Case Study – Microsoft EA Renewal Service Canadian Financial Institution – Microsoft EA Right-Sizing Delivers 18% Savings and Strengthened Compliance
Background
A leading Canadian financial services company (Toronto, ON), with 6,000 employees and approximately CAD $3 billion in annual revenue, partnered with Redress Compliance to optimize its Microsoft Enterprise Agreement.
The company operates in the banking and insurance sectors, subject to strict regulatory requirements for data security and compliance.
Its Microsoft environment was broad: most employees had Microsoft 365 (a mix of E3 and E5 – with E5 given to compliance, security, and analytics teams for advanced features), extensive use of Azure cloud for developing new digital banking services, Dynamics 365 Customer Service for call center operations, and Power BI for enterprise reporting.
The EA was due for renewal within six months, and the company sought to reduce costs while ensuring that any new agreement met the stringent requirements of the financial industry.
An expiring 3-year EA covered all Microsoft services, and the renewal coincided with internal budget pressure to trim IT spend by at least 10% without losing critical capabilities.
Read our guide to Microsoft EA renewals.
Challenges
The financial institution’s challenges were twofold: controlling escalating costs and meeting compliance without over-buying. Microsoft’s initial renewal proposal reflected a 12% price increase, partly due to an increase in E5 licenses and a higher Azure consumption commitment.
The company was concerned that Microsoft was upselling them to enterprise-wide E5 (including costly security & compliance features like Advanced eDiscovery, which only a fraction of users actively needed).
Given the highly regulated nature of finance, the client did need certain E5 features – but not for all employees. They faced a common dilemma: how to provide necessary tools to risk and compliance teams without paying E5 prices for the entire organization.
Moreover, the client had accumulated some shelfware and underutilized licenses. For example, they had licenses for Microsoft Power Platform seeded across the organization, yet adoption was low outside of IT. Several Dynamics 365 module licenses were bought for a pilot that never went enterprise-wide, thus sitting idle.
On Azure, the company had a sizable reserved instance and Azure credit agreement; however, not all business units consumed their forecasted resources, resulting in pockets of underutilized Azure spend.
The true-up process also highlighted compliance concerns: the bank needed to ensure it remained fully compliant with Microsoft licensing (no unwitting shortfalls that could trigger audits), but doing so often meant erring on the side of over-purchasing.
They wanted to break this cycle by precisely aligning licenses with actual and demonstrable needs.
Key challenges included: reducing the overall Microsoft spend, fine-tuning E5 vs E3 mix for compliance needs, eliminating unused licenses (without risking compliance gaps), and negotiating terms that respected their regulatory obligations (e.g., data residency, security) without a cost premium.
How Redress Compliance Helped
- Thorough License and Usage Assessment: Redress Compliance assembled a cross-functional assessment team, including representatives from the client’s IT, compliance, and finance departments. Together, they audited the current EA’s utilization. Redress analyzed M365 usage reports and found that roughly 1,000 out of 6,000 users had M365 E5 – but many of those users weren’t using the E5-specific features. Only about 300 users (mostly in cybersecurity, legal, and data analytics roles) regularly utilized tools such as Advanced Threat Protection, Advanced Compliance, or Power BI Pro. This indicated that approximately 700 E5 licenses could be candidates for downgrading to E3 without impacting functionality, as standard Office apps and email were meeting the needs of those users. The team also uncovered ~200 unused M365 licenses (resulting from attrition and overestimation) and several hundred dollars per month in Azure services that were running unnecessarily. Still, it no longer needed (e.g., test VMs left on). On the Dynamics 365 side, Redress catalogued which module licenses were actually in use (the Customer Service and Finance modules) and which were not (a Sales module trial that had not been expanded). This comprehensive data provided a baseline for rightsizing.
- Risk-Aligned License Optimization: Given the bank’s regulatory requirements, Redress adopted a risk-aligned approach rather than arbitrarily cutting costs. They recommended keeping all necessary security/compliance features for the users who truly needed them: those ~300 users would retain E5 or get specific add-ons. For the other E5 holders who weren’t using those features, Redress planned a downgrade to E3 with targeted add-ons if needed. For example, a department head who had only an E5 license for Power BI could be given an E3 license plus a standalone Power BI Pro license – significantly cheaper than an E5 license, while still meeting their needs. This targeted approach ensured that no critical functionality was lost for compliance or analytics purposes. Redress also proposed reclaiming and reallocating all unused licenses: those 200 dormant accounts would be eliminated at renewal, and any future needs would go through a tighter approval to avoid shelfware accumulation. On Azure, Redress optimized the upcoming commitment by identifying which reserved instances to renew or drop and suggesting a modest growth buffer instead of a large overcommit. They also prepared a plan to utilize existing Azure credits toward projects in the pipeline (ensuring the money would be spent on productive work, not sit unused).
- Negotiation Strategy Focused on Value and Compliance: In negotiations, Redress positioned the client as an informed customer who demands value for money. They presented Microsoft with the internal analysis, which showed how many E5 features were not in use, thereby bolstering the case for a better license mix. Microsoft was pushing for more E5 adoption, citing security benefits, but Redress countered that the client already had best-of-breed third-party security in some areas, making Microsoft’s upsell redundant. They negotiated a custom compliance package: Microsoft agreed to offer advanced compliance and security features (such as eDiscovery and Customer Lockbox) as add-on SKUs for a subset of users at a discounted rate, rather than requiring E5 for all. This was a significant win – it allowed the bank to get needed features for, say, 500 users without upgrading all 6,000 to E5.Additionally, Redress leveraged the competitive dynamic: they hinted that the bank was evaluating other cloud providers for certain workloads, which encouraged Microsoft to improve the Azure pricing and terms. Ultimately, Redress secured an overall 18% cost reduction on the EA renewal. This included both license cost cuts (through downsizing and discounts) and Azure cost optimization. Microsoft provided concessions, including locked-in pricing for Azure over the term (protecting against price hikes) and a commitment to Canadian data residency for cloud services at no additional cost (important for compliance). Flexible true-up terms were also negotiated, allowing the bank to adjust license quantities annually with less friction, so they wouldn’t be penalized for overestimating again.
- Future-State Planning and Governance: Redress didn’t stop at the negotiation. They helped the bank establish a governance framework to optimize Microsoft licensing moving forward. This included establishing a quarterly internal review of Microsoft 365 usage, especially focusing on any expansion of E5 usage (for instance, if new compliance regulations down the line required more E5 features, the bank would document that and be ready to justify it at the next true-up or renewal). They also integrated license management into the bank’s employee onboarding/offboarding process to ensure licenses are promptly assigned or removed, preventing the buildup of unused accounts. Redress provided templates for reporting to executives on Microsoft ROI, showing, for example, how the E5 vs. E3 mix was delivering both security/compliance value, as well as cost efficiency. With Azure, they assisted in creating alerts for underutilization (so that if any cloud resource stayed underused for a period, it would flag for potential downsizing). This proactive stance allowed the client to remain compliant with both Microsoft and financial regulators without resorting to over-licensing.
Outcome and Impact
- Cost Savings and Avoidance: The renegotiated EA resulted in an 18% reduction in total Microsoft costs, saving the company around CAD $4 million over the three-year term. This surpassed the initial 10% cost-cutting goal. Microsoft’s renewal quote was approximately CAD $22 million; Redress reduced it to roughly CAD $18 million through a combination of negotiated discounts and scope adjustments. Additionally, by optimizing Azure usage and avoiding overcommitment, the bank saved hundreds of thousands of dollars in potential wasted cloud spend. For example, rightsizing the Azure agreement and actively managing it is expected to save an additional ~$500,000 in avoided costs over three years, as the bank won’t pay for idle cloud resources. These savings were achieved while maintaining full compliance with internal and external requirements – a critical point for the client’s peace of mind.
- Tailored Compliance without Overspend: One of the biggest wins was decoupling necessary compliance features from a blanket E5 requirement. The bank now has a tailored set of licenses, comprising approximately 3,500 users on M365 E3, 300 on M365 E5, and the remainder on E3 with specific security/compliance add-ons (such as Microsoft’s Advanced Compliance SKU) for an additional 200 users. This granular approach means the bank is paying for advanced features only where needed. All regulatory needs (audit trails, encryption, eDiscovery, data residency guarantees) are met, but with an estimated 20% lower licensing bill than if they had blindly put everyone on E5. This aligns with industry observations that reclaiming inactive or oversized licenses can lower Office 365 costs by approximately 14%. In this case, the bank achieved even greater savings by smartly reallocating licenses.
- Optimized Azure and Dynamics Utilization: On the cloud side, the EA now reflects the bank’s actual cloud strategy. The Azure commitment is calibrated to realistic usage, with flexibility to grow if needed but no pressure to consume excess to “get their money’s worth.” In the first year post-renewal, the bank found it was slightly under the new Azure commitment, and thanks to the negotiated terms, it was able to roll over the unused portion to cover a new AI compliance project – effectively no waste. The previously unused Dynamics 365 licenses were removed, and the bank will add them back only if a business case arises. By shedding those unused modules, the EA became leaner, focusing only on the Dynamics functionality the bank actively uses (saving roughly 15% on their Dynamics spend). Overall, software asset management is now much tighter: the bank has near real-time visibility into license allocation and cloud spend, ensuring resources are used or promptly reallocated.
- Strategic Vendor Management: This case also set a precedent within the bank for a more assertive stance in vendor negotiations. With Redress’s guidance, the bank demonstrated that it’s possible to stand up to a major vendor like Microsoft and emerge with a better deal. The vendor-agnostic, client-first philosophy imparted by Redress means the bank will continuously evaluate Microsoft products against their value. For instance, when Microsoft pitched a new Viva employee experience suite during negotiations, the bank deferred that, choosing not to bundle it in without clear evidence of benefit – a far cry from earlier times when they might have accepted it and paid across the enterprise. Microsoft, in turn, now engages with the bank with an understanding that clear value must be shown for any new additions. This healthier dynamic will benefit the bank in the long run, not just in this EA. The bank’s IT and procurement teams have gained confidence and knowledge to manage the EA proactively, rather than viewing it as an uncontrollable cost.
Client Quote
“Redress Compliance helped us thread the needle – we met our regulators’ expectations and slashed costs. It was eye-opening to see how many of our high-end licenses were going underused. Redress’s analysis provided us with the hard data to negotiate a significantly better deal with Microsoft. We got an 18% cost reduction, but just as importantly, we’re no longer paying for a one-size-fits-all package. Redress showed us how to get exactly what we need from Microsoft – nothing more, nothing less – and they backed us every step of the way as an independent advisor. Our new EA is lean, compliant, and aligned with our business.” – CFO, Canadian Financial Institution
Call-to-Action
Even highly regulated industries can break free from oversized licenses and overspending. Contact Redress Compliance for a free Microsoft EA Optimization Assessment. We’ll help you navigate the complexity of Microsoft contracts, enabling you to achieve both compliance and cost efficiency. Get the tailored, flexible agreement you deserve.
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