Case Study – Microsoft Negotiation Service – Australian Telecommunications Company – Microsoft CSP Optimization Cuts Costs by 15% and Boosts Cloud Flexibility
Background
An Australian telecommunications company, with 3,000 employees nationwide, was reevaluating its approach to purchasing Microsoft licenses and cloud services.
Historically, the company had purchased Microsoft licenses through the Cloud Solution Provider (CSP) program via a local IT reseller. This CSP model allowed them to pay monthly for licenses (primarily Microsoft 365 and some Dynamics 365 seats), which suited their need to scale licenses up or down as staff count changed.
However, after a few years, the spend through CSP had grown substantially, and the company wasn’t sure if it was still the most cost-effective approach.
They noticed the monthly bills creeping up, and they had little insight into whether they were over-provisioned. Microsoft had approached them about possibly moving to an Enterprise Agreement given their size, but the company was hesitant to lose the flexibility of CSP.
Redress Compliance was brought in to analyze the situation and recommend an optimal path. The goals were to reduce Microsoft licensing costs by at least 10-15% (if possible) while maintaining or even increasing the flexibility that the CSP model provided (including month-to-month adjustments), and to ensure the company wasn’t paying for unused licenses or services. Essentially, they aimed to retain the agility of CSP while eliminating any inefficiencies.
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Challenges
The main challenges centered on cost visibility and control in the CSP model.
The monthly CSP invoices were complex, listing numerous line items for various licenses and subscriptions, and the telecom company’s IT finance team struggled to understand exactly what they were paying for and why certain costs fluctuated.
Unlike an EA, where costs are negotiated and locked (but inflexible), CSP costs can vary if licenses are added or if Microsoft changes pricing.
Microsoft had implemented a price increase for Microsoft 365 that year, which automatically flowed through to their CSP bills, catching the company off guard.
Another challenge was potential over-licensing: since CSP is so easy to add licenses to, some department managers had spun up extra Power BI Pro licenses or Azure services via the CSP portal without central oversight.
There was concern that they might be paying for resources that nobody was using (for example, VMs running in Azure that had not been shut down, or M365 licenses still assigned to users who had left).
Additionally, the telecom industry has seasonal project-based work, and they wanted to ensure they were taking full advantage of CSP’s supposed flexibility – were they removing licenses during off-peak times, or were they just leaving them allocated?
Possibly not. Another issue: the company’s reseller was charging a margin on top of Microsoft’s prices (standard in CSP), but the company wondered if that margin was too high or if they could negotiate it down given their volume.
Finally, Microsoft’s hinting about moving to an EA introduced a dilemma: would an EA save money (through volume discounts) or would it reintroduce inflexibility and commit them to more than they need? The company needed clarity on this strategic decision: stick with CSP, optimize it, or switch to EA.
How Redress Compliance Helped
- CSP Spend Audit and License Cleanup: Redress Compliance initiated a thorough audit of the company’s CSP billing and usage. They examined three months of CSP invoices and cross-referenced them with actual active users and Azure resource usage. This audit uncovered several inefficiencies. For instance, Redress identified approximately 150 Microsoft 365 licenses that were paid for but either unassigned or assigned to employees who had left the company (a result of rapidly adding licenses during a growth phase without scaling back when attrition occurred). They also found that the company was paying premium CSP rates for some Azure services that could potentially be prepaid or reserved for a lower cost. Redress highlighted that CSP convenience sometimes comes at a slight premium per unit and identified which services are the costliest. Armed with these findings, Redress recommended a cleanup: immediately remove or reassign the 150 idle licenses (which alone would significantly reduce the monthly bill) and shut down or right-size the 10 Azure virtual machines that were running at low utilization. They also suggested moving a portion of Azure usage to a reserved instance model (which some CSPs can facilitate) to save on steady-state workloads.
- Negotiating a Better CSP Deal: Rather than abandoning CSP, Redress saw an opportunity to optimize it. They approached the company’s CSP reseller with the findings and an ultimatum: the company now understood its usage better and would consider moving to another reseller or different licensing program if costs weren’t improved. Redress negotiated on behalf of the company to reduce the reseller’s margin on Microsoft 365 licenses (since the volume was significant). The reseller agreed to a more favorable tier, effectively giving the company about a 5% reduction on those license prices going forward. Additionally, Redress got the reseller to agree to a fixed price for 12 months for the core Microsoft 365 SKUs, protecting the company from Microsoft’s impending price hikes (the reseller would absorb or at least delay them). This was important for budget stability. Redress also explored a hybrid approach: they discovered that some of the company’s usage (like Azure or certain Dynamics 365 modules) might be eligible for direct billing via Microsoft’s MCA with a discount, while still keeping other parts on CSP. Ultimately, the solution was to stay primarily on CSP but with renegotiated terms and a commitment from the reseller to provide more proactive cost management support.
- Implementing Processes for Flexibility: To truly leverage CSP’s flexibility, Redress helped the company set up a process. They established internal guidelines that any project-specific licenses (e.g., extra Power BI or Teams conferencing add-ons) must have an “owner” and an expiration date. Essentially, when IT adds 50 licenses for a new project team or contractors, they now tag those licenses to the project and schedule a review when the project ends to remove them. Redress also configured alerts in the CSP portal to notify IT if the total license count exceeds a specified threshold or if Azure spend in a category exceeds a monthly limit. This way, IT gets a heads-up and can investigate anomalies (for example, if someone mistakenly spins up a costly Azure resource). Over time, these measures instilled a discipline of scaling down as diligently as scaling up. Redress also provided training to department heads on requesting license removals when people roll off projects – making flexibility a shared responsibility, not just IT’s job.
- EA vs CSP Analysis and Decision: Redress concluded by revisiting the question of Enterprise Agreement versus CSP. They ran a scenario analysis: if the company were to go to an EA for 3 years at current usage, what would it cost with typical discounts versus staying on an optimized CSP? The analysis, which included the new CSP discounts Redress received, showed that CSP was still more cost-effective, given the company’s need to fluctuate licensing (the EA would make them pay for a higher baseline even in slow periods) and the fact that Redress had trimmed much of the fat from the CSP spend. They also pointed out that many companies of their size save 10–20% by switching from EA to CSP by eliminating unused licenses – in their case, they had already been on CSP but hadn’t capitalized on the benefits until now. With the newfound optimizations, they were essentially realizing those savings while avoiding EA lock-in. The company’s leadership decided to stick with the CSP model, now confident that it could be cost-efficient with the right oversight.
Outcome and Impact
- 15% Cost Reduction in Microsoft Spend: Within a couple of months of implementing Redress’s recommendations, the Australian telecom saw its monthly Microsoft costs drop by about 15% on average. This was a combination of the license cleanup (removing unnecessary licenses), the reseller’s reduced margins, and smarter management of Azure resources. That 15% saved amounted to a significant annual figure – funds that directly improved the company’s earnings or could be reinvested elsewhere (some were allocated to a new customer analytics initiative). Importantly, these savings did not come at the expense of any loss of capability for the business; no one lost any software they truly needed. It was pure efficiency gain.
- Enhanced Cloud Flexibility and Agility: The company retained and even enhanced its ability to flexibly adjust its Microsoft usage as needed. Now that they had processes to truly use CSP’s month-to-month nature, they avoided the common trap of treating CSP like a static subscription. For example, during a quarter when a major project concluded and a batch of contractors departed, IT promptly removed 80 licenses – an action that would not have occurred previously, or at all, meaning they would have paid extra for months. Conversely, when gearing up for a new service launch that requires temporary staff and extra analytics workloads, they added licenses and Azure capacity confidently, knowing they could remove them later without contractual hindrance. This agility helped operationally and financially – IT could respond to business needs faster without always seeking procurement approvals for new licenses (they had a buffer in the budget thanks to savings). The finance team has also found the costs to be much more predictable now that alerts and quarterly reviews are in place. They could see patterns and plan for seasonal peaks rather than be surprised.
- Better Cost Visibility and Governance: By working with Redress, the company developed a much clearer picture of its Microsoft usage and costs. The detailed breakdowns and dashboards introduced by Redress enabled IT asset managers to identify top cost drivers at a glance (for example, noticing that Power BI licenses were increasing in one department, prompting a discussion about whether all were necessary). They established a governance board that reviews cloud and license spending quarterly, comprising stakeholders from IT, finance, and key business units. This led to increased accountability – department heads now know that if they request 100 licenses, someone will follow up later to verify if they still need all 100. The culture shifted to be more cost-conscious with software. Additionally, the relationship with the CSP reseller improved: what was previously a passive vendor now became more of an active partner who provides the company with usage reports and optimization suggestions (part of the renegotiation was that the reseller would give them this value-added service). So, the company is not just relying on internal vigilance; it also has external support watching out for it, too.
- Long-Term Strategy Without Lock-In: The company has developed a sustainable strategy for moving forward. They decided against an Enterprise Agreement, which they felt would have been like taking a step backward into rigidity and potential waste. Instead, they doubled down on a flexible model, but one now tamed to their advantage. They effectively demonstrated that with good management, CSP can yield savings of 10–20% that others have achieved by eliminating unused licenses and optimizing monthly spend. Now, they pay for Microsoft services much like they bill their telecom customers – on a usage basis – and they’re managing that usage closely. This alignment of cost with actual need means they’re very unlikely to overspend on Microsoft going forward. If their business shrinks or grows, their Microsoft costs will too, in near real-time. That’s a big win for financial alignment. And if circumstances change such that an EA becomes necessary (for instance, if they acquire another company and double in size), they will have all the data to make that decision in the future, and likely the negotiation leverage to secure a great EA deal given their optimized baseline. However, for now, they are confident that they’ve chosen the right path and are saving money every month as a result.
Client Quote
“We always liked the idea of monthly pay-as-you-go, but we weren’t using its potential until Redress Compliance showed us how. They combed through our cloud and license usage with a fine-tooth comb and found savings we had no idea were there. In a matter of weeks, our Microsoft bills dropped by around 15%, and it’s purely because we stopped paying for things we weren’t using. What’s great is we didn’t have to sign any long contracts or give up flexibility to save that money. We’re more nimble now than ever. Redress helped us turn the knobs on our CSP setup just right – we can ramp up when we need to and ramp down just as fast, and now it reflects correctly in our costs. It’s like going from driving without a dashboard to having full gauges and controls. As a telecom, agility is in our DNA, and now our Microsoft arrangement finally matches that ethos. Redress acted as our advocate with our reseller and with Microsoft’s program, and the results speak for themselves: lower costs, no lock-in, and no surprises. We’re extremely pleased and will keep Redress in our corner for future negotiations.” – CFO, Australian Telecommunications Company.
Call-to-Action
Are you leveraging the full benefits of Microsoft’s CSP program or other cloud subscriptions? Don’t let flexibility turn into overspending. Contact Redress Compliance for a complimentary review of your Microsoft agreement and subscription.
We’ll analyze your usage, eliminate waste, and negotiate better terms – so you save money while maintaining the agility your business needs. With Redress, you get the best of both worlds: savings and flexibility. Let us help you optimize today for a leaner, more responsive tomorrow.
Further Reading
- Read about our Microsoft Contract Negotiation Service.
- Read about our other Microsoft Case Studies.
