Microsoft EA Renewal for an IT Professional Services Company in ChicagoUSD 4.2 Million in Savings and 22% Cost Reduction

The Challenge: A Growing IT Services Company with Misaligned Microsoft Licensing

The client is a 10,000-employee IT professional services company headquartered in Chicago. They are among the largest independent IT consultancies in North America, with geographic spread across 12 states and staff deployed at dozens of major client sites. They had just signed a three-year Enterprise Agreement with Microsoft, but within months of execution recognised that the licensing structure bore no relation to how the business actually consumes Microsoft software.

What Was Going Wrong

The organisation had purchased Microsoft 365 Enterprise Edition (E5) for every single employee at a cost of approximately USD 22 per user per month. This was the first mistake. While E5 is designed for knowledge workers requiring maximum productivity and security capabilities, the client had a substantial workforce of field technicians, junior consultants, and administrative staff who needed only basic email, file storage, and collaboration tools.

The Strategic Approach

We engaged the client in October 2022, with their EA renewal scheduled for February 2023. This gave us four months to build the case, model the restructuring, and prepare negotiations with Microsoft. The strategy had three pillars:

Pillar 1: Role-Based M365 Restructuring

We conducted a detailed role-based licensing assessment across the entire employee base. We did not simply look at who was assigned M365 licenses. We examined actual usage patterns through Azure AD sign-in data, Exchange mailbox activity, and SharePoint adoption metrics. This revealed that the organisation could tier M365 licensing as follows:

This restructuring alone would save USD 560,000 per year. The key to Microsoft acceptance was framing this as a business-driven decision, not a cost-cutting exercise. We positioned it as enabling security posture improvements (E1 users get modern authentication but no advanced threat protection; E5 users get Copilot, advanced audit, etc.). This allowed Microsoft to sell the upgrade for the 800 users moving to E5 while accepting the massive migration of mid-tier users to E1.

Pillar 2: Azure Commitment Optimisation

The Azure consumption pattern was predictable: peak in Q1 (March), low in summer (June to August), moderate in Q4. The client had set a monthly commitment at peak level, leaving them paying for capacity they did not need for nine months of the year.

We restructured Azure as follows:

• Reduce the monthly commitment from peak level to the median of the prior 12 months
• Move seasonal peaks to on-demand (PAYG) instead of commitment
• Implement reserved instances for predictable infrastructure (Kubernetes clusters, dev/test environments)

This optimisation saved USD 180,000 per year on commitment waste alone, plus an additional USD 95,000 through reserved instances on compute.

Pillar 3: Dynamics 365 Rationalisation

The client had licences for 850 users but only 340 were actively using the system. The remaining 510 licenses were pure waste. We recommended consolidating to active users only and working with their development team to build Power Apps solutions for the operational workflows that the non-users were trying to achieve through Dynamics.

This cut Dynamics spend from USD 385,000 per year to USD 145,000, a saving of USD 240,000 per year.

The Negotiation and Renewal

Microsoft came to the renewal conversation with a proposal for plus 15 percent increase (a common refresh rate for EA renewals when consumption grows). Our work showed that the client could actually reduce spend by 22 percent while improving the security and capability profile of the licensing estate.

The negotiation took place over six weeks. Microsoft's first position was to accept the M365 restructuring (they make money on E5 upsell) but resist Azure commitment reduction (it is more profitable for them). We countered with data: we showed Azure consumption trends over 24 months and demonstrated that the commitment level was set to an artificial peak that did not reflect normal operations.

By the time the EA was signed in February 2023, we had achieved:

• M365 restructuring (6,500 users moved to E1, 800 moved to E5) as proposed
• Azure monthly commitment reduced from USD 1.9M to USD 1.68M
• Azure reserved instances contracted for 36 months at USD 2.15M total (vs. USD 3.2M on-demand equivalent)
• Dynamics 365 reduction to 340 active users

The Outcome

The three-year EA term (2023 to 2026) will deliver USD 4.2 million in net savings compared to Microsoft's initial renewal proposal. This includes year one savings of approximately USD 1.4 million, declining slightly in years two and three as reserved instance discounts amortise.

Beyond cost, the restructuring improved the security and compliance posture of the client's Microsoft estate. Removing E5 from 3,500 low-usage accounts reduced the attack surface. Centralising Dynamics 365 to active users enabled the client to tighten user access governance. The Azure commitment reduction improved cash flow predictability.

Why This Matters for IT Services Companies

IT services firms have complex licensing needs because their workforce is heterogeneous: some staff are highly mobile field technicians; others are office-based consultants; some are back-office administrators. A one-size-fits-all approach to Microsoft licensing (common in EA deals) almost always leads to massive overspend.

This case demonstrates the value of role-based assessment. By understanding who actually uses what, how often, and at what intensity, it is possible to architect a licensing estate that is both cost-efficient and fit-for-purpose.