CIO Playbook: Navigating Microsoft EA Renewals vs. MCA-E in 2025

Navigating Microsoft EA Renewals vs. MCA-E in 2025

Microsoft’s enterprise licensing landscape is undergoing a major shift in 2025. As a CIO of a global enterprise, you may be approaching your Enterprise Agreement (EA) renewal and facing a pivotal decision: do you renew your EA through a reseller or transition directly to the new Microsoft Customer Agreement for Enterprise (MCA-E) with Microsoft?

This playbook will help you understand the key differences and formulate a winning renewal strategy. We’ll compare EAs and MCA-E on flexibility, pricing, cloud adoption, and support, and outline negotiation tactics (such as discount banding, deal structuring, and using CSP quotes) to secure the best deal.

We’ll also include pricing insights, a sample negotiation checklist, guidance on multi-year TCO modeling, and conclude with actionable recommendations for CIOs.

(Note: “EA” in this guide refers to the traditional Microsoft Enterprise Agreement. “MCA-E” refers to Microsoft’s new Microsoft Customer Agreement for Enterprise, the direct-purchase model that Microsoft is rolling out as a successor to EAs.)

EA vs. MCA-E at a Glance

To decide on your renewal path, it’s critical to understand what the EA and MCA-E are and how they differ. Below is a high-level comparison of key attributes:

In summary, an EA is a traditional 3-year volume licensing contract with predefined discounts and a reseller involved. In contrast, MCA-E is Microsoft’s new direct, flexible purchasing agreement with no fixed term or built-in volume discounts.

EAs offer price locks and a familiar renewal rhythm, while MCA-E offers agility and simplicity, but shifts more responsibility to you to manage costs and compliance. Keep these distinctions in mind as we dive into the renewal strategy.

The 2025 Transition Landscape

Microsoft’s push toward MCA-E in 2025 is strong. Starting in January 2025, Microsoft has begun encouraging (and in some cases mandating) that many EA customers transition to MCA-E or the Cloud Solution Provider (CSP) program at renewal.

This is especially true in “direct markets” (countries where Microsoft sells directly) and for mid-sized enterprises:

• Mid-Market EA Customers (500–2,400 users): Microsoft is phasing out EAs for this segment first. If you fall into this range (often EA Level A or B), expect Microsoft or your reseller to steer you toward an MCA-E or CSP deal. Large account resellers have reported being told not to provide EA renewal quotes for these customers; instead, they are being pointed to Microsoft’s new agreements. In other words, smaller EAs are being retired as part of simplification efforts.
• Large Enterprise Customers (>2,400 users): Microsoft’s largest customers (Level C and D EAs) are not immediately being forced off EAs in early 2025, but the writing is on the wall. Microsoft views the MCA-E as “the digital evolution of the EA” for all enterprises. While you might still be able to renew your EA in 2025 if you’re a very large customer or have unique requirements (some large clients have successfully renewed so far), you should expect increasing pressure to transition in the next renewal cycle or two. Microsoft has signaled that EA will eventually be phased out for all customers as the new commerce platform (MCA/CSP) matures.
• Geographical Considerations: The MCA-E program was initially available in ~20 countries (as of early 2025) and is expanding. If your organization operates in regions Microsoft deems “indirect markets” (where direct sales aren’t established), you might be allowed to stick with an EA a bit longer or use CSP via a local partner. Conversely, in major markets (such as North America, the UK, and the EU), Microsoft is ready to transact directly and is thus more eager to move you to MCA-E. Global enterprises may need to adopt a hybrid approach – for example, using MCA-E where available, but possibly maintaining legacy agreements or CSP arrangements in certain countries until MCA-E coverage is global.
• Cloud-Focused vs. On-Premises: Microsoft’s transition efforts have focused on “cloud EAs” – agreements primarily consisting of cloud subscriptions (such as Office 365/M365, Azure, and Dynamics) with little or no on-premises component. If your EA is largely cloud services, expect a push to move that into MCA-E (or CSP). On the other hand, if you have a heavily customized EA or significant on-premises licensing with Software Assurance, Microsoft may currently allow an EA renewal (or at least a continuation via alternate agreements) because MCA-E might not yet fully support all those needs. For example, if you rely on an EA for Windows Server/Data Center licenses with SA or unique amendment terms, Microsoft can’t replicate that easily in MCA-E in 2025. These customers might receive a temporary pass to renew EAs, but likely with the understanding that cloud services should transition to the new model when feasible.

What this means for CIOs: Even if you have the option to renew your EA now, it may be the last cycle you can do so. It’s important to assess your readiness for the new MCA-E model. Microsoft’s strategic direction is clear – more flexibility, cloud-oriented terms, and direct relationships.

The goal of this playbook is to help you navigate this transition strategically, turning Microsoft’s changes into an advantage for your organization.

Renewal Strategy Options

Given this landscape, CIOs essentially have two renewal paths to evaluate in 2025:

Option 1: Renew the EA (via Reseller)

In some cases, sticking with the status quo for one more term might be viable. This means negotiating a renewal of your existing Enterprise Agreement through your licensing partner.

Key considerations for remaining on an EA:

• Continuity of Licensing Terms: You maintain the familiar 3-year cycle, retaining benefits such as Software Assurance and price protection. This can be important if you have investments tied to SA (e.g. you rely on License Mobility, training vouchers, upgrade rights, etc., all enabled by SA). By renewing the EA, you avoid any gaps in these benefits or the need to write off past SA investments. For example, if you’ve paid for years of SA on Windows or SQL Server, an EA renewal keeps those rights intact without disruption.
• Existing Discounts & Pricing: If your current EA provides significant discounts (volume discounts or special pricing) that would not carry over to a new agreement, renewing might preserve those savings a bit longer. Large enterprises often have better-than-list pricing locked in. In contrast, moving to MCA-E could mean paying closer to retail rates if you can’t negotiate equivalent discounts. Example: A company had an EA with a 30% discount on Office 365 licenses due to its size and prior negotiations. By renewing the EA, they might retain the 30% off for another 3 years, whereas switching to MCA-E could reset the pricing closer to the list price (unless they secure a new discount arrangement in MCA-E).
• True-Up and Flexibility Limitations: If your user count and product usage are relatively stable or predictably growing, the EA’s fixed structure may be acceptable. True-ups (the annual reconciliation of added licenses) are manageable, and you don’t anticipate needing to reduce license counts significantly mid-term. In this scenario, the downsides of the EA’s rigidity are minimal for you. In other words, if you’re confident you won’t need to scale down or radically change course in the next 1-3 years, an EA can still serve you well.
• Partner Value-Add: Renewing via an LSP means you continue to leverage any services your reseller provides. Many large account resellers offer licensing advisory services, adoption workshops, or other value-added services as part of the EA relationship. If you highly value your partner’s support and guidance, you might prefer to keep that model. (Under MCA-E direct, the partner is cut out of the licensing transaction, though you could separately hire them for consulting.) Some CIOs feel more comfortable having a partner “in their corner” to help manage license compliance, deployment planning, and to escalate issues with Microsoft as needed.
• Delay the Inevitable (Strategically): In some cases, the best move is to buy time. If your organization isn’t ready this year to adapt to a new contracting and management model, renewing the EA gives you three more years to prepare. Perhaps you have other digital transformation projects in flight and don’t need the added complexity of changing license agreements right now. A renewal could be a tactical choice to align the MCA-E transition with your roadmap when the timing is better, for example, by aligning with a major cloud migration or the completion of data center modernization efforts.

However, staying on EA is not always possible or optimal:

• Microsoft might refuse an EA renewal if you’re in a segment they’re targeting for MCA-E/CSP. You may find that your reseller cannot generate an EA quote, prompting you to contact Microsoft’s direct sales team. In such cases, you’ll need a fallback plan, either pushing for an exception or moving to Option 2.
• Even if you can renew, the cost could be higher. Microsoft has been known to reduce EA renewal discounts or offer less favorable terms if it senses that a customer is resisting the move to the new model. The EA renewal might come with a “cloud transition” clause or less flexibility than before. You must negotiate carefully (see Negotiation Tactics below) to avoid losing ground.
• By delaying the transition, you might miss out on some of the benefits of the new model, such as flexibility, new services, and streamlined purchasing. For instance, if your company plans to rapidly adopt new Azure services or spin up new SaaS trials, the EA’s structure might slow you down or complicate things with rigid requirements.

In short, renewing the EA can be a short-term solution to maintain stability. Still, it requires negotiating skills to make it worthwhile, and you should have a long-term plan for eventually moving beyond the EA.

Option 2: Shift to MCA-E (Direct with Microsoft)

Transitioning to the Microsoft Customer Agreement for Enterprise means signing up for Microsoft’s new direct purchasing program and letting your existing agreement (EA) expire. This is a more transformative move, but it can align better with cloud-era needs.

Key considerations for moving to MCA-E:

• Maximum Flexibility: The biggest advantage of MCA-E is agility. You are no longer locked into a blanket 3-year commitment for all products. You can mix and match subscription terms:
  • Monthly term for certain services or fluctuating staff counts (e.g., you can provision 100 extra Power BI Pro licenses for a 2-month project and then cancel them, only paying for those 2 months). Annual term for most stable user counts (locking price for 1 year at a time). Multi-year (36-month) term for core products where you want price predictability (similar to an EA commitment, you can choose a 3-year subscription for say Microsoft 365 to secure a rate).
  This flexibility allows you to optimize costs more precisely. For example, a retailer might scale down licenses during off-peak seasons with monthly subscriptions – something impossible under an EA. A company can also pilot a new Microsoft service for 6 months and only pay for that period. Cloud adoption tends to accelerate under this model, as you can quickly add new services without the need for contractual paperwork or waiting for a renewal cycle. In a rapidly changing IT environment, MCA-E’s agility is a strong enabler.
• Direct Relationship with Microsoft: Under MCA-E, you have a direct line to Microsoft for licensing. This can simplify communication and potentially give you more influence if you are a strategic customer. Microsoft account teams often give priority attention to direct customers, since the revenue ties straight to Microsoft. Additionally, contracting directly can reduce some procurement layers – for instance, invoices come straight from Microsoft, and you may have more direct access to Microsoft’s product and licensing specialists for complex needs. (Be aware, however, that losing the LSP means losing their independent advice – so you might consider engaging a third-party licensing advisor to fill that gap, as many CIOs do when going direct.)
• Simplified Portfolio & Consolidation: The MCA-E is designed as a “one-stop” agreement for all your Microsoft cloud needs. Over time, it will encompass Azure, M365, D365, and more under a single contract umbrella. This could reduce the number of separate agreements you manage (e.g., EA, CSP, Azure-only SCE can all be consolidated). A single evergreen contract with modular terms is easier for contract management and compliance tracking. If your organization values simplification and reducing legal overhead, this is appealing. (Imagine having one portal and one agreement to manage instead of juggling an EA on the Volume Licensing Service Center plus CSP subscriptions on a partner portal, etc.)
• No Minimum and no “all-in” requirement: You are not required to purchase for the entire organization. Perhaps in your EA, you had to include every qualified device for Windows Enterprise or Office – under MCA-E, you could choose to license only specific subsets or pilot groups for certain products without committing company-wide. This granularity can avoid over-licensing and allow phased rollouts. It’s a more cloud-friendly approach where you can start small and expand usage organically.
• Frequent Adjustment and Optimization: Because there is no set renewal period, you can continuously optimize your licensing. Instead of a big true-up once a year, you can adjust counts monthly or any time new employees join or leave. This can reduce wasted licenses (shelfware). It also means you can respond to budget changes more swiftly – e.g., if there’s a downturn and you need to cut costs, you could decide not to renew certain annual subscriptions or drop usage to save money immediately, rather than being stuck with unused licenses until an EA term ends.
• Access to the Latest Pricing and Programs: Microsoft is evolving its commerce platform with features like new Azure savings plans, special promotions, and more (for example, new Azure consumption incentives or future offerings that may bypass traditional programs). MCA-E customers will typically have faster access to these new options since the agreement is evergreen and updated regularly. In contrast, EA customers might have to wait for a new term or sign an amendment to take advantage of certain new offers. Essentially, MCA-E keeps you current with Microsoft’s best offers as they come.

Challenges and watch-outs with MCA-E:

• Potential for Higher Costs if Unmanaged: The flip side of flexibility is the risk of cost creep. Without the discipline of an EA true-up or end-of-term negotiation, companies may find themselves adding services without revisiting them or paying for more than they need, simply because the contract doesn’t require a review. Price increases can also accumulate: Microsoft can raise subscription prices or adjust exchange rates annually, and these changes will be reflected in your monthly or annual charges. Over a 3-year horizon, you might pay more under an MCA-E if you don’t actively negotiate and monitor usage. It places a bigger emphasis on Software Asset Management (SAM) and FinOps practices to regularly optimize licenses. CIOs will want to set up quarterly or semi-annual internal reviews of their Microsoft spend under an evergreen deal.
• Loss of Volume Discounts: As noted, MCA-E doesn’t automatically give larger enterprises the kind of volume discounts an EA might. Unless you negotiate, you could end up paying closer to retail pricing for each license. Microsoft’s stance is often “we can offer discounts in return for growth or commitments,” rather than guaranteed discount bands. You’ll need to bring your volume leverage to the table in negotiations (covered later) to avoid cost increases. It’s not uncommon in 2025 for an initial direct quote from Microsoft under MCA-E to be 10-20% higher than what the same customer paid under EA. The onus is on you to push that down.
• No Built-in Renewal = Less Negotiation Leverage: In an EA, the renewal event is a powerful leverage point for customers – Microsoft knows you could walk away or reconfigure your bundle at that 3-year mark, so they come to the table with offers. In an evergreen MCA-E, there’s no such deadline motivating them (except any custom pricing term you negotiate). Microsoft could be less inclined to proactively offer concessions once you’re in an evergreen contract. This changes the dynamic: you must create your leverage (using tactics like competitive quotes or planning internal “contract reviews” as if they were renewals). We’ll discuss how to manage negotiations under an evergreen model in the Negotiation Tactics section.
• Operational Change – Internal Readiness: Moving to MCA-E isn’t just flipping a contract; it changes how you manage licenses day-to-day. Your procurement and IT teams will need to become comfortable with Microsoft’s self-service admin portals for adding and removing licenses. The billing process may change (from monthly invoices from Microsoft to annual true-up orders). Support requests that your LSP handled might now come to you. Ensure your organization is ready to absorb these responsibilities or has a plan to outsource some of them (e.g. you might still work with a Microsoft partner on a consulting basis to help administer your licenses, even if they aren’t selling you the licenses directly).
• Support and Services Gaps: Under MCA-E, Microsoft expects customers to either use their paid support offerings or find a partner for value-added services. In an EA, you might have received some unofficial support from your reseller or benefits like planning services days from your SA. With those gone, make sure you budget and plan for support. This could mean purchasing a Unified Support agreement from Microsoft (which can be very expensive, typically a percentage of your license spend) or contracting with third-party support providers. Some organizations moving to MCA-E negotiate a package of support or advisory hours from Microsoft as part of the deal (not standard, but if you’re a big Azure spender, you might receive a dedicated Microsoft cloud solution architect, for example, as an incentive).

In summary, shifting to MCA-E is a strategic move that adopts a cloud-first, flexible approach to operations. It can yield long-term agility and potentially better alignment with actual usage, leading to cost savings, but it requires careful governance and negotiation to avoid pitfalls. Many CIOs see MCA-E as the future-proof choice, as long as they adapt their management processes accordingly.

Key Differences Explained: Flexibility, Pricing, Cloud Adoption, Support

Let’s highlight some of the critical differences between EA and MCA-E in the areas most CIOs care about, and what they mean in practical terms:

• Flexibility & Scalability: MCA-E offers unparalleled flexibility compared to EA. With an EA, you’re essentially locked into a static set of licenses for 3 years (scaling up is possible, but scaling down is very restricted). In fast-moving industries or during unpredictable events, such as mergers, divestitures, or pandemics, this can lead to over-provisioning or wasted spending. MCA-E’s month-to-month adjustability means your licensing can scale with your business in real time. For example, if a division is sold under an EA, you would still pay for their licenses until the end of the term. Under MCA-E, you could reduce those licenses at the next monthly or annual renewal and stop paying for unused capacity. The flexibility extends to adding new Microsoft services: under an EA you might have to amend your agreement or wait for renewal to include a new product suite, whereas MCA-E lets you jump on a new offering (say Microsoft’s latest AI service) immediately by just clicking to accept new terms in the portal.
• Pricing & Discount Model: EA’s volume-tiered pricing has traditionally meant that bigger customers pay less per unit. MCA-E flattens that – every customer pays roughly the same list price unless they negotiate. Additionally, EA pricing is insulated from market changes for 3 years; MCA-E pricing can evolve. For CIOs, this means budgeting under an EA is straightforward, as it involves known costs for three years, whereas budgeting under MCA-E might require assumptions about annual price escalations. Microsoft has periodically adjusted cloud prices, often to account for currency fluctuations or inflation. Without a negotiated cap, you might see, for example, a 5% increase in Year 2 for your M365 licenses and another in Year 3. Cloud Solution Provider (CSP) program pricing is similar to MCA-E, as it uses the same commerce platform. Therefore, whether you buy directly or through a CSP, the baseline list price remains consistent. However, a CSP partner might give you a discount from their margin. The key difference is that with MCA-E, you’ll need to actively manage and negotiate price terms, whereas EA gives you a multi-year breathing room. We’ll discuss strategies to achieve “EA-like” discounts in MCA-E, such as committing to spend or leveraging competitive quotes, in the next section.
• Cloud Adoption and Innovation: EA and MCA-E both allow the purchase of cloud services, but the speed and breadth of adoption can vary. Under an EA, if you wanted to roll out a new cloud service organization-wide, you might need to plan it for the next EA cycle or sign a special enrollment. Under MCA-E, you have direct access to Microsoft’s catalog in real-time. This means that if Microsoft launches a new product SKU or service, you can often start a subscription for it right away. This encourages experimentation and the adoption of new technology (e.g., spinning up a few Azure services to test or trialing Microsoft Viva modules for a subset of users) without contractual hurdles. Cloud-oriented CIOs may prefer MCA-E for this reason: it aligns with agile deployment of cloud resources.
  On the other hand, if your company is slower-moving or cloud-averse, the EA’s deliberate structure might serve as a forcing function to carefully plan cloud adoption. Some CIOs use the EA’s true-up as a yearly checkpoint to decide which new services to add in a controlled way. So, consider your organization’s cloud adoption style – fast and continuous (MCA-E supports that) vs. structured and periodic (EA enforces that).
• Support & Services Differences: With an EA through a reseller, you often had a triad relationship: you, the reseller, and Microsoft. The reseller typically handled a lot of administrative tasks, such as helping with orders, providing licensing reports, and occasionally offering basic support for license issues. You might have had Microsoft Premier or Unified Support for technical issues. In MCA-E, it’s just you and Microsoft for the contract. Microsoft does not automatically provide personalized support or licensing advice with an MCA-E – those are separate. You may need to invest in Microsoft Unified Support for technical help (which can be costly and is based on a percentage of your license spend), or ensure your IT staff can manage support tickets via the standard channels.
  Additionally, if you relied on your LSP’s licensing expertise (some have licensing consultants who help with compliance or optimization), note that under MCA-E, Microsoft’s account team may not provide the same depth of licensing optimization advice – they are motivated to sell. While they can explain programs, they won’t necessarily point out if you’re over-licensed. Many enterprises mitigate this by hiring independent licensing advisors or continuing to work with their former LSP in a paid consulting capacity. Bottom line: under MCA-E, ensure you have a plan for support (either internal skills or purchased services) and ongoing licensing optimization since you won’t have a reseller doing those for you by default.
• Contractual Flexibility & Custom Terms: Large EAs often include custom-negotiated terms or amendments – for example, special use rights, pricing protections, or merger carve-outs specific to the customer. Microsoft historically could accommodate these in an EA due to its bespoke nature. In the MCA-E world, Microsoft is trying to standardize terms as much as possible. There is a limited ability to add custom amendments (aside from regulatory requirements, such as GDPR clauses or specific negotiated discounts in an addendum). If your organization needs very specific contractual accommodations, check if MCA-E can support them. As of 2025, Microsoft has indicated that features like 5-year extended terms or complex ramp-up pricing structures are not available under MCA-E. This means that if you used to negotiate, say, a phased payment plan (ramped fees) or special merger or acquisition clauses in your EA, those might be harder to get now. You’ll have to find alternate solutions or accept the standard terms. This is an area to discuss with Microsoft early if you have non-standard needs; otherwise, you could inadvertently lose a protective clause when moving to MCA-E.

Negotiation Tactics for 2025 Renewals

Whether you’re leaning towards renewing your EA or switching to MCA-E, effective negotiation is key to getting the best pricing and terms. Microsoft’s sales approach and incentives in 2025 reflect their cloud-first agenda, so you need to come prepared.

Below are tactics and strategies a CIO should employ during negotiations:

• 1. Leverage Discount Banding Knowledge (if on EA): If you aim to renew the EA, use your knowledge of Microsoft’s volume discount levels to your advantage. EA pricing levels (A, B, C, D) are based on user counts – crossing into a higher level can yield a lower unit price. Strategy: If you are near a threshold (e.g., you have 2,300 users – just shy of Level B’s 2,400 user cutoff), consider up-fronting additional licenses or expanding the EA scope slightly to reach the next band. The per-unit discount on all licenses could far outweigh the cost of a few extra licenses. Microsoft won’t volunteer this; it’s on you to crunch the numbers. Additionally, remind Microsoft of your historical discounts. If you were at a 30% off in your last EA, push to retain that on renewal, even if your headcount dropped. Use data: “We’re at 2,300 users but plan to grow to 2,500 next year – we should be treated as Level B now to lock in better pricing.”
• **2. No Predefined Bands in MCA-E – Negotiate Custom Discounts: When moving to MCA-E, Microsoft’s default stance might be “no standard discounts,” but that doesn’t mean you can’t get any. Everything is negotiable for large enterprises. Approach it this way: determine what discount off list price would roughly equate to your current EA pricing or your target budget, and explicitly ask Microsoft for a custom price concession. For example, “We want a 15% discount on our Microsoft 365 E5 licenses for a commitment of 3 years of usage” or “If we move to direct, we expect to maintain the same unit pricing we had under our EA, which was $X per user.” Microsoft may not provide an outright percentage in the contract, but it could be achieved through mechanisms like discounted SKUs or an agreed-upon price sheet attached to your MCA-E for a set term. Be prepared to justify it: show commitment or growth (e.g., “We will add 500 more E5 users in the next 18 months – in return, we need that 15% off now”). Essentially, re-create the volume discount conversation even though the program doesn’t mandate one. Their sales teams do have flexibility for strategic accounts, especially if they believe you might opt to go to a competitor or stick with an EA otherwise.
• 3. Highlight Total Deal Value (Deal Structure): When negotiating either type of agreement, bundle as much as you realistically plan to invest in Microsoft into a single negotiation. Microsoft views large multi-product, multi-year commitments favorably (they have internal metrics for Azure consumed, Dynamics seats, Power Platform, etc.). If you’re also making a big Azure commitment or planning to deploy new Dynamics 365 modules, bring it into the negotiation package. This is often referred to as a “total annual spend” or “all-up deal” approach. The idea is to structure the deal with multiple components:A 3-year commitment on core Microsoft 365 services (to get the best pricing on those). An Azure consumption commitment (e.g., commit to spend $5M on Azure over the next 3 years,) which can earn you an Azure Consumption Discount (ACD) and maybe some Azure credits or funding for migration. Microsoft often offers programs where, if you commit to Azure, they’ll give you a percentage of that commitment back as credits or services (for example, a 10% credit pool for Azure if you make a certain commitment). Possibly include other products like GitHub Enterprise, Power BI, or security add-ons in the conversation. By structuring a larger deal, you give Microsoft sellers more room to offer discounts and investment funds. They might take a smaller margin on one product if they see a big picture of growth across your account. Tip: Ensure that any cross-product incentives are documented in writing (e.g., if they promise $100k in Azure credits for signing by a certain date, include this in an official offer or contract exhibit).
• 4. Use Cloud Solution Provider (CSP) Quotes as Competitive Pressure: Even if you intend to go direct with Microsoft, it’s wise to shop around with CSP partners. The CSP program allows partners to sell you the same subscriptions, often with some discount from their partner margin or with added services. Solicit a quote from one or two reputable Microsoft CSP resellers for your license stack – you might find they offer, say, a 5-10% discount off Microsoft’s MSRP to win your business, or extra support hours bundled in. Armed with that, you can approach Microsoft: “We have alternative options via CSP at better pricing. If we’re to sign directly via MCA-E, we need you to match or beat these terms.” Microsoft won’t want to lose a large account to an indirect sale (from their perspective, direct revenue is more strategic), so this can pressure them to improve their offer. Be careful: Microsoft might respond that if price is your only concern, you’re free to go CSP. Also, mention other factors, like, “We prefer a direct relationship with Microsoft for the long term, but the cost difference is hard to ignore.” In some cases, organizations genuinely choose a CSP over direct to get better discounts or more personalized service. This tactic is both a negotiation lever and a real alternative if Microsoft doesn’t budge enough.
• **5. Negotiate Contract Flexibility (Reduction Rights, Transfer Rights): If you stay on EA, you could negotiate for a bit more flexibility than standard. For example, some customers request the right to reduce a certain percentage of licenses at each anniversary (beyond what the standard EA allows) or to substitute one product for another as their needs change. Microsoft might not always agree, but if you don’t ask, you don’t get. If you move to MCA-E, you inherently have flexibility, but you might negotiate notice periods or special terms if you foresee a unique scenario. For instance, if you plan a divestiture, negotiate up front that those users’ licenses can be transferred to the spun-off entity or terminated without penalty mid-term. Adding new services mid-term is easy in MCA-E, but if you want price guarantees on those, negotiate a clause like “any new Microsoft 365 services we add in the next 12 months will receive the same X% discount as our existing ones” to avoid getting list price on new additions. Essentially, think ahead to what changes could happen in 1-2 years (mergers, divestitures, adopting new tech, scaling down a business unit, etc.) and try to bake in some contractual options to accommodate that. It’s easier to negotiate flexibility before you sign than to plead for exceptions later.
• **6. 3-Year Commitment vs. Annual Flex – Finding the Right Balance: Microsoft often presents options like annual subscriptions versus 3-year subscriptions for various services under MCA-E. An annual gives you the flexibility to adjust each year, whereas a 3-year term might come with a bit of extra discount or at least a price lock. As a negotiation tactic, you can play one against the other: “We’re willing to consider a 3-year commitment on these products, but only if the pricing is compelling (e.g., 10% lower than the annual rate or fixed for 3 years despite any upcoming list hikes). If not, we’ll just do one-year terms and re-evaluate yearly or even move some users to monthly where we can flex down.” This signals to Microsoft that you won’t commit long-term without incentive. Many organizations opt for a mix: they commit core, stable workloads to 3-year terms to get the best pricing and keep a portion on annual or monthly terms for flexibility. For example, commit 80% of your anticipated Office 365 seats for 3 years (to secure a bulk discount), but leave 20% of licenses on annual terms to allow for potential reductions if the company shrinks or to accommodate acquisitions (you could use those flexible licenses to reassign to new users, etc). Negotiation insight: Microsoft may offer promotions like a monthly term at 20% higher than the annual price” (this was a standard premium in their commerce model). Use that knowledge: if monthly is 20% more, then conversely, you can argue that annual is effectively a 16% discount off the monthly rate. If you’re going to do a 3-year, maybe you aim for, say, 20% off the monthly rate locked in, because you’re giving them a longer commitment. Frame it as a win-win: “We’ll lock in 3 years for stability, you give us a better rate for the loyalty.”
• **7. Model the Multi-Year Total Cost and Use it in Negotiation: Show Microsoft that you’ve done the math on your Total Cost of Ownership (TCO) under different scenarios (EA vs MCA-E, 1-year vs 3-year terms, etc). When you enter discussions armed with a detailed cost model, it not only informs your strategy – it impresses upon Microsoft that you are an educated buyer who can’t be easily misled. For instance, calculate what your cost would be over 3 years if: You renewed EA at the offered terms (including any projected true-up additions each year and the final payout). You switched to MCA-E with list prices, but adjust for expected growth or reduction each year. You went CSP with a partner quote. Include assumptions like “Microsoft typically raises prices ~5% annually on these products, so in our MCA-E model, we factored that in.” If your analysis shows MCA-E would cost $X more than EA over 3 years at the initial offer, use that: “Based on current offers, going MCA-E would cost us $500k more over three years than renewing EA – this is a hard sell internally. What can Microsoft do to narrow that gap? Perhaps an additional discount or Azure credit can offset the difference.” Essentially, make Microsoft respond to the long-term cost picture, not just year-1 pricing. This often prompts them to come up with creative solutions (temporary discounts, one-time credits, extended payment terms) to make the deal more palatable. Additionally, sharing parts of your model (without revealing every internal detail) can help guide the discussion. If they see you plan to drop 200 licenses in year 2 (for example), they might propose a flexible term for those, or at least know you won’t pay for them unnecessarily.
• **8. Consider CSP or MCA-E for Different Parts of the Business (Hybrid Approach): Remember, it’s not always all-or-nothing. In some cases, a hybrid licensing approach can yield the best outcome. For example, a global enterprise might maintain an EA for on-premises licenses and SA (if those are still needed in volume), but shift cloud subscriptions to MCA-E. Or vice versa, move most things to MCA-E but maintain a small EA for a subsidiary in a country where direct isn’t available yet. During negotiations, you can use this possibility: “Perhaps we maintain an EA just for our server licenses and some legacy products, but move our 5,000 Office 365 users to MCA-E.” Microsoft might be open to that or might fight it – gauge their reaction. Sometimes, saying you will split the business this way motivates them to offer a more unified and attractive deal to keep it all under one contract (they generally prefer not to have customers in multiple agreement types if it can be avoided). Also, within MCA-E, you could even split between direct and partner for different needs. For instance, you might purchase Azure directly through MCA-E (to leverage a big commitment with Microsoft), but purchase some Microsoft 365 seats through a CSP partner that provides managed services for a branch of your company. Be creative in structuring your approach to maximize both cost savings and service quality. When negotiating, outline these options – it shows Microsoft that you have alternatives and are not afraid to adopt a complex solution to get the best value.
• **9. Secure Price Protections and Renewal Options: If moving to MCA-E, try to build in EA-like price protection where possible. While the contract is evergreen, you can negotiate a price hold or cap for a set period. For instance, negotiate that your Microsoft 365 rates will not increase for 3 years, or that any increase will be capped at the inflation rate. You could also negotiate a “review clause” after 3 years – not exactly a renewal, but an agreement that you and Microsoft will meet to revisit pricing, allowing you to renegotiate. Microsoft might resist strict price locks beyond 1 year for online services, but large customers have had success getting at least a fixed price for a 3-year term via custom SKUs. If you can’t get a full lock, consider negotiating incremental discounts over time (e.g., a 2% extra discount kicks in next year to offset expected price increases, etc.). The key is to avoid getting stuck in an evergreen contract with unchecked price hikes. Also, if your company requires budget stability, you could negotiate the option to convert to a 3-year agreement or to terminate certain services without penalty in the event of unexpected increases. These kinds of terms need legal negotiation, but they can be worth pursuing.
• **10. Use Timing and Quarter-Ends to Your Advantage: Like many vendors, Microsoft has sales targets and quarterly/year-end pressures. Align your negotiation timeline with Microsoft’s fiscal urgency. Microsoft’s fiscal year ends on June 30, so late June can be a time when they are highly motivated to close deals (the same goes for the end of a quarter, such as late December or September). As a CIO, you can often get the best concessions at quarter-end when your deal contributes to their quota. However, be careful not to run out of time – start negotiations early enough so that you can reach those final days with an almost done deal and squeeze out the last incentives. If you’re renewing an EA that expires on, say, June 30, begin serious talks in Q3 (Jan-March) so that by June, you have Microsoft eager to close. Sometimes, Microsoft will offer an “accelerator” or additional discounts if you sign up this quarter instead of next. Don’t be shy to ask: “What can we gain by signing in this fiscal quarter for Microsoft? Any flexibility on pricing or extra services if we commit now?” They might offer something like a 1% rebate or free training workshops if it helps them close the deal sooner.
• **11. Negotiate Support and Services in Parallel: Licensing isn’t the only thing to negotiate – consider negotiating your Microsoft support contract or partner services simultaneously. There’s often interplay. For example, Microsoft’s Unified Support cost is based on a percentage of your license consumption. If you’re worried that moving to MCA-E will raise your support costs, push for a support discount: “We’ll move to MCA-E and Azure consumption, but we want 10% off our Unified Support fees locked for two years.” Or if you rely on a partner, ask the LSP or CSP to include X hours of consulting or training if you award them certain business. Microsoft sellers sometimes can’t directly discount support (since it’s a separate division), but they might coordinate an overall discount with the support sales team if it’s a deal enabler. In any case, bundling your support needs in the conversation either gets you cost savings or at least ensures you’re not surprised by a support fee increase after the licensing deal.
• **12. Get Everything in Writing: This is a classic negotiation rule, but worth reiterating for Microsoft deals. If the account team verbally promises “Don’t worry, you’ll get the same discounts in MCA-E as you had in EA,” insist that the written offer and contract reflect that (e.g., via a discounted price sheet or an amendment). Any special terms, like the right to swap a product or a pool of free Azure credits, must be documented in the final paperwork. Microsoft’s contracts will still be in effect after your salesperson has moved on. As a savvy CIO or licensing lead, create a checklist of promised items and review the final agreement carefully. Microsoft’s deal desk can generate custom terms, but only if they were negotiated and approved. Last-minute omissions can still occur, so be vigilant. It’s easier to fix before signing than after.

Using these tactics, CIOs can approach the negotiation table well-prepared. Next, we’ll provide a sample negotiation checklist to ensure you cover all your bases during this process.

Sample Negotiation Checklist

Negotiating a Microsoft agreement is complex, touching technical, financial, and legal domains. This checklist breaks down key steps and considerations for CIOs and their teams as they plan for an EA renewal or MCA-E transition.

Use this as a guide to organize your efforts:

1. Inventory and Assess Current Usage:

• Catalog all licenses and services under your current EA. Note quantities, products, and how they’re being used (e.g., 5,000 Office 365 E3 users, 1,000 of them might upgrade to E5 for security features; X amount of Azure consumed per year; on-premises Windows/SQL licenses with SA, etc).
• Identify under-utilization or over-provisioning. Are there licenses that have been paid for but are not in use? This is crucial for deciding what to renew or drop. For example, maybe you bought 500 Power BI Pro licenses, but only 300 are actively used – mark these 200 as potential cuts or switch to flex pricing.

2. Forecast Future Needs (1–3 years):

• Engage with business units to understand growth or contraction plans. Will user counts increase or decrease? Any acquisitions or divestitures expected? New offices or closures?
• List planned new Microsoft technology adoptions. For instance, if you intend to roll out Dynamics 365 CRM next year or deploy Azure AI services, include those in your forecast. This ensures you negotiate capacity for them now (either as part of an EA renewal or by having them ready in MCA-E).
• Forecast Azure consumption if possible. A trend line of Azure use can strengthen your case when negotiating Azure commitments or credits.

3. Define Your Licensing Strategy Goals:

• Decide on your desired end-state: “Remain on EA for one more term” vs “Move to MCA-E now” (or a hybrid). This will guide the negotiation narrative.
• Prioritize what’s most important: Is it cost savings (budget pressure to reduce spend)? Flexibility (need to be agile)? Simplicity (one agreement, fewer headaches)? Support (ensuring you have help managing this)? Knowing your top 1-2 priorities will help when you have to make trade-offs during negotiations. For example, if cost is a top priority, you might sacrifice some flexibility to lock in a lower price.

4. Gather Market Intelligence:

• Research Microsoft’s latest announcements and licensing changes (many of which are covered in this playbook). Know the context – e.g., the push to MCA-E, upcoming price adjustments (Microsoft announced price increases in 2025 for certain regions and products), and any incentives currently being promoted.
• Talk to peer companies or through advisory services to understand what deals others are getting. If you have access to benchmark data, check if companies of a similar size received, say, a 20% discount on E5 or special terms. This gives you realistic targets.
• Solicit CSP partner input early. Even if it’s just informal, ask a trusted partner, “What could you offer us if we went with CSP?” to get a baseline alternative quote.

5. Engage Microsoft Early – and at the Right Level:

• Kick off discussions with your Microsoft account team well in advance of your EA expiration. Ideally, 6-12 months in advance for large enterprises. Communicate that you are reviewing options (EA vs MCA-E) so they know this isn’t a rubber-stamp renewal.
• Involve a Microsoft cloud solution strategist or licensing specialist if available. Sometimes the field will bring in a specialist to articulate MCA-E benefits. Use those meetings to ask tough questions about pricing, support, and any features you’d lose or gain.
• Ensure you have an executive counterpart at Microsoft who is aware of the importance of your account. As CIO, you may want to speak with Microsoft’s Enterprise Commercial leader for your region or other senior reps if the deal is big. This can help if you need to escalate a request for a better discount approval later.

6. Prepare Your Negotiation “Wish List”:

• Write down all the items you want to negotiate. Break it into “Must Haves” and “Nice to Haves.” For example:
  Must Haves: Overall cost not above $X million/year, ability to reduce up to 10% of licenses at anniversary if needed, price protection for 3 years on core products, some form of Azure discount or credit for committing to cloud growth.
  Nice to Have: A pool of training days or FastTrack assistance for new deployments, inclusion of a few Power Platform seeds at low cost, extended payment terms (net 60 instead of net 30 on invoices), etc.
• Prioritize the list and be prepared to trade a lower-priority item to secure a higher-priority one. Having this list ensures you don’t forget any item in the heat of discussions.

7. Conduct Internal Stakeholder Briefings:

• Bring in your Procurement, Finance, and Legal teams early. Procurement can help with negotiation strategies and ensure the process (such as RFPs to CSPs) is done properly. Finance will need to understand the impact of changes (e.g., OpEx vs. CapEx) if moving to a subscription or multi-year financial commitments, etc. Legal will want to review the MCA-E terms, which are new. There may be clauses regarding liability or data privacy that differ from your existing agreement.
• If you have a CFO or other C-suite members heavily involved in cost approvals, educate them on the differences between EA and MCA-E. This is important so that, for instance, if Microsoft approaches your CFO directly (a known tactic), touting the “benefits of MCA-E,” your CFO is already aware of what the trade-offs are and doesn’t accidentally undermine your negotiation stance.
• Ensure that everyone internally agrees on the direction and key points to walk away from. Know your BATNA (Best Alternative to a Negotiated Agreement) – e.g., “If Microsoft won’t give us at least X, we will go with the CSP quote or we will renew only part of the deal and drop certain products.” Unity in your team prevents Microsoft from finding soft spots to exploit (like playing finance and IT off each other).

8. Negotiate – Meetings and Counter-Offers:

• When you present your requirements to Microsoft, do so both in writing and verbally. For example, provide a requirements document or RFP-style list of needs. This helps their team internally justify what you’re asking for and loop in the right approvers. Microsoft’s internal approval for non-standard discounts or terms goes through a “business desk” or approval chain – a clear list from you makes their job easier to advocate for you.
• Use a matrix or table to compare proposals if you get multiple offers (e.g., compare Microsoft’s EA renewal quote vs. their MCA-E quote vs. a CSP’s quote across key dimensions like total 3-year cost, flexibility, support included, etc). Share a simplified version with Microsoft to show where they fall short or lead.
• Don’t reveal all your cards at once. Perhaps hold off on sharing that you have a 15% off CSP quote until you see Microsoft’s first offer. If their first offer is good, you might not need to use it; if it’s weak, then bring out the alternative to push them.
• Keep a record of each meeting, who said what (especially any promises). Follow up with summary emails “As discussed, we are looking for X and Microsoft will investigate Y…”. This paper trail will be useful if things get fuzzy later or if personnel changes on the vendor side.

9. Final Offer Evaluation:

• Once you have Microsoft’s final offer (or multiple offers if they gave options), do a last internal huddle. Evaluate it against your must-haves list. Does it meet your budget constraints? Have the major risks been addressed (e.g., no surprise loss of a needed feature)? Is the pricing locked or at least clear for the next few years?
• If something is missing, now is the time for a final push or executive escalation. For example, if they wouldn’t include a price cap clause you wanted, you could have your CEO or CIO place a call to a Microsoft executive expressing, “this is the last sticking point preventing signing.” High-level intervention can sometimes secure that one extra concession if it’s truly vital.

10. Check the Fine Print:

• Before signing, have your legal team review the contract documents thoroughly. Ensure all negotiated items are incorporated. Common documents to expect: the MCA-E base agreement (if going that route), a Pricing Annex or Customer Price Sheet, any Amendments for special terms, and perhaps a separate document for Azure MACC if you did an Azure commitment. Cross-check these with your negotiation notes.
• Verify billing terms and invoicing details. For example, if you negotiated a customized billing schedule or multi-currency handling for global regions, is that spelled out?
• Look at any language on termination or notice periods. Under an evergreen contract, you can usually terminate specific services with a notice – ensure you know how (e.g., “the customer may terminate a subscription by not renewing at the end of the term,” which is standard, or any master termination rights for breach, etc.).

11. Plan the Rollout (Post-Signing Transition):

• If transitioning to a new agreement type (EA -> MCA-E), plan the cutover. There might be practical steps, such as moving subscriptions from the old enrollment to the new billing account. Microsoft or your partner should assist, but keep track so that nothing is accidentally double-billed or left out.
• Inform IT administrators of any new portal or process (MCA-E uses the Microsoft 365 admin center and Azure portal for everything; EA users might be used to Volume Licensing Service Center for some things – ensure everyone knows where to manage licenses now).
• Update internal documentation (asset registers, SAM tools) to reflect the new agreement.

12. Ongoing Management Setup:

• Establish a cadence for reviewing your Microsoft usage and costs. Under an EA, much of this was based on the annual true-up and triennial renewal. Under MCA-E, consider conducting quarterly business reviews with Microsoft or performing internal license audits every six months. Mark your calendar with dates to review key subscription renewals. You may have various products coming up for annual renewal at different times now – don’t let them auto-renew at higher prices without scrutiny.
• If you engaged an independent advisor for the negotiation, you might keep them on retainer for periodic check-ins to ensure you remain optimized.
• Communicate the outcomes and new processes to stakeholders: let finance know how billing will occur, let IT ops know how to request new licenses, etc., under the new regime.

Using this checklist, you can approach the renewal or transition methodically, ensuring no important aspect slips through the cracks. Now, with strategy and negotiation tactics in mind, it’s also crucial to understand the financial implications over multiple years of whichever route you choose – that’s up next.

Modeling TCO Over Multiple Years (EA vs. MCA-E)

One of the most important exercises for a CIO is to model the total cost of ownership over the next several years under each agreement scenario. This informs decision-making and helps communicate with CFOs and finance committees.

Here’s how to approach TCO modeling for EA vs MCA-E:

1. Establish a Time Horizon: Typically model 3 years (since that’s the EA term) and maybe extend to 5 years if you want a longer outlook. Even though MCA-E is evergreen, you can simulate what 3 years of costs would look like under that model, and then extend if needed to see longer trends.

2. Include All Cost Components: For each scenario, list out annual costs, including:

• License subscription costs (for cloud services) or SA renewal costs (for any perpetual licenses in EA). Use Microsoft’s pricing and any negotiated discounts for each year.
• Azure consumption costs (if relevant). This is usage-based, so project the usage and apply any Azure commitment discounts or overage rates.
• Support costs (Microsoft Unified or third-party support). Often overlooked in pure licensing discussions, but if moving to MCA-E causes an increase in support fees (for example, Unified Support is priced as a percentage of your license spend, which may change), factor it in. Or if you plan to get support via a partner under CSP, include that partner’s support fee.
• Partner services costs if applicable (for instance, maybe you plan to hire a licensing advisory firm annually – include that if it’s part of your cost of managing an MCA-E vs previously your LSP did it “for free”).
• One-time transition costs (e.g., internal project to change systems, or any double payment during switchover). Ideally, those are minimal, but if, say, you overlap an EA and MCA-E for 2 months to transition, that extra spend should be counted.
• Credits/Incentives as negative costs. If Microsoft is giving you a one-time credit (say $200k of Azure credits or a deployment fund), subtract that in the year it applies.

3. Account for Growth/Changes Each Year: Create multiple columns (Year 1, Year 2, Year 3) for each scenario. Adjust the license counts up or down per your forecast. For EA:

• Year 1: Pay for initial quantities.
• Year 2: Pay for initial + any true-up from Year 1 growth (assuming growth; EA pricing is fixed per unit, but total grows if more units).
• Year 3: Pay for initial + cumulative true-up from Year 2 (and Year 1, since any added in Year 1 would have been paid in Year 2, etc.). It can be tricky, but basically, EA costs often climb if you keep adding licenses via true-up, unless you have decreases (which EA typically doesn’t credit you for until maybe renewal).
• End of Year 3: If modeling beyond, assume a renewal with, for example, new pricing or a switch to MCA-E.

For MCA-E:

• Year 1: Pay monthly/annually as per use. If you plan to scale up or down, reflect those at the points where they happen. E.g., if you plan to reduce 10% of licenses in Year 2, your Year 2 costs drop correspondingly.
• Year 2: Assume a price increase if likely (e.g., Microsoft announces a 5% increase for certain licenses in Year 2 – add that to unit costs).
• Year 3: Similarly, adjust for any price changes or increased usage.
• Because MCA-E allows for reduction, you might show a scenario with a downturn, for example: “What if we have a hiring freeze and reduce 500 licenses in Year 2?” Under EA, you’d still pay for them; under MCA-E, you would not after their term end. This can show the value of flexibility in dollars.

4. Compare the Cumulative Costs and Net Present Value (NPV): Add up the total spend over 3 years for each scenario. Sometimes, a cash flow vs. NPV analysis is useful if payment timings differ. For example, an EA might allow annual billions, which is similar to MCA-E annual billing. However, if you were comparing it to an up-front purchase (less common now), you would want to discount future cash flows. In most cases, both EA and MCA-E are paid annually or monthly, so a straight sum is fine. Still, present the totals both as raw numbers and as NPV, if significant (especially if one option has larger payments early versus later).

5. Factor in the Opportunity Cost of Flexibility: This is more qualitative, but it can be quantified as a risk adjustment. If your business is volatile, assign a value to flexibility. For instance, if there is a 20% chance you’ll have to cut 1000 users in year 2 (merger or economic downturn scenario), what cost would that incur under each model? Under EA, you’d still pay for those 1000 through year 3 (cost = 1000 * license cost * remaining years). Under MCA-E, the cost may be a small penalty or just zero after you drop them at the next renewal. Quantify that risk and, if necessary, multiply it by the probability to get the expected value. This can show that while MCA-E might seem slightly pricier in the base case, the worst-case cost is much lower.

6. Scenario Analysis: It’s wise to model best-case, expected, and worst-case scenarios:

• Best-case: perhaps higher growth, which could mean more cost but also more revenue for the company – maybe not relevant unless you tie EA costs to revenue.
• Worst-case: needing to downsize or being hit with large price increases.
• Show how each model performs. Often, EA might win in a high-growth stable scenario (because you locked low prices for lots of growth), whereas MCA-E might win in a downturn scenario (because you can scale down costs). Present these to give a full picture.

7. Include qualitative TCO factors: Not everything is dollars on a spreadsheet. Mention things like:

• Value of SA benefits: Under EA, you might be getting value from SA (e.g., DR rights, training, support credits). If you drop SA, you may incur other costs, such as buying training separately or needing a higher Azure SKU because of the loss of the Hybrid Use Benefit. Try to estimate those costs or at least note them.
• Administrative overhead differences: EA renewals and true-ups require effort (in terms of people and time). MCA-E is a more continuous effort but less of a big bang. If you have an internal licensing team, does one model free them up more? Possibly MCA-E reduces legal/procurement cycles (saves some FTE hours every 3 years), but increases ongoing ops workload (monthly tracking).
• Impact on cash flow: EA usually doesn’t require upfront payment for all 3 years (unless you choose to), it’s annual. MCA-E can be paid monthly, which might be slightly better for smoothing cash flow. If that matters to finance, note it. Paying monthly might also align better with usage – some CFOs prefer operating expenses (OpEx) spread out over big annual bills.

By doing this TCO analysis, you’ll have a solid financial grounding for your decision. Present the findings to stakeholders to build consensus on which path is more cost-effective or lower risk. It could be helpful to summarize it in a simple table, for example:

3-Year Cost Comparison (Illustrative):

(The above is just an example format. Your actual numbers will vary.)

In this hypothetical, the MCA-E ends up slightly cheaper due to being able to drop some services and a better Azure deal, despite higher unit costs on M365. Even if your analysis shows the MCA-E scenario slightly higher in cost, you might still choose it for strategic reasons – but having the numbers lets you justify the decision, or negotiate harder to remove that gap.

CIO Recommendations & Actionable Guidance

Finally, distilling all of the above, here are the key recommendations for CIOs tackling Microsoft EA renewals and the EA-to-MCA-E transition in 2025:

• 1. Start Early and Educate Your Team: Don’t treat your EA renewal as “business as usual.” Begin planning well in advance and ensure that your procurement, IT, and finance leaders understand Microsoft’s new licensing direction. Early education on MCA-E vs EA will ensure your team is aligned on goals and prepared to engage with Microsoft on equal footing. Action: Host an internal workshop or strategy session to bring everyone up to speed on Microsoft licensing changes.
• 2. Evaluate Both Options (EA and MCA-E) Thoroughly: Even if you believe Microsoft will force your hand, run a structured evaluation of staying on EA vs. switching to MCA-E. This involves comparing costs (using TCO modeling), assessing flexibility needs, and evaluating the impact on your operations. Action: Create a decision matrix that lists the pros and cons of EA vs. MCA-E for your organization’s context, and review it with key stakeholders (e.g., CIO, CFO) to determine a preliminary direction.
• 3. Leverage Your Negotiation Power – Don’t Settle for List Price: Microsoft’s transformation doesn’t mean you lose all bargaining power. Use competitive pressure (CSP quotes, alternative scenarios) and highlight your strategic value as a customer to negotiate favorable terms. They still want your business and revenue commitment. Action: Before engaging in final negotiations, obtain at least one alternative proposal (from a CSP or even consider alternative providers for some solutions if applicable) to use as a credible fallback or bargaining chip.
• 4. Prioritize Flexibility if Your Business Demands It: If your industry or company is prone to change (e.g., a fluctuating workforce, rapid growth or contraction, tech innovation), lean towards an agreement model that allows you to scale and adapt. Paying slightly more per unit is often better than paying for thousands of unused licenses. Action: Identify any upcoming business events (mergers, divestitures, reorganizations) in the next 1-3 years and ensure your chosen agreement can accommodate those with minimal penalty.
• 5. If Transitioning to MCA-E, Strengthen Asset Management: The move to an evergreen contract means you must impose your internal renewal discipline. Implement robust software asset management and cloud cost management processes. Regularly audit usage, clean up unused accounts, and stay up to date with Microsoft announcements about price or program changes. Action: Schedule a quarterly meeting to review Microsoft license usage and spending, and invite teams such as IT asset management, cloud operations (FinOps), and procurement to proactively adjust consumption.
• 6. Mind the Gaps – Address SA and Support Needs: Be careful not to drop important benefits in the transition. If leaving EA means losing Software Assurance on some on-premises assets, plan how you will maintain equivalent capabilities (e.g., purchase subscription versions, or if you let SA lapse on a server, be prepared to buy new licenses for future upgrades). Also, ensure you have a support plan: Microsoft’s new agreements don’t inherently include enterprise support, so budget for Unified Support or a third-party, or negotiate support credits. Action: Make a list of all current SA benefits you utilize (license mobility, DR rights, etc.) and confirm how each will be handled if you move to MCA-E. Similarly, decide who will provide support and include that in the agreement negotiations or parallel discussions.
• 7. Use Azure Commitments and New Initiatives as Bargaining Chips: If your company is investing in Azure or other Microsoft services, such as Power Platform or Dynamics, use those as negotiation sweeteners. Microsoft may be willing to offer better terms if they see your total Azure spend growing or if you’re adopting new services (they have sales targets for these). Action: Outline a 1-3 year cloud adoption plan and share a high-level version with Microsoft during negotiations, framing it as contingent on getting a cost-effective deal. For example, “We plan to move these workloads to Azure, which could triple our Azure spend – but we need pricing certainty to get executive approval for that move.”
• 8. Don’t Be Afraid of a Short-Term Renewal: If you’re truly not ready for MCA-E and Microsoft allows an EA renewal, you might take it, but treat it as a last hurrah. Use the next three years to prepare: optimize your license usage, complete any transitions from legacy products, and get your internal processes ready for a more cloud-centric model. Possibly negotiate a “dual path”: e.g., renew EA but pilot MCA-E for a subset of services or new projects to learn how it works. Action: If renewing EA now, set a schedule for year 2 of the EA to begin a transition plan to MCA-E (or CSP). Don’t wait until the end; run a small trial or parallel of MCA-E so that when 2028 comes (or whenever the next cycle does), you’re ready to pivot smoothly.
• 9. Engage Expert Help if Needed: The complexity of Microsoft licensing in 2025 is high. Consider engaging independent licensing experts or consultants, as Microsoft has removed the LSP advisory role in direct deals. They can often identify optimization opportunities or negotiation tactics you might miss. Action: Evaluate at least one proposal from a licensing advisory firm to assist with either negotiation or ongoing license management under the new agreement. Their fee can often be justified by the savings and avoidance of pitfalls they provide.
• 10. Align the Agreement with Business Strategy: Ultimately, your Microsoft agreement should be a tool that supports your business strategy, not a hindrance. If your strategy is cloud-first, agile innovation, then an MCA-E (or CSP) model aligns well. If your strategy focuses on cost leadership and stability, you might emphasize discounts and price guarantees. Ensure whatever you sign enables your IT strategy for the next few years. Action: Double-check the final plan against your IT roadmap. For instance, if you plan to deploy many Windows 11 upgrades and need VDA licenses, does your agreement cover that? If you anticipate a significant push into AI, have you included Azure AI credits or the appropriate Power Platform capacity? This alignment will maximize the value of the agreement.
• 11. Communicate Changes to the Organization: If there are changes that affect end-users or business units (such as new usage guidelines to reduce waste or a different way managers request software), communicate them clearly. For example, under an EA, everyone might have been automatically assigned a license whether they used it or not; under a tight MCA-E, you might reclaim licenses faster. Action: Launch an internal awareness campaign or policy update on software use – e.g., “licenses will be reclaimed after 90 days of inactivity” or “new project teams must request cloud services through IT to leverage our committed discounts.”
• 12. Stay Informed Going Forward: The transition in 2025 is not the end – Microsoft will continue to evolve its licensing, possibly introducing new service bundles or eventually phasing out EA entirely. As CIO, keep an eye on licensing news and periodically revisit your Microsoft strategy. Action: Assign someone (or yourself) the role of “Licensing watcher” to track Microsoft announcements, attend webinars, or read analysis blogs on Microsoft licensing every 6-12 months. Being ahead of changes (like knowing if a price hike or a new discount program is coming) will let you proactively adjust your agreement or usage.

By following these recommendations, CIOs can not only navigate the immediate EA renewal challenge but also set up their organizations for a smoother, cost-effective relationship with Microsoft in the cloud era. The goal is to turn what could be a daunting contract change into an opportunity: an opportunity to modernize your licensing approach, potentially save money, and gain the flexibility needed for your digital transformation goals.

In conclusion, approach your Microsoft EA renewal or MCA-E transition with a strategic mindset. Use the flexibility vs. cost trade-off to your advantage, negotiate hard using all available levers, and align the outcome with your business’s future direction.

Microsoft’s 2025 licensing changes are significant, but with the comprehensive guidance in this playbook, you as a CIO are well-equipped to make the best decision for your enterprise and secure a deal that delivers value on your terms.