Case Study – Microsoft Negotiation Service – German Manufacturing Group – Microsoft EA Optimization Realizes 26% Cost Savings and Unifies Global Licensing
Background
A German manufacturing group with 12,000 employees worldwide (headquartered in Munich, with subsidiaries in Europe, North America, and Asia) was preparing for a renewal of its Microsoft Enterprise Agreement.
The group specializes in automotive components and industrial machinery. Its IT landscape is a mix of on-premises ERP systems (SAP) and a growing adoption of cloud services for collaboration and analytics.
The existing Microsoft EA covered a broad array of products: Microsoft 365 for all office staff across the group (with a mix of E3 and E5 licenses), Project Online for engineering project management, and a significant deployment of Power BI Pro for data analysis. Notably, each region (Europe, the US, and Asia) had its own enrollment under the EA, and licensing was managed somewhat fragmentarily.
Redress Compliance was engaged to optimize and negotiate the renewal, to consolidate licenses into a unified global agreement, slash redundant costs, and align
Read how to negotiate with Microsoft.
Challenges
The manufacturing group’s challenges included duplication and inefficiency in licensing, as well as the need for a cohesive global view. Because different divisions and regions handled licenses semi-independently, the company lacked transparency – for example, the U.S. division purchased additional Visio and Project licenses through a reseller, unaware that the German headquarters had spare licenses allocated.
There was over-licensing in some areas: an internal audit found that roughly 500 Visio Pro licenses were assigned company-wide even though only about 150 engineers used Visio regularly; similarly, some employees had two overlapping licenses (due to migrations that weren’t cleaned up, e.g., an E3 and a separate Exchange Online Plan for the same user).
These issues hinted at the potential for significant cost savings if cleaned up. Another challenge was aligning the EA with the company’s strategy to move toward cloud and IoT.
Microsoft proposed a significant Azure commitment for IoT sensor data and analytics, as well as suggesting an upgrade for all users to Microsoft 365 E5 to leverage advanced security for IoT.
However, the company was cautious – they wanted to adopt Azure gradually, and not all users needed E5, especially factory-floor personnel who don’t use advanced features. There was tension between Microsoft’s push to bundle more (one-size-fits-all) and the company’s desire for a right-fit solution.
Additionally, the group had concerns about compliance and usage tracking. They had undergone a Microsoft license compliance review two years prior, which was disruptive, and lacked a centralized way to ensure they were always compliant without overcommitting.
They wanted better tools or terms to manage this. Lastly, currency and pricing differences across regions were a concern – the previous EA had pricing in euros.
Still, U.S. licenses were purchased through a U.S. reseller in USD, which caused some complexity in understanding the true spend. The company sought to simplify billing and secure the best volume pricing by leveraging its international purchasing power.
How Redress Compliance Helped
- Global License Audit and Inventory: Redress Compliance undertook a comprehensive audit of all Microsoft licenses across the group’s regions. They worked with each IT team (Germany, USA, Asia-Pacific) to gather entitlements and usage data. This audit immediately uncovered overlapping and unused licenses that could be eliminated. For instance, Redress found that in Europe, the company had an EA allotment of 200 Project Online licenses, while the US had separately purchased 50 through a cloud solution provider. Consolidating these under the EA allowed for the cancellation of the separate US licenses. Redress tallied all users who had E5 and assessed if their usage justified it. They identified approximately 1,000 E5 users who were candidates for downgrading to E3 because their usage did not involve the advanced features (similar to patterns seen elsewhere in the industry, where a significant chunk of Office 365 features go underutilized). They also identified the final 300 users still on standalone Office 2016 licenses via MPSA from a past acquisition; these could be folded into the EA as Microsoft 365 licenses for consistency, possibly at a lower cost and certainly with easier management.
- Unified Licensing Strategy: With this data, Redress formulated a strategy to unify and optimize. They proposed that the renewal collapse all regional enrollments into a single global enrollment (with subsidiary true-ups as needed) to maximize volume discounts. Instead of each region negotiating its slight discount, the combined volume put the company into a higher discount tier. Redress also recommended standardizing the license types: for example, choosing one collaboration tool set for all (the company had a mix of Teams and still some Skype for Business in one region – they moved all to Teams to eliminate duplicate support costs). Importantly, Redress suggested a tiered licensing approach internally: a core of ~5,000 power users would get M365 E5 (covering executives, R&D heads, cybersecurity, etc.), while the majority (~6,500 users) would use M365 E3 which sufficed for their needs, with perhaps a small set of add-ons like EMS (Enterprise Mobility + Security) for those who needed extra security but not full E5. This approach ensured the company wasn’t overpaying for E5 across the board.
- Negotiation and Cost Benchmarking: In negotiating with Microsoft Germany (who handled the global account team), Redress presented the findings bluntly: “We have X licenses not being used, Y overlaps, and Z% of E5 features not utilized. We are prepared to remove or reduce these unless pricing is adjusted.” This set the tone that the company would not renew the status quo. Redress’s industry benchmarking for manufacturing companies indicated that typical overspend on shelfware could be 10–15%, and they aimed to remove that. Microsoft initially countered with arguments about future needs (IoT, security threats requiring E5, etc.). Still, Redress negotiated a compromise where Microsoft provided E5-level security features for a portion of E3 users via an add-on at a fraction of the cost, rather than making everyone E5. In terms of pricing, by consolidating and committing the entire global volume under one EA, the company reached Microsoft’s highest discount tier (Level D pricing for Enterprise Agreements, which significantly lowers unit costs).Additionally, Redress negotiated an overall 26% cost reduction on the EA, citing the need to align with competitive pressures (the client had hinted they might explore Google Workspace for some roles if Microsoft couldn’t be flexible). The Azure component was negotiated as a separate module. Redress secured a modest Azure commitment to cover the initial IoT projects, with the ability to increment it in the second year with the same discount if those projects expanded (thus avoiding overcommitting on cloud before results were proven). Microsoft, eager to have Azure in the door, agreed to this phased approach.
- License Management and Visibility Improvements: Redress didn’t stop at negotiation; they assisted in setting up better internal license management. They introduced the client to some software asset management (SAM) tools that integrate with the Microsoft 365 admin center to track license assignment and usage by user. They also secured Microsoft’s agreement to include, at no additional cost, access to advanced usage analytics dashboards (part of Microsoft’s Enterprise Admin Portal) to help the client monitor the consumption of Power BI, Teams, and other services. This would allow the IT team to quickly spot if licenses are underutilized and reclaim them or downgrade users – preventing the buildup of shelfware over the new term. Redress also ensured the contract had clear terms that any affiliate or new acquisition could be added to the EA pool, so the company could quickly bring new units into the fold without separate contracts (this was important given the prior acquisitions that were on separate agreements).
Outcome and Impact
- 26% Cost Savings and Euro Millions Saved: By the final agreement, the German manufacturing group achieved 26% in cost savings relative to what a straight renewal on previous terms would have cost. In real numbers, this translates to approximately €5 million saved over a three-year period. The savings came from volume consolidation (driving larger discounts), the elimination of duplicate and unused licenses, and the selective downgrading of E5 to E3 for those 1,000+ users who didn’t need the extras. Not only did costs decrease, but the value-per-license also increased, as almost every license in use is now actually needed and assigned to an active user. The CFO of the group was particularly pleased that IT costs per employee went down while still providing modern tools – a direct boost to the bottom line and productivity ratio.
- Unified Global Licensing and Simplified Management: The firm now enjoys a unified global Microsoft agreement. All regions are covered under a single umbrella, which means a single renewal date, a consolidated bill (with a transparent breakdown by affiliate), and a master set of terms. This unification has significantly streamlined IT administration. The central IT asset team in Munich can view all Microsoft licenses in one place and redistribute them as needed – for example, if the US unit requires 50 more licenses, they can be allocated from Europe’s unused pool, if available, rather than purchasing them anew. The removal of siloed agreements also means the end of the inconsistent user experience; every employee globally has access to the same versions of Office apps and collaboration tools, enabling smoother collaboration across borders. For compliance, having one agreement helps ensure the same rules and security features apply company-wide (no region lagging on patches or versions due to licensing limits).
- Improved License Utilization and Visibility: Thanks to the efforts of Redress and the implementation of new tools, the company now has near real-time visibility into license utilization. The IT team set up quarterly reviews to examine usage reports, checking metrics such as the number of active Power BI Pro licenses and which Visio installations had been opened in the last 90 days. This process has already borne fruit: in the first quarter after renewal, they identified 100 Visio licenses and 200 Power BI Pro licenses that were allocated to users who hadn’t used those tools at all; they reclaimed those and put them into a reserve pool rather than renewing them unnecessarily. The risk of accumulating shelfware is significantly reduced, and any emerging inefficiency can be identified and corrected promptly. Essentially, the company has adopted a lean licensing operation, much like it does with lean manufacturing, continuously trimming excess.
- Alignment with Business Growth and Innovation: The new EA is structured to support the manufacturing group’s future. Because it allows adding affiliates easily, when the company acquires a smaller firm (which is in their growth strategy), they can bring them into the fold and equip them with standard tools without renegotiating contracts – this agility is important in the competitive manufacturing sector. The cost savings and flexible Azure commitment also mean IT can invest where it matters: they are channeling some of the saved budget into their IoT initiative and advanced analytics on the production line. Microsoft’s concession to let them increase Azure later at the same discounted unit rate gives the company a risk-free way to experiment with cloud: if their IoT project yields ROI, they will scale up Azure use and know the cost per unit; if not, they haven’t sunk huge costs into it upfront. This type of arrangement aligns technology expenses with the actual business value delivered. Overall, the Microsoft agreement is now a facilitator of the company’s global IT strategy, not a patchwork hindrance. It supports unified communication, data-driven manufacturing improvements, and operational flexibility – all at a significantly lower cost than before.
Client Quote
“Our Microsoft licensing was like a puzzle scattered around the world – now it’s finally a complete picture. Redress Compliance helped us consolidate everything, eliminate the waste, and dramatically cut our costs. We saved 26% and at the same time made our IT more powerful – that’s a huge win. Before Redress came in, we honestly didn’t realize how many overlapping and unused licenses we were paying for. They shined a light on it, and then they fixed it. Now, we have a single global agreement with Microsoft that’s much easier to manage. Every euro we spend on Microsoft now is a euro delivering value to our business, not leaking out on inefficiency. Redress also negotiated flexibility for us that we never thought possible – we can adapt our licensing as we grow, without worrying about getting stuck with shelfware. Redress was 100% on our side, helping us get the best deal. They truly unified our licensing strategy, and we feel in control for the first time in years.” – Head of IT Procurement, German Manufacturing Group.
Call-to-Action
Is your global company juggling fragmented Microsoft contracts or suspect you’re over-licensed? Contact Redress Compliance for a free Microsoft agreement review or renewal strategy session. We’ll help you consolidate, optimize, and negotiate a unified agreement that cuts costs and supports your business worldwide. Don’t let complexity and overlap drain your IT budget – let Redress streamline your Microsoft licensing for maximum value.
Further Reading
- Read about our Microsoft Contract Negotiation Service.
- Read about our other Microsoft Case Studies.
