Explaining Microsoft EA FAQs
Q: What is a Microsoft Enterprise Agreement (EA)?
A:
A Microsoft EA is a volume licensing agreement for large organizations (typically with 500 or more users/devices) that consolidates the purchase of software and cloud services under one contract, offering discounted pricing.
It simplifies license management by covering multiple products and services in a single agreement, offering flexibility and cost savings.
Q: What are the main benefits of a Microsoft EA?
A: Key benefits include:
- Volume discounts and cost savings: EAs provide lower per-license pricing by committing to a standardized platform across the organization. Pricing is locked in for three years, which helps with budget predictability.
- Flexibility: Organizations can mix and match cloud services (such as Microsoft 365 and Azure) and on-premises software under the same agreement, always utilizing the latest versions through Software Assurance.
- Simplified management: A single agreement streamlines license tracking and renewal, and payments can be spread annually, reducing upfront costs.
- Additional benefits: EAs include Software Assurance, which offers training, support, and upgrade rights at no extra cost, adding more value.
Q: Which organizations or industries benefit most from a Microsoft EA?
A: EAs benefit large organizations with 500 or more users/devices in any industry. The value stems from scale: companies in sectors such as manufacturing, finance, healthcare, government, education, and retail frequently utilize EAs to standardize IT procurement and licensing.
For instance, a global manufacturing firm saved 25% on licensing costs by adopting an EA, and a large university improved compliance while cutting overhead under an EA. Any enterprise with a significant Microsoft footprint can benefit, regardless of sector.
Q: How does a Microsoft EA work?
A: A Microsoft EA is structured as a multi-year (typically 3-year) contract. The organization makes an initial commitment for a set of Microsoft products and services across all users or devices, then pays annually (or upfront) based on that commitment.
Pricing for those products is fixed for the term, so you’re shielded from price increases. Each year, you have a “true-up” process to report and pay for any additional licenses if your usage grows, ensuring you stay compliant at the same discounted rates. At the end of the term, you can renew the agreement or adjust your licensing for the next term.
Q: How long does a Microsoft EA last, and can it be extended?
A: The standard EA term is three years. After three years, you can renew for another term if needed. In special cases, Microsoft may allow a short extension or even offer a longer term (like a five-year EA).
Still, it is generally recommended to renegotiate a new EA at renewal rather than simply extending the existing one. Renewing at the end of the term gives you a chance to adjust your licensing and pricing to current needs.,
Q: What is included in a Microsoft EA (software, cloud services, support)?
A: An EA can cover any combination of Microsoft on-premises software (Windows, Office, SQL Server, etc.) and cloud services (Azure, Microsoft 365, Dynamics 365, etc.) under one agreement. By default, it includes Software Assurance for the licensed products, which provides new version rights, training vouchers, planning services, and limited technical support.
Companies typically purchase comprehensive support (such as Premier/Unified Support) separately; however, the EA ensures that you have basic support and upgrade benefits included. Companies usually purchase comprehensive support (like Premier/Unified Support)
Q: What is Software Assurance, and how is it related to EA?
A: Software Assurance (SA) is Microsoft’s maintenance and benefits program, which is included with an EA. It provides additional value beyond the licenses, including rights to new software version releases, training vouchers, planning services, and technical support during the EA term.
In essence, SA ensures that your organization always has access to the latest software and useful services (like training and support) without additional cost while under the EA.
Q: What are the requirements to qualify for a Microsoft EA?
A: An organization needs at least 500 users or devices to be eligible for a commercial Enterprise Agreement. (Public sector and academic variants often have a lower minimum, around 250 seats.)
Microsoft designed the EA for mid-size and large enterprises at that scale. If you don’t meet the minimum requirements, Microsoft offers alternative licensing programs, such as the Cloud Solution Provider (CSP) program or Open Value.
Q: Can smaller businesses under 500 users use an EA, or what are the alternatives?
A: Businesses with fewer than 500 users are typically steered toward other licensing programs rather than an EA.
Microsoft’s CSP program is the most common alternative for smaller organizations, offering more flexibility with month-to-month subscriptions. Another option is Open Value (or Open Business) agreements for those needing on-premises licenses.
Microsoft generally requires a 500-seat minimum for EAs, so an EA is usually not available or cost-effective if you’re a smaller organization. (Microsoft has recently begun encouraging some mid-sized customers to switch to CSP or the newer Microsoft Customer Agreement instead of starting a new EA.)Businesses with fewer than 500 users are typically
Q: What is the difference between a Microsoft EA and an Enterprise Subscription Agreement (EAS)?
A: The EAS is essentially the subscription-based version of an EA. In a standard EA, you purchase perpetual licenses with SA — you pay over three years and ultimately own those licenses forever (for the version acquired).
In an EAS, you don’t own the licenses at the end; you rent them on a yearly basis. You pay an annual subscription fee for three years, and if you terminate the agreement, your software access will also end (unless you exercise a buyout option).
The EAS usually has a lower annual cost than an EA (since you’re not buying perpetual rights) and can allow more flexibility (you can reduce license counts at each anniversary if your needs drop, which a standard EA does not permit mid-term). The trade-off is that you must continue renewing or lose software usage rights with an EAS.
Q: How does an EA compare to CSP or Open Value licensing programs?
A: Compared to an EA, the Cloud Solution Provider (CSP) program is more flexible: CSP is month-to-month with no three-year commitment, allowing you to add or remove licenses as needed and pay only for what you use.
This is great for organizations with agility or fewer than 500 seats. However, large enterprises often get better volume discounts under an EA than through CSP.
Open Value agreements are another alternative for smaller organizations or those wanting a three-year agreement without the scale of an EA; they provide volume licensing benefits on a smaller scale.
In short, EAs favor large, stable environments (with deeper discounts and fixed pricing), whereas CSP/Open programs favor flexibility and smaller or variable commitments. Many enterprises use a mix: EA for core licensing and CSP for certain specific needs where flexibility is key.
Q: How are licenses managed under an EA?
A: Microsoft provides centralized tools to manage your EA licenses. Typically, you’ll use the Microsoft Volume Licensing Service Center (VLSC) or Microsoft 365 admin portals to allocate and track licenses, add new users or services, and monitor usage.
Many organizations also utilize Software Asset Management (SAM) tools to maintain an inventory of deployments versus entitlements and ensure compliance.
The EA’s single-contract structure means that all license changes (such as additions) are recorded and then reconciled at least annually through the true-up process.
Q: Is technical support included with an EA?
A: EAs include some level of support through Software Assurance.
For most products, SA provides 24/7 basic break-fix support (or a certain number of support incidents) as part of the package. You can also access Microsoft’s knowledge base and open cases with Microsoft Support for products under SA.
However, this is not the same as a Premier/Unified Support contract – it’s more basic. Many large EA customers still purchase a separate support agreement for guaranteed response SLAs and deeper support.
However, the EA’s SA benefits ensure you have at least standard support and the ability to escalate issues with Microsoft during the term.
Q: Can we add new products or services to our EA mid-term?
A: Yes. One advantage of an EA is the ability to add additional Microsoft products or services at any point during the agreement term. If you decide mid-term to deploy new software (say, Power BI Pro for a team or a new Azure service), you can simply include it under your EA by placing an order through your LSP.
You’ll typically be charged pro-rated for the remainder of the year (or it will be counted in your next annual true-up). Adding products is straightforward—the EA is flexible enough to encompass new Microsoft offerings as your needs evolve.
Q: What happens if we need to increase or decrease the license count during the term?
A: Increasing is easy: you can add users/licenses anytime and formally report those additions in the next annual true-up (and pay for them).
Decreasing is more limited: under a standard EA, you generally cannot reduce the number of licenses you’ve committed to until the end of the 3-year term. You must maintain at least the initial quantities (you can only “true-up,” not “true-down” mid-term).
The exception is if you signed an Enterprise Subscription Agreement or a certain cloud subscription – those may allow adjusting quantities down at the anniversary.
In practice, any reductions must wait until the EA renewal point, at which you can adjust your counts to reflect the new, lower need. So, think of it: you can scale up during the term, but scaling down happens at renewal.
Q: Are EA licenses perpetual or subscription-based?
A: It can include both. Traditional EA licensing for on-premises software (like Windows or Office procured via EA) grants perpetual rights – once you’ve paid for those licenses through the EA, you own them even after the EA ends.
Meanwhile, many offerings in an EA are subscriptions (for example, Office 365 or other cloud services are essentially subscription licenses). During the EA, you may have a mix of perpetual rights for on-premises products and subscription rights for cloud products.
If you sign an Enterprise Subscription Agreement (EAS) variant, all licenses are subscription-based and have no perpetual rights.
In summary, a standard EA gives you perpetual use for the software licenses you bought (with SA giving you upgrades during the term). In contrast, cloud services are subscription-based, and you can structure your EA to include one, the other, or both types of licensing.
Q: What happens at the end of an EA term?
A: When an EA expires after its 3-year term, the customer typically can renew the agreement for another term or let it lapse.
If you renew, you negotiate a new agreement (often adjusting products and quantities as needed) and continue coverage seamlessly. If you choose not to renew:
- For perpetual licenses acquired via the EA, you retain the right to use those licenses at the last version you obtained (you’ve paid for them in full). However, you will lose Software Assurance on them, so no further upgrades or free support will be available on those products once the term ends. Essentially, your licensing becomes “frozen” at that point (you can continue to use what you have, but won’t receive new versions).
- For subscription services (like Microsoft 365 or Azure) or if you were on an Enterprise Subscription Agreement, your rights to use those services end. There may be a brief grace period, but generally, you will need to either renew in some form or transfer those users to another licensing program (such as CSP or other subscriptions) to avoid service interruption.
There’s no financial penalty for choosing not to renew an EA. However, any benefits tied to the EA (such as training vouchers and planning services) will expire if not used. Many organizations that don’t renew will either shift to another licensing model or reduce their Microsoft usage. If you plan not to renew, it’s essential to have a licensing transition plan in place to ensure that users and systems remain properly licensed.
Read Microsoft EA Renewal FAQs
Q: Who do we work with to sign an EA – Microsoft or partners?
A: EAs are sold and managed through Microsoft’s certified partners called Licensing Solution Providers (LSPs). Although Microsoft sets the pricing and terms, an LSP typically handles the transaction.
These are large resellers (examples: CDW, Insight, SHI, SoftwareOne, etc.) authorized to administer EAs.
You will work with a partner (whom you can choose) who will process orders, provide quotes, and help manage the agreement in coordination with Microsoft.
Microsoft’s representatives often get involved in negotiations (especially for large deals), but an LSP will be the party through which you sign and execute the agreement.
Q: What is a Licensing Solution Provider (LSP) in the context of EAs?
A: An LSP is a Microsoft partner authorized to sell and manage Enterprise Agreements and other volume licensing contracts. In an EA, the LSP acts as the “partner of record,” handling the procurement and administrative aspects of the agreement. They assist with quoting, true-up submissions, and general licensing support.
Familiar industry names, such as CDW, Dell, Insight, SHI, and SoftwareOne, are LSPs. They serve as the middleman between you and Microsoft.
A good LSP will help ensure your EA runs smoothly, remind you of deadlines, and often provide advice or tools for asset management. Microsoft requires using an LSP for EAs in most regions, so you will select one when signing the EA.
Q: Are there any downsides or challenges to an EA?
A: While EAs offer many benefits, potential drawbacks include:
- Commitment and inflexibility: You’re committing to a 3-year term. If your company downsizes or your needs decrease, you generally cannot reduce your license counts until the end of the EA term, which could result in paying for unused licenses.
- No mid-term reductions: As noted, you can’t shut down during the term (except by not renewing those licenses later). This is a risk if you over-forecast or have unexpected staff reductions.
- Upfront financial commitment: Although you pay annually, you are committing to a significant sum over three years. Early termination isn’t allowed, so it’s a lock-in for the term.
- Complexity: EAs can be complex to manage. Tracking deployments, staying compliant, and utilizing all available benefits require effective internal processes. Without active management, an EA can result in “shelfware” (unused licenses) and wasted spend.
- Changing needs: If new technology or a shift in strategy necessitates a different vendor or platform mid-term, the EA’s structure (a 3-year commitment) can make it more challenging to pivot quickly away from Microsoft.
Despite these, most downsides can be mitigated with careful planning and management. Companies should enter an EA aware of the commitment and ensure they have the necessary maturity (processes, tools, personnel) to manage it actively for maximum value.
Read Microsoft EA Negotiations FAQs.
Read about our Microsoft EA Negotiation Service.
