Microsoft Customer Agreement vs. Enterprise Agreement
- Flexibility: MCA – Pay-as-you-go; EA – Three-year commitment.
- Cost: MCA – No upfront costs; EA – Volume discounts.
- Suitability: MCA – Small to medium businesses; EA – Large enterprises.
- License Scaling: MCA – Dynamic; EA – Annual true-up.
Microsoft Customer Agreement vs. Enterprise Agreement
The primary pathways for acquiring Microsoft products and services are the Microsoft Customer Agreement (MCA) and the Enterprise Agreement (EA), which are used to navigate Microsoft’s licensing options.
Each of these agreements has specific strengths and ideal use cases, depending on factors like an organization’s size, operational flexibility needs, and long-term planning considerations.
This comprehensive guide will provide an in-depth comparison of these two agreements, including differences in terms, costs, and suitability for different organization types.
Overview of Microsoft Customer Agreement (MCA)
The Microsoft Customer Agreement (MCA) is a flexible, simplified licensing model that allows customers to acquire services such as Microsoft 365, Dynamics 365, and Azure without the constraints of a long-term contract.
It was introduced to replace older, more rigid agreements, providing a more agile and easily scalable approach for organizations that want to adjust their licensing based on usage.
Key aspects of the MCA include:
- Pay-as-you-go Pricing: The MCA allows customers to pay only for what they use based on actual consumption. This approach reduces the burden of long-term commitments, making it ideal for organizations with variable needs.
- Monthly or Annual Billing: Customers can choose between monthly and annual billing cycles, which provides flexibility to manage finances effectively.
- Ease of Use: The MCA is designed to be straightforward, minimizing administrative overhead and allowing customers to easily make changes or add services as needed.
Overview of Enterprise Agreement (EA)
The Enterprise Agreement is a traditional licensing model for large organizations with 500 or more users or devices. The EA allows organizations to acquire Microsoft products at scale, often accompanied by volume discounts and predictable pricing over a three-year commitment.
Enterprises that need long-term stability in their software licensing may prefer the EA due to its structured pricing and extensive customization options.
Key characteristics of the EA include:
- Three-Year Commitment: The EA typically involves a three-year contract, providing fixed pricing. This structure offers price stability, which is beneficial for budgeting.
- Volume Discounts: Organizations under the EA can benefit from substantial volume discounts, making it more cost-effective for companies with many users.
- True-Up Flexibility: The EA features a yearly true-up process, allowing organizations to adjust their license count at the end of each year to reflect actual usage, with associated cost adjustments.
Key Differences in Terms and Conditions
The MCA and EA differ significantly in overall structure, which has implications for small and large enterprises.
Below, we explore the core distinctions between these agreements.
Contract Duration and Flexibility
- Microsoft Customer Agreement: The MCA operates on a no-commitment basis. Customers can choose between month-to-month or annual billing cycles, and services can be adjusted or canceled anytime. This level of flexibility makes the MCA suitable for businesses that experience changes in their operational needs, such as seasonal businesses or startups.
- Enterprise Agreement: The EA requires a three-year commitment. This is designed for enterprises needing consistency in pricing and software capabilities over a longer period. While this structure provides stability, it lacks the adaptability of the MCA, making it less suitable for organizations that require rapid changes.
License Management and Scaling
- MCA: The MCA is designed to support dynamic scaling. Customers can add or reduce licenses instantly, allowing them to adapt to changing workloads. This is particularly advantageous for organizations growing quickly or having varying resource needs throughout the year.
- EA: The EA features a true-up mechanism, which allows enterprises to add licenses during the year and reconcile the increased usage annually. This approach provides flexibility within a structured framework but is less responsive than the MCA’s on-demand scaling.
Cost Comparison
The cost structure of the MCA and EA differs in terms of pricing models, discounts, and the financial commitment involved.
Upfront Costs and Financial Commitments
- Microsoft Customer Agreement: Under the MCA, no upfront costs or long-term financial commitments exist. Organizations simply pay for what they use on a monthly or annual basis. This makes the MCA an attractive option for businesses looking to minimize their initial expenditure and avoid being locked into long-term commitments.
- Enterprise Agreement: The EA involves upfront financial commitments, typically covering three years. While this leads to predictable expenses, organizations must have a clear budget and a longer-term vision for their software needs. The EA requires an annual payment schedule, including adjustments for additional licenses procured through the true-up process.
Volume Discounts
- EA Advantage: EA offers significant volume discounts for enterprises with a large number of users or devices. These discounts can make EA a cost-effective solution for large organizations, especially when considering additional benefits like extended support options.
- MCA Pricing: The MCA does not offer the same volume discount structure. Instead, it provides flexible, pay-as-you-go pricing. This can be more cost-effective for smaller organizations or those with fluctuating user counts, but larger organizations might find it less economical compared to the bulk pricing benefits of an EA.
Long-Term Predictability vs. Variable Costs
- Microsoft Customer Agreement: The MCA’s pay-as-you-go model means that costs can vary monthly based on usage. This is ideal for organizations that need agility, but it might pose challenges for businesses that prefer predictable spending.
- Enterprise Agreement: With a fixed three-year term, the EA offers price predictability. This stability is ideal for organizations that value knowing their exact IT expenditure for multiple years, allowing for better financial planning.
Suitability for Different Organization Sizes
The suitability of the MCA or EA largely depends on the organization’s size and structure, as well as its specific IT needs.
Below, we provide a comparison based on organization size and other key factors.
Small to Medium-Sized Businesses (SMBs)
- MCA as a Preferred Option: The Microsoft Customer Agreement is well-suited for small to medium-sized businesses due to its low barriers to entry, flexibility, and lack of long-term commitment. SMBs often experience more frequent changes in staffing and operational needs, and the MCA’s ability to dynamically add or remove users helps ensure that these businesses are only paying for what they use.
Large Enterprises
- EA for Scalability and Cost Efficiency: The Enterprise Agreement is designed for large enterprises that need predictable pricing and volume-based discounts. Companies with more than 500 users often can leverage the EA’s volume pricing to reduce per-user costs, while the structured nature of the EA provides stability for large IT deployments. The commitment to a three-year term also allows for strategic planning, ensuring continuity in the tools and services used by employees.
Organizations with Fluctuating Needs
- MCA for Flexibility: Organizations with seasonal demands or those that experience rapid growth or contraction benefit significantly from the MCA’s flexibility. For example, a company that needs additional Azure resources for a short-term project can quickly scale up under the MCA and then reduce usage without financial penalty.
- EA Limitations: While the EA offers some flexibility with its true-up process, it does not provide the same immediate scalability as the MCA. Organizations that frequently adjust their software or cloud usage might find the EA’s structure too restrictive.
Product Availability and Coverage
The MCA and EA cover a wide range of Microsoft products, but there are differences in how those products are accessed and licensed.
Azure, Microsoft 365, and Dynamics 365
- Microsoft Customer Agreement: Under the MCA, Azure services are billed based on real-time consumption, and customers can expand or reduce services without contractual constraints. Microsoft 365 and Dynamics 365 are also available under this agreement, allowing for flexible user management and scaling options.
- Enterprise Agreement: The EA includes access to the same range of services but requires upfront purchase with annual adjustments. The three-year term ensures that pricing remains stable, which can be advantageous for businesses planning large-scale Azure or Microsoft 365 deployments over multiple years.
Hybrid Licensing Options
- Azure Hybrid Benefit: Both agreements support Azure Hybrid Benefit, which allows customers to use existing Windows Server or SQL Server licenses on Azure. However, the MCA’s lack of a minimum purchase requirement makes it easier for smaller companies to take advantage of these savings.
- Software Assurance: The EA includes Software Assurance benefits, which are particularly useful for enterprises that require additional support, training, or access to the latest software versions. These benefits are built into the EA’s pricing structure but must be added separately under the MCA.
Read how MCA works with Microsoft CSP.
Administrative Overhead and Management
The complexity of managing each agreement type is another critical consideration for organizations.
Microsoft Customer Agreement
- Ease of Management: The MCA is designed to be as straightforward as possible, reducing the administrative overhead of managing contracts and licenses. Customers can make changes directly through the Microsoft admin portal, providing a user-friendly way to manage subscriptions.
- Self-Service Tools: The MCA allows administrators to adjust services, add users, and review billing information in real-time. This is ideal for organizations without a large IT department that need to manage licenses independently.
Enterprise Agreement
- Centralized Control: The EA offers a centralized approach to license management, often managed by dedicated IT staff or a licensing specialist within the organization. The true-up process allows companies to align their actual use with licensed capacity, but this requires regular tracking and reporting, adding complexity.
- Audit and Compliance Requirements: The EA also has more rigorous compliance requirements. Organizations must ensure that they stay compliant throughout the contract term, which may involve audits conducted by Microsoft. This adds an administrative burden, particularly for larger companies with diverse software deployments.
Support Options
The support structures available under each agreement differ and can impact an organization’s overall experience managing Microsoft services.
Standard and Advanced Support
- MCA Support: Under the MCA, support is typically self-service or available via Microsoft’s standard support channels, with the option to add Professional Direct or Premier Support for additional fees. This approach allows organizations to tailor support to their specific needs, paying for higher levels of support only when necessary.
- EA Support: The EA often includes more comprehensive support options in the Software Assurance package. These include technical support, training vouchers, and planning services that help large organizations maximize their software investments.
Third-Party and Partner Support
- Partner Engagement: The EA is often managed through Microsoft Partners, who provide additional support and services to help enterprises navigate complex deployments. This can add value by reducing the workload of internal IT teams.
- Direct Microsoft Relationship: The MCA is typically managed directly through Microsoft, although customers can still engage partners if they require additional support or consulting services.
FAQs About Microsoft Customer Agreement vs. Enterprise Agreement
What is the main difference between the Microsoft Customer Agreement and the Enterprise Agreement? The Microsoft Customer Agreement (MCA) offers flexible, pay-as-you-go pricing with no long-term commitment. In contrast, the Enterprise Agreement (EA) requires a three-year commitment, often including volume discounts.
Which agreement is more suitable for small businesses? The MCA is generally more suitable for small to medium-sized businesses due to its lack of upfront costs and flexibility in scaling services without a long-term commitment.
How does the Enterprise Agreement benefit large enterprises? The EA is designed for large enterprises with 500 or more users, providing volume discounts, predictable pricing over three years, and additional benefits like Software Assurance for extended support.
Can the Microsoft Customer Agreement be used for Azure services? Yes, the MCA can be used for Azure services. It allows for pay-as-you-go billing and offers flexibility to scale services based on business needs.
What is the difference between MCA and EA in terms of financial commitment? The MCA requires no upfront financial commitment, with services billed based on consumption. In contrast, the EA involves a three-year financial commitment, often paid annually with adjustments for license changes.
How does license scaling work under the MCA and EA? Under the MCA, licenses can be scaled up or down dynamically, allowing for real-time changes. The EA uses an annual true-up process to reconcile added licenses, providing some flexibility but with a fixed review schedule.
Does the EA offer any cost-saving advantages over the MCA? Yes, the EA typically offers volume discounts for larger organizations, making it more cost-effective for companies with many users or devices. The MCA, while flexible, lacks such bulk pricing incentives.
Can organizations easily change their services under the MCA? Under the MCA, organizations can add or remove services at any time, offering great flexibility. This is particularly useful for businesses with fluctuating needs or seasonal variations.
What support options are available under the MCA and EA? The MCA provides standard support with options to add more comprehensive services, such as Professional Direct. The EA often includes more extensive support as part of Software Assurance, including training and planning services.
How does the true-up process in the EA work? The true-up process under the EA allows organizations to add licenses throughout the year and reconcile them at the end of each year, adjusting costs to match actual usage levels.
Are there any penalties for canceling services under the MCA? No, there are generally no penalties for canceling services under the MCA, making it a flexible choice for businesses needing to adjust their services frequently.
Which agreement offers better long-term cost predictability? The EA offers better long-term cost predictability due to its three-year fixed pricing structure. The MCA’s costs can vary monthly based on consumption, which may be less predictable.
Do both agreements support Azure Hybrid Benefit? Yes, the MCA and EA support Azure Hybrid Benefit, allowing customers to use their existing Windows Server or SQL Server licenses to save on Azure costs.
How does Software Assurance differ between the MCA and EA? Software Assurance is included by default in the EA, providing extended support and training benefits. In the MCA, Software Assurance must be added separately if needed.
What administrative differences exist between managing the MCA and EA? The MCA is simpler to manage, with self-service tools for making changes directly through the Microsoft portal. The EA requires more oversight, typically involving dedicated IT staff or Microsoft partners to manage compliance, true-ups, and contract terms.
