Case Study – Microsoft Negotiation Service – French Professional Services Firm – Microsoft MCA Strategy Delivers 18% Savings and Greater Flexibility
Background
A French professional services firm based in Paris, with 800 employees and offices across France and Belgium, was evaluating its Microsoft licensing strategy as its traditional Enterprise Agreement was nearing its end.
The firm provides consulting and auditing services, so its workforce is largely comprised of knowledge workers who rely on tools such as Office 365, email, and collaborative software.
Previously, the firm had a smaller Microsoft Products and Services Agreement (MPSA) for some purchases and later an Enterprise Agreement when they crossed 500 seats. With the EA term ending, Microsoft was encouraging the firm to transition to the new Microsoft Customer Agreement (MCA) model instead of renewing a full EA, citing it as more flexible for mid-sized enterprises.
The MCA is a modern, evergreen contract for purchasing Microsoft cloud services, offering flexibility without a fixed 3-year term. This was relatively new territory for the firm’s IT and procurement team, and they engaged Redress Compliance to help them navigate this change.
The goals were to ensure the move (if they agreed to it) delivered cost savings, to maintain or improve flexibility in licensing, and to avoid any pitfalls in the new agreement format.
Essentially, the firm sought to modernize its Microsoft relationship in a manner that aligned with its size and needs, while maintaining favorable terms.
Read how to negotiate with Microsoft.
Challenges
One challenge was understanding the implications of the Microsoft Customer Agreement vs. the Enterprise Agreement. Microsoft pitched the MCA as a simplified, no-expiration contract that could eventually replace EAs for many customers.
While the promise of flexibility sounded good (no 3-year lock, pay-as-you-go for cloud services), the firm was cautious. They worried that losing the EA might mean losing negotiated discounts or benefits, such as fixed pricing.
Microsoft’s initial pricing under the MCA offer looked higher per unit than their EA prices, which often include volume discounts. The firm needed to ensure it wouldn’t end up paying more by abandoning the EA framework. Another challenge was cost control and predictability.
Under the EA, they had predictable annual payments; the MCA, being consumption-driven, could fluctuate, especially with the usage of cloud services. The firm’s finance team was concerned about budgeting if costs could swing month to month. They needed mechanisms to keep costs in check or at least predictable.
How Redress Compliance Helped
- MCA vs EA Cost-Benefit Analysis: Redress Compliance first helped the firm perform a detailed comparison of staying on an Enterprise Agreement (perhaps a smaller EA since they were just at the threshold) versus moving to the Microsoft Customer Agreement. They looked at all components – user licenses, Azure, and support. Redress explained that the MCA is evergreen and modular, which can be beneficial, but it typically doesn’t automatically include the volume discounting that an EA negotiation can yield. They calculated that if the firm simply shifted to MCA at list prices, costs would be higher. However, Redress also found that Microsoft was offering some incentives for the firm to be an early adopter of MCA. For instance, they would maintain the firm’s previous EA pricing on Microsoft 365 for a specified period and provide a one-time Azure credit to sweeten the deal. Redress tallied these offers and showed that, with negotiation, the firm could save money. Specifically, Redress set a target to achieve at least 15-20% savings in year one under the MCA compared to the EA, by ensuring discounts are carried over and by trimming unused services.
- Negotiating the Microsoft Customer Agreement Terms: In discussions with Microsoft France, Redress acted as the firm’s advocate to secure favorable terms in the MCA. One key negotiation win was securing Microsoft’s agreement to offer “EA-equivalent” discounts on Microsoft 365 licenses, even under the MCA. Normally, MCA is a pay-as-you-go service with standard pricing, but Microsoft didn’t want to lose the client, so they offered to lock in the firm’s pricing at the same unit price they had under the EA for the next two years. This effectively gave the firm the best of both worlds: EA pricing with MCA flexibility. Redress also pressed for and obtained quarterly cost reviews with Microsoft account managers – a sort of governance arrangement where Microsoft would help monitor the firm’s spend and alert them if any usage (like Azure) was trending above forecasts, to avoid surprises. Microsoft agreed to this as part of the service in the MCA, recognizing that alleviating the client’s budgeting concerns was crucial. Additionally, Redress secured a contractual right for the firm to scale down certain services. For example, if the firm deployed 100 Azure user licenses for a project and then the project ended, the firm could reduce those licenses without penalty (something not possible in an EA mid-term, but inherently possible in MCA – still, putting it in writing was reassuring).
- Optimizing License Mix and Cloud Use: Alongside the contract change, Redress helped optimize the firm’s purchasing decisions. They recommended sticking largely with Microsoft 365 E3 for all users, but leveraging some of the à la carte flexibility of the MCA to purchase small quantities of add-ons where needed, rather than full E5 licenses. For instance, for a team of 50 security analysts, Redress advised using the “E5 Security” add-on pack on top of E3 (which is significantly cheaper than providing all 50 with full E5, yet grants the advanced security tools they need). This approach cut costs significantly. On Azure, Redress helped the firm set a modest base budget and cleaned up some idle resources before moving to MCA billing (so they wouldn’t carry waste into the new model). They also utilized some Azure Reserved Instances for their always-on workloads, resulting in a cost reduction of ~20%. So, when the firm transitioned to MCA, it was already running a tighter ship. All these optimizations contributed to immediate savings and set a precedent for ongoing cost management.
- Smooth Transition and Support Carryover: Redress oversaw the transition plan to ensure nothing fell through the cracks. They verified that all the firm’s existing licenses were properly documented and then re-provisioned under the new MCA tenant without service interruption. For the support benefits, Redress negotiated a solution: Microsoft agreed to provide the firm with an equivalent Premier Support package for one year at no extra charge (since under EA, they had included support hours). This ensured the firm didn’t lose out on that value. Redress also provided training to the firm’s IT and procurement teams on the new Microsoft Commerce Portal used for MCA, showing them how to add/remove services and track consumption. This empowerment was important so the firm could self-manage in the new paradigm. By the time the MCA went live, the firm was confident in using the new system. Redress remained involved for a few months to double-check billing and ensure that the first invoices under MCA matched expectations. Any discrepancies were quickly ironed out in the cost review meetings.
Outcome and Impact
- 18% Cost Savings Achieved: In the first year after switching to the Microsoft Customer Agreement, the firm realized an 18% reduction in Microsoft licensing and cloud costs compared to the prior year under the EA. This was a substantial win, considering there were fears that costs might rise outside the EA. The savings resulted from a combination of negotiated discounts (maintaining EA-level prices), rightsizing of licenses (avoiding overpayment for E5 suites that weren’t needed), and improved cloud cost management. To put it concretely, the firm saved tens of thousands of euros that year, which for an 800-person company translated into a notable cut in per-employee IT cost. These savings directly improved the firm’s operating margin on its services, freeing up budget that they ultimately invested in other IT tools (they initiated a pilot of a new project management software using some of the savings).
- Greater Flexibility and No Lock-In: The move to an MCA, guided by Redress’s strategy, genuinely gave the firm more flexibility. They are no longer locked into a rigid 3-year contract – if their headcount drops or they need to pivot, they can adjust their Microsoft usage accordingly. This became evident when the firm experienced a slowdown in one practice area and downsized by 5%. Under the old EA, they would have continued paying for those user licenses until the term ended; however, under the MCA, they simply stopped assigning new licenses as people left, and their monthly bill shrank accordingly. Conversely, when they ramped up a new project with short-term contractors, they could provision extra Microsoft 365 licenses for just a few months and then remove them – essentially only paying for what they used. This kind of agility in software licensing was new to them and very welcome. The finance team also found comfort in the quarterly cost reviews and the fact that major prices (like M365 per user) were locked for the near term. They got both flexibility and predictability: a rare combo.
- Simplified Agreement and Administration: The Microsoft Customer Agreement proved to be a significantly shorter and simpler contract than the previous EA. With Redress’s help, the firm navigated it expertly, and now they appreciate not having to think about renewals or true-up exercises each year – the MCA simply continues until they decide to make a change. Procurement noted that they spent far less time on Microsoft admin overhead. Managing licenses through the new portal is straightforward and can be done in real-time. If a new hire joins, IT assigns a license, and it is reflected on the next invoice, pro-rated – eliminating the need to track and report to Microsoft in an annual true-up. This streamlined approach reduced administrative burden. The firm’s IT asset manager can now focus more on optimizing use and less on contractual trivia. Microsoft’s account team also became more of a partner in monitoring usage, since they have those periodic check-ins. Overall, the relationship feels less adversarial and more transparent – costs are openly disclosed every month, and adjustments can be made promptly.
- Future-Proofed Microsoft Strategy: By adopting the MCA with Redress’s guidance, the firm positioned itself ahead of the curve. Microsoft has indicated that it intends to eventually transition more enterprise customers to the Customer Agreement model, and this firm is now already there, reaping benefits. They are confident that, as they may adopt more cloud services (such as Dynamics 365 or Power Platform down the line), adding those to their agreement will be easy and at fair rates, since they’ve established a precedent of negotiating under the MCA. They also feel more in control: they can evaluate new Microsoft offerings and pilot them without the pressure of committing enterprise-wide. In essence, their Microsoft contract is now a flexible framework that can evolve with their changing needs. For instance, if economic conditions change drastically, they can scale down licenses to save costs immediately – an important capability for a mid-sized business. And if growth accelerates, they can scale up without having to renegotiate a new EA from scratch. This flexibility is exactly what they hoped to gain, and it has been delivered.
Client Quote
“Switching to Microsoft’s new agreement felt like a leap into the unknown – but Redress Compliance was our safety net and guide. We ended up saving about 18% compared to our old deal, which is fantastic for our firm, and we gained a level of flexibility we never had before. Now, we’re not locked into anything – we can dial our Microsoft services up or down as needed. Redress made sure we didn’t lose our volume discounts in the process, which was key. Honestly, managing our Microsoft licenses has gone from a yearly headache to a non-issue. We see what we use, we pay for what we use – no more surprise true-up bills or arguing over renewal quotes. Redress lived up to their promise of being independent advisors; they showed us the pros and cons and then fought to get the best out of the new model for us. We feel modernized, in control, and quite happy with Microsoft now – words I’d never have imagined saying a year ago!” – IT Director, French Professional Services Firm.
Call-to-Action
Considering moving to the Microsoft Customer Agreement or another new licensing model? Make sure it’s on your terms. Contact Redress Compliance for a free Microsoft agreement review or strategy session. We’ll help you understand the options, avoid cost traps, and leverage the flexibility of new contracts to your advantage – all while saving you money. Don’t navigate change alone; let Redress be your trusted guide in the Microsoft licensing landscape.
Further Reading
- Read about our Microsoft Contract Negotiation Service.
- Read about our other Microsoft Case Studies.
