cloud cost management, knowing that excess capacity would not be automatically absorbed by an oversized commitment. Azure transitioned from a lump-sum expense — partly going to waste — into a well-governed utility with consumption matched to business value.
The E5 downgrade removed a significant layer of cost from the M365 estate without any impact on daily productivity. The ~800 users who moved to E3 noticed no difference — they continued using email, Office apps, and Teams exactly as before. The 200 users who retained E5 were identified as genuine power users: the security team deployed Defender for Endpoint more aggressively knowing that only committed users held the licence, and the compliance team expanded its use of advanced eDiscovery. The result was fewer E5 licences generating more actual security and compliance value — a better outcome for both the budget and the organisation's risk posture.
The currency protection mechanism was a critical win in the Argentine context. In a country where annual inflation regularly exceeds 100%, a multi-year Microsoft agreement without currency protection can produce year-over-year payment increases that dwarf any negotiated discount. The rate-cap mechanism provided the predictability the CFO needed to plan Microsoft spend across the EA term without worrying about macroeconomic shocks consuming the savings achieved through optimisation.
"Redress Compliance helped us take back control of our Microsoft spending. We knew we were overspending on Azure and licences, 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 levelled the playing field with Microsoft. Now our EA fits our business, not the other way around." — CFO, Argentine Telecom Provider
Key Lessons for Telecom and Large Enterprise CIOs
🎯 Microsoft EA & Azure Optimisation Takeaways
- Audit Azure consumption against commitment before renewal: Most Azure commitments are sized on optimistic projections. Analyse actual consumption at the resource level, identify orphaned resources, right-size over-provisioned VMs, and project realistic demand based on confirmed projects — not Microsoft's growth assumptions. A 15–20% overcommitment gap is common and entirely recoverable.
- Challenge E5 as an organisation-wide need: E5 is a powerful security and compliance suite, but only a small percentage of users typically leverage its exclusive features. Profile E5 usage by feature (Defender, Teams Phone, advanced eDiscovery, Power BI included) and downgrade users whose consumption matches E3. The per-user cost difference is substantial and compounds across thousands of seats.
- Eliminate ghost accounts systematically: Employee turnover, M&A, and organisational restructuring create inactive accounts that consume paid licences silently. Implement automated 90-day inactivity detection and quarterly deprovisioning reviews. In large enterprises, ghost accounts routinely represent 3–5% of total licence spend.
- Negotiate Azure burst pricing at committed-spend rates: Rather than over-committing to avoid premium rates, negotiate a structure where consumption above the commitment threshold is charged at the same discounted rate up to a defined ceiling. This eliminates overcommitment waste while preserving price protection for growth.
- Demand currency protection in volatile economies: For organisations operating in high-inflation environments, a multi-year EA without currency protection is a budget risk that can exceed any negotiated discount. Negotiate rate-cap mechanisms, USD-denominated pricing, or indexation formulas that limit the impact of local currency devaluation on payments.
- Secure true-down provisions for dynamic businesses: Standard EA terms permit additions but not reductions. If your business environment includes potential divestitures, outsourcing, or large-scale workforce changes, negotiate a true-down clause allowing you to reduce licences at renewal anniversaries. This prevents paying for software that serves employees or business units that no longer exist.
- Establish a software licensing committee: One-off optimisation degrades without ongoing governance. Formalise a cross-functional committee (IT, finance, procurement) responsible for monitoring licence utilisation, Azure consumption, and vendor contract terms. Regular governance prevents cost drift and ensures optimisation gains compound over time.
- Engage independent advisers for EA renegotiation: Microsoft's account team is incentivised to maintain or grow spend. Independent advisers benchmark Azure commitments against actual consumption, validate licence utilisation data, and negotiate structural terms that Microsoft will not offer unprompted — including the currency protection and true-down provisions that were central to this engagement's success.