The evergreen contract Microsoft is steering enterprises toward, its three forms, and the protections that quietly do not come with it. Three knowledge checks along the way, and 1 clip from a senior cloud advisor.
This is a taught session, not a talking head. The instructor works through analyst grade slides, and three times the video stops on a question with four options on screen. Pause, commit to an answer, and the next slide explains which option is right and why each of the others is wrong. Once in the session the frame splits and a senior cloud advisor gives the view from inside real Oracle negotiations, and the instructor picks the clip apart when the slides return.
The full narration of this session, section by section, for reading and reference. Guest analyst clips are marked.
Welcome back, session three of forty. Last week we took apart the Enterprise Agreement, and the thing to carry forward is what its three year term quietly did for you: it held your prices still. Today we meet the vehicle Microsoft is steering a growing number of enterprises toward, the Microsoft Customer Agreement, and the defining fact about it is one word, evergreen. No fixed end date. No renewal signature required for it to continue. Which sounds like freedom, and functions like exposure, because if there is no term, there is no term based price hold. Nothing expires, and nothing is protected either, unless somebody wrote the protection in deliberately. Today: what the MCA actually is, the three forms and the confusion that comes from mixing them, the three things buyers lost in transition without being told, how to engineer protection into an agreement with no term to hang it on, and an honest account of where the MCA genuinely wins. Let's read it properly.
Five takeaways. One, what it is: a single evergreen agreement, no fixed expiry, subscription led, and what that changes about how your pricing behaves over time. Two, the three forms: Enterprise, Online, and Partner, different routes with different billing, and the estates that ended up running more than one without deciding to. Three, what buyers lost: three patterns that recur across the EA to MCA transitions we have advised, each one a protection nobody realised the EA had been providing structurally. Four, how to replace them: the specific language that puts a hold, a cap, and reduction rights into an agreement that has no term to attach them to. And five, when the MCA is genuinely the right answer, stated as clearly as when it is not, because it is right for some estates and this course is not in the business of telling you otherwise. One framing before we start: nothing in this session says the MCA is bad. It says it is different, and that the difference is priced.
What the MCA is, three characteristics. Evergreen by design: a single agreement with no fixed expiry, which does not lapse, does not require a renewal signature to keep running, and critically does not carry the three year container that an EA uses to hold your pricing still. Subscription led: your purchases sit as subscriptions under the agreement rather than as an enterprise wide commitment with an annual true up, so adding and, depending on the terms you negotiate, reducing behaves differently from the EA's one way count, and for some estates that difference is the whole reason to move. And billed direct or through a partner, depending on which form you are on, which changes who you call when something breaks, who holds the margin, and what support actually looks like on a Tuesday afternoon. Now the consequence that the entire session turns on, and it is worth saying slowly: with no term, there is no term based price hold. In an EA the hold was free and invisible, a by product of the structure. In an MCA it is a negotiated term or it does not exist. Nothing expires, and nothing is protected.
The three forms. MCA-E, the Enterprise form: for large organisations moving off an EA, with negotiated terms and direct billing, and the thing to watch is that negotiated discounts and any protections must be written, because nothing is inherited from the agreement you are leaving. MCA-Online: self service and smaller purchases on standard terms, card or invoice, no negotiated price hold available, and the risk here is not the terms themselves, it is that Online purchases accumulate quietly around the edges of an organisation until somebody discovers a meaningful spend nobody negotiated. MCA through a partner: bought and billed through a CSP partner under the agreement, where the partner's margin and support quality become part of your deal, which session four covers in full. And then the fourth row, which is not a form but a condition, the mixing problem: estates that ended up running more than one form at once, with split billing, inconsistent terms, and nobody able to answer what the organisation has actually agreed to. Route confusion was a recurring pattern in its own right across the transitions we advised. It is worth an hour of your time to establish which forms are live in your estate before anyone proposes a fourth.
First check. Your EA discount was twenty one percent on the enterprise products. You move to an MCA-E. What happens to that discount? A, it carries across automatically as part of the transition. B, it is renegotiated from scratch on the new agreement, because negotiated EA levels do not carry forward by themselves, which is why transition proposals must be compared on totals rather than on the discount label. C, it improves, since the MCA is Microsoft's preferred vehicle. Or D, it is fixed by Microsoft policy at the equivalent level. Pause here. What exactly was your twenty one percent attached to, and does that container still exist after the move?
The answer is B. Your discount was a negotiated term of a specific enrollment on a specific agreement, so when the agreement changes, the discount is negotiated again, and discount reset is one of the three patterns that recurred across the EA to MCA transitions we advised. A is the assumption that costs the most money, because a buyer who believes the discount travels compares a familiar percentage against an unfamiliar one instead of comparing totals, and percentages across different structures are not comparable, which is session one's lesson arriving with real consequences. C mistakes Microsoft's strategic preference for a customer benefit, and the benchmark is unkind to it: the transition proposals we priced landed eight to seventeen percent above the equivalent EA renewal on like for like scope for most large estates. D imagines a policy that would remove the negotiation altogether, and no vendor writes that policy. So the instruction is simple and slightly tedious, which is why it works: at transition, treat every commercial term as new, price the whole basket over a comparable horizon, and never let the conversation come to rest on whether the new percentage is bigger than the old one.
What buyers lost, three patterns, and then the thread that connects them. One, the lost price hold: evergreen pricing removed the fixed term protection, exposing five to fifteen percent annual drift that nobody had modelled, and nobody had modelled it precisely because in an EA the hold was free and invisible. Two, the discount reset we just covered: negotiated levels did not carry forward, so year one looked competitive while the underlying position had quietly changed. Three, route confusion: Enterprise, Online, and Partner forms mixed across an estate, complicating billing and leaving no single answer to the question of what had actually been committed. Now the thread: none of these were hidden. Nobody was deceived. Each was a protection the EA provided structurally, as a by product of how it was built, so nobody thought to ask whether the replacement provided it, because you do not ask about the floor you have been standing on. Which gives us the lesson, and it generalises well beyond Microsoft: when a structure changes, inventory what the old structure was doing for you before you agree the new one. That inventory is this session's homework. Our guest analyst watched the first pattern play out at scale.
Guest analyst The transition I think about most was a professional services firm, about nine thousand seats, moving from an Enterprise Agreement to an MCA-E. The proposal was good. Year one came in about six percent below their current EA spend, the account team was helpful and straightforward, and the modernisation story was genuinely appealing, one agreement, no renewal cliff, simpler administration. They signed. I was called in during year three, when the CFO asked a very reasonable question: why is our Microsoft spend up twenty two percent when our headcount is flat? The answer was in the arithmetic nobody had run. In year two the prices moved. In year three they moved again. Neither movement was dramatic on its own, seven percent and then eight, both within the range you would expect in an evergreen agreement with no negotiated hold, and both entirely permitted, because there was nothing in the paper preventing them. The six percent year one saving was real, and it was also the only year it existed. What made it painful was how avoidable it had been. They had a strong negotiating position at the point of transition, Microsoft wanted the move, and a price hold on their top ten products for thirty six months was, in my experience, obtainable that day for the asking. Nobody asked, because nobody realised the EA had been providing exactly that for free. So the question I now put in front of every client considering this move, and I would put it in front of you: what is your current agreement doing for you that you have never had to negotiate? Write that list first. Everything on it is about to become a negotiation, whether you participate or not.
Six percent in year one, twenty two percent up by year three on flat headcount, and a price hold that was obtainable on the day for the asking. What is your current agreement doing for you that you have never had to negotiate? Write that list first. Second check does the arithmetic.
Check two. An MCA-E proposal shows year one costing four percent less than your current EA spend. Over four years, with no negotiated price hold, what is the honest expectation? A, roughly four percent less each year, since the discount applies to the agreement. B, cheaper still, because evergreen agreements avoid renewal uplifts entirely. C, year one is the best year: without a written hold, five to fifteen percent annual drift is the benchmarked pattern, so the four year total can exceed the EA path despite the year one saving. Or D, impossible to estimate without Microsoft's forward price list. Pause here. In an agreement with no expiry, what actually stops the price moving next year?
The answer is C, and the question underneath it is the one to ask in every evergreen negotiation: what stops the price moving next year? The honest answer is only a clause you negotiated. Absent that clause, the transitions we advised met five to fifteen percent annual drift, which compounds against a four percent year one saving quickly enough that the four year total lands above the EA path, exactly as it did for Tom's professional services firm. Now B deserves credit because it contains a real half truth, and I want to be fair to the MCA here: an evergreen agreement genuinely does avoid the renewal event. What it does instead is replace one large negotiated moment with continuous unnegotiated movement, and notice who that suits. For a buyer who prepares and negotiates hard every three years, that trade is bad. For an organisation that never really negotiated the renewal anyway and simply signed what arrived, it may be neutral or even better. A assumes a percentage attaches permanently to an agreement rather than to specific priced terms. And D refuses an estimate the benchmark data actually supports, which matters because refusing to model is how buyers end up comparing one year against three. Model four years, both paths, and write the drift assumption down so somebody can argue with it.
Engineering your own protection, three pieces of language, and the framing matters: the EA gave you these for free through its structure, so on an MCA they exist only if you write them. First, a price hold with a horizon: named products held at agreed unit prices for a defined period, and I would ask for thirty six months, precisely because that mirrors what the EA was giving you structurally. This is the single most valuable sentence in an MCA negotiation and the one most commonly absent from the agreements I review. Second, an increase cap: a ceiling on annual movement for the products you cannot realistically leave, so that drift becomes bounded rather than open ended. If a full hold is refused, the cap is the fallback worth insisting on, and a cap is easier to concede than a hold, which makes it the natural second ask. Third, quantity and exit rights: what you can reduce, when, and with what notice, because evergreen cuts both ways and the flexibility everyone praises is only real if the terms say so rather than if the marketing does. And the timing instruction, which is the whole game: ask for all three during the transition negotiation, while Microsoft wants the move. Asking afterwards is asking a vendor to reopen a deal they have already won.
When the MCA is genuinely right, and this table runs both directions honestly. Highly variable consumption: strong fit, and this is the profile where the benchmarked MCA deals genuinely beat their EA equivalents, so if your demand swings, this is your vehicle. Shrinking or restructuring estates: strong, because you are not carrying a three year enterprise wide commitment that counts only upward, which is session two's asymmetry avoided entirely. Large, stable, standardised estates: weak, because the EA's term hold is worth more than flexibility you would never use. Buying without a negotiation team: weak, and this one is uncomfortable but true, drift is invisible and continuous, and an evergreen agreement removes the annual moment that forces somebody to look. Mixed estates already running several forms: proceed with caution and consolidate the forms first, or your agreement governs less of your spend than you think. And facing an EA retirement message: verify, which is the last check. The pattern across the table: the MCA rewards estates that change and buyers who negotiate continuously. The EA rewards estates that are stable and buyers who negotiate hard once every three years. Be honest about which of those describes your organisation, because that is the actual decision.
Last check. Your account team tells you the EA cannot be renewed and an MCA-E is the only path available. The correct first move: A, accept it and negotiate the best MCA terms available. B, verify the claim for your specific segment and geography in writing, then price both paths over a comparable horizon, because a stated absence of choice is itself a negotiating position and the alternative may still exist. C, escalate to Microsoft leadership to demand an EA renewal. Or D, move to CSP instead to avoid the question. Pause here. Who benefits if you believe you have no alternative? And what does that tell you to check first?
The answer is B. A buyer who believes they have no alternative negotiates differently, and worse, so the first move is always to establish whether the constraint is real for your segment, your size, and your geography, in writing rather than in a meeting where it was mentioned in passing. Sometimes it is entirely true, and then the answer is to negotiate the MCA well, with the three protections from the previous slide as conditions of the move. Often it is directional rather than absolute, a statement about where Microsoft is going rather than about what you can sign this year. A concedes the frame before testing it, and everything negotiated afterwards happens inside somebody else's premise, which is the most expensive place to negotiate from. C is confrontation without information, and escalation works far better once you know precisely what you are escalating about. D swaps one unexamined vehicle for another, though it carries a real point that I do not want to dismiss: CSP is a genuine third path, session four covers it properly, and for some estates it is the right answer. The honest version is to price all the paths that actually remain open, rather than the first one you were offered.
How to arrive at an MCA conversation, three things in hand before the first meeting. The inventory: what your current structure provides, price hold, discount level, reduction rights, true up mechanics, support terms, written down, because you cannot ask a new agreement to replace protections you have never listed. That is Tom's question turned into a document. The model: four years, both paths, with an explicit drift assumption on the evergreen side and a renewal uplift assumption on the EA side, so you are comparing two numbers over a comparable horizon with inputs somebody can challenge, rather than a year one headline against a feeling. And the ask list: a price hold with a horizon, an increase cap, quantity and exit rights, and the form consolidated to one, presented as conditions of the move while the move is still something Microsoft wants from you. Those three artefacts take an afternoon to produce and they change the entire character of the conversation, because you arrive knowing what you are giving up, what it is worth, and what you want in exchange. Next session: CSP, the partner channel, where the margin actually sits, monthly versus annual terms, and the vehicle where the quality of the partner is part of the product you are buying.
Session three, three sentences. One: the MCA is a single evergreen agreement in three forms, and evergreen means nothing expires and nothing is protected either, because the price hold an EA provided structurally has no term left to hang on. Two: three patterns recur in transitions, the lost price hold with five to fifteen percent annual drift, the discount reset, and route confusion, and none of them were hidden, they were simply protections nobody thought to ask about because the old structure gave them away for free. Three: the MCA genuinely wins on variable consumption and shrinking estates, and everywhere else the move should be verified, modelled over four years both ways, and made conditional on a hold, a cap, and reduction rights. Next week, CSP and the partner channel. See you there.
Homework, about an hour, and it is Tom's question turned into a worksheet. One, list the protections your current agreement provides: price hold and its horizon, discount level, reduction rights, true up mechanics, support terms, one line each, taken from the paper rather than from memory, because memory is generous about contracts. Two, mark the free ones: which of those exist because of the structure rather than because somebody negotiated them, and understand what you have just marked, those are exactly the protections a transition removes silently. Three, model four years: your current path with a realistic renewal uplift against an evergreen path with a drift assumption, and write both assumptions down explicitly so they can be challenged by your CFO rather than believed by them. Four, check your forms: if any MCA is already live in the estate, which form or forms, and who bills whom, because mixed forms are a finding worth surfacing before somebody proposes adding another. And five, draft the ask list, hold, cap, reduction rights, form consolidation, and keep it on file, because the transition conversation arrives on Microsoft's timetable rather than yours, and the buyer who already has the list is the one who negotiates rather than reacts.
Five reads before next session, all free on redress compliance dot com. First, the Microsoft Customer Agreement explained, the buyer guide behind this session including the transition patterns and what was lost in each. Second, the EA and MCA renewal guide, for how the two interact when your renewal and a transition proposal arrive in the same conversation, which is increasingly how it happens. Third, the CIO playbook on evaluating Microsoft renewal proposals across EA, MCA, and CSP, which is the three way comparison and good preparation for session five. Fourth, Microsoft cloud agreements and subscriptions, for the subscription mechanics underneath the agreement. And fifth, Microsoft contract terms negotiation, which has the actual clause language for holds, caps, and reduction rights, and is worth reading with a pen before you draft your ask list. That is session three. Evergreen means nothing expires and nothing is protected, so inventory what you have, model both paths, and make the protections conditions of the move. Next week, the partner channel. See you there.