Microsoft EA Renewal FAQs
Q: When should we start preparing for a Microsoft EA renewal?
A: It’s recommended to start renewal planning well in advance – often about 12 to 15 months before your EA expiration. Microsoft suggests initiating the renewal process at least a year ahead. Starting early gives you time to assess your current usage, gather requirements for the next term, engage stakeholders, and negotiate with Microsoft without rushing.
Early preparation also means aligning the renewal with your budgeting cycles and avoiding last-minute decisions that might favor the vendor by default. Microsoft suggests initiating the renewal process at least a year ahead.
Q: What steps are involved in renewing an EA?
A: Renewing an EA typically involves several key steps:
- Inventory and Usage Review: Analyze your current EA – what licenses and services you have versus what’s being used. Identify any unused licenses or under-utilized services.
- Needs Assessment: Determine your organization’s needs in the next three years. Will you add users, move to new Microsoft products (e.g., adopt Teams Phone or more Azure services), or drop certain software? Forecast growth or changes for the next three years.
- Stakeholder Alignment: Involve all relevant stakeholders (IT, procurement, finance, department heads) early. Ensure everyone agrees on the renewal’s requirements and goals. This prevents internal disagreement during negotiations.
- Engage Microsoft/Partner: About 6-12 months out, inform your Microsoft account team or LSP that you’re entering the renewal planning phase. Request initial pricing proposals. This also alerts them to start securing any necessary approvals for discounts.
- Explore Optimization: Before renewing, clean up your license counts. Remove or reassign any licenses that are not being used (so you don’t renew them). Also, consider if some users can be downgraded to cheaper licenses or if certain products can be dropped entirely. This “true-down” planning ensures you only renew what you need. For example, one company avoided renewing 20% of their licenses after discovering unused ones.
- Benchmark & Set Targets: Research what discounts and terms similar companies have received (if possible) to benchmark. Set target outcomes for your negotiation (e.g., “We want to reduce the total cost by 10%” or “We need to include Office 365 for all but at no more than $X per user”). Having clear targets helps guide discussions.
- Negotiation: With your data and requirements, negotiate with Microsoft (often via your LSP). Discuss pricing, true-up terms, any new products, and contract terms. Use the time to secure concessions, such as better discounts for higher volumes or favorable payment terms. Don’t hesitate to counter-offer or push back on initial quotes—it’s expected.
- Finalize Agreement: Once an agreement in principle is reached, ensure all terms are documented. Have your legal/contract team review the renewal paperwork to verify it matches what was promised (pricing, products, any special terms). Sign the renewal so it takes effect immediately after the old term ends to avoid any coverage gap.
- Post-Renewal Communication: After renewing, communicate the key changes to stakeholders. For instance, if you dropped or added certain licenses, let IT teams know so they can adjust deployments. Also, inform end-users of new benefits (say you added Office 365 – users might need to know they now have access). Internally, update your license tracking systems to the new agreement’s entitlements.
Following these steps helps ensure a smooth renewal that aligns with your organization’s needs and avoids the common pitfall of simply rubber-stamping the previous agreement without scrutiny.
Q: How can we determine what to renew or drop in our EA?
A: The key is to perform a detailed license and usage audit before renewal. Look at each product’s deployment and usage data: Which licenses are actively used and which are idle? Any license that has been consistently unused or unassigned is a candidate to drop or reduce. For example, if you purchased 1,000 Visio licenses but only 600 people actively use Visio, you might plan to renew only ~600 and save money.
Case studies show companies that did this kind of analysis were able to significantly trim fat – one organization avoided buying roughly 20% of renewal licenses by cutting out underutilized ones. Also, review if all users need the same edition: perhaps downgrade some users from an E5 plan to E3 if they don’t use E5 features. The goal is to renew the EA with the right quantity and mix of licenses, so you’re not paying for shelfware in the next term.
Q: Can we reduce the number of licenses or products at EA renewal?
A: Yes – renewal time allows you to adjust quantities and products. Since a renewal effectively signs a new EA, you can “true-down” then. You are free to renew only what you need going forward. For example, if you initially licensed 1,000 Windows Enterprise seats but now have only 800 employees using them, you can renew for 800 and stop paying for the excess 200.
Similarly, any product you no longer require organization-wide can be removed at renewal. Microsoft expects customers to re-evaluate needs at renewal; there are no penalties for reducing quantities or scope when entering a new term. Using renewal to right-size is a best practice to avoid overspending in the next cycle.
Read our Microsoft EA FAQs.
Q: What are common pitfalls to avoid during EA renewal?
A: Common renewal pitfalls include:
- Starting too late: Waiting until the last minute to begin renewal discussions can lead to rushed decisions or even a lapse in coverage. Avoid this by starting the process 6-12 months in advance so you have ample time.
- Not involving stakeholders: If you don’t include key stakeholders (IT operations, business units, finance), you might overlook important requirements or renew licenses no one uses. Engage them early to get input and buy-in (e.g., don’t renew a product a department plans to replace with something else).
- Renewing “as-is” without analysis: A big pitfall is simply renewing everything in the current EA without scrutinizing usage (failing to map the EA to actual user needs). This often leads to carrying forward shelfware. Always analyze and justify each component you renew.
- Missing cost optimization opportunities: Renewal is the best time to optimize pricing and terms, but some companies accept the initial quote. To find savings, you should negotiate and explore different licensing options (like shifting to Microsoft 365 bundles or adjusting levels). Not doing so is a missed opportunity.
- No post-renewal adoption strategy: Sometimes new products are added to a renewal (e.g., you include Power BI for all users), but then there’s no plan to train users or roll it out, so it goes underused. If you negotiate for it, make sure you plan to utilize it; otherwise, you’re paying for value not realized.
By being aware of these pitfalls, you can take proactive steps (like thorough usage reviews, early planning, stakeholder meetings, and having an adoption roadmap) to avoid them and ensure your renewal is successful and cost-effective.
Q: How do price changes or increases impact EA renewal?
A: At renewal, your pricing will reset based on Microsoft’s current price list (unless you negotiate otherwise). During your EA term, your prices were locked, but that protection ends at renewal. If Microsoft has raised the list price of certain products in the last three years, your renewal quote could reflect those higher prices.
Similarly, if your previous EA had special discount terms, those don’t automatically carry forward – you’ll need to renegotiate them. This means your costs could increase at renewal if you simply roll over the same quantities with no changes.
To mitigate this:
- Negotiate aggressively: Treat renewal as a fresh negotiation. Just because you paid $X last time doesn’t mean you should accept $X plus some increase this time. Use your growth in usage or loyalty as leverage to seek equal or better discounts to offset list price increases.
- Optimize your mix: As discussed, drop unnecessary items and consider cheaper alternatives (e.g., shifting some users to lower-cost plans). Reducing quantity can counteract price-per-license increases.
- Be aware of Microsoft’s licensing changes: Sometimes, price increases come with added value (new features, etc.). Evaluate if you truly need those or if you can stick with a lower edition. For instance, if a price went up because Microsoft bundled in new functionality you won’t use, you may negotiate to exclude it or choose a different SKU.
In summary, expect Microsoft’s baseline prices to be higher now than when you last signed. The renewal negotiation is your chance to offset that through higher discounts or a leaner license count. The net impact on your budget will depend on how well you optimize and negotiate the new deal.
Read how to renew your Microsoft EA.
Q: Should we consider switching to a different licensing program at renewal (like CSP)?
A: Renewal is a good time to re-evaluate whether an EA is still the best fit. If your organization’s profile has changed, alternatives like the Cloud Solution Provider (CSP) program or Microsoft Customer Agreement (MCA) might be worth considering. For example, CSP’s no-commitment model could be attractive if your user count has dropped below EA minimums or you need month-to-month flexibility for certain services.
Or if most of your services are cloud-based now, you might compare EA vs CSP pricing for those. On the other hand, if you still meet EA’s scale and want deeper discounts, sticking with an EA is usually beneficial (EA discounts for large volumes often beat CSP pricing for the same quantity). Some organizations even adopt a hybrid: keep an EA for core licenses and use CSP for very dynamic or pilot needs. In any case, it’s smart to crunch the numbers.
Before renewing, ask your LSP for a CSP quote for equivalent services and compare. If the EA renewal deal isn’t compelling, you could let the EA lapse and use CSP until a better EA opportunity arises. If you show Microsoft that you’re considering switching programs, they may often improve the EA offer to keep you.
In short, yes, consider alternatives to ensure you’re getting the best value, but make a decision based on careful cost and flexibility comparison.CSP’s no-commitment model could be attractive if your user count has dropped below EA minimums or you need month-to-month flexibility for certain services
Q: How do true-ups factor into the renewal process?
A: You must still account for usage growth in the final year of your expiring EA via a true-up. Typically, right before or as part of the renewal, you’ll do one last true-up of the old agreement – reporting any additional licenses/users added since the last anniversary and paying for those. Often, this final true-up can be rolled into your renewal order. For instance, if you added 50 Office 365 users in the last few months, you can simply add those 50 to the new EA and settle any pro-rated amount for the time they were used on the old EA.
The key is not to forget about growth in that final year. Renewal negotiations sometimes focus so much on future terms that the final true-up can be overlooked – but it’s part of closing out the old contract. After that, those new licenses become part of your renewed baseline.
Strategically, analyzing your true-up history helps in renewal. Suppose you consistently true up a certain number of licenses each year. That indicates growth, and you might negotiate a higher starting volume (and thus possibly a better discount) rather than paying each year incrementally.
Conversely, if true-ups were minimal, it shows you had headroom and maybe can trim some fat. In summary, handle the final true-up hand-in-hand with renewal: capture all last-minute additions and then reset your counts appropriately for the new term.
Q: How can we leverage the EA renewal to optimize costs?
A: If approached strategically, renewal is the prime opportunity to reduce your Microsoft spend. Ways to leverage it include:If approached strategically, renewal is the prime opportunity to reduce your Microsoft spend
- Right-size your licenses: Use the renewal to eliminate “shelfware,” as discussed. Only renew licenses that have demonstrated use or clear need. This immediately cuts recurring costs for the next term.
- Negotiate better discounts: Your renewal is essentially a new deal – use your leverage (increased volume, the possibility of switching to alternatives, alignment with Microsoft’s year-end) to secure better pricing. If your organization has grown, argue for a higher volume discount tier. If you’re adopting new Microsoft cloud services, see if they’ll offer incentive pricing to include those (Microsoft often does for Azure or Power Platform commitments). Every percentage point discount will reduce costs across the board for three years.
- Consider changing agreement type: If you need to reduce licenses in the future, you could switch from a traditional EA to an Enterprise Subscription Agreement (EAS) at renewal—this could lower annual costs and give flexibility (at the cost of not owning licenses). Or vice versa, if you ended up owning licenses you don’t need, maybe an EAS would have been better. Renewal is the time to choose the model that will cost you less over the coming years.
- Add value, remove cost: Sometimes, you can restructure what you buy to get more value for money. For example, if you license Office, Windows, and EMS separately, moving to the Microsoft 365 bundle might be more cost-effective and yield a discount versus separate parts. Conversely, if you were on an all-inclusive bundle but aren’t using big parts, you could break it apart and renew the needed components.
Companies often achieve double-digit percentage cost reductions at renewal by being aggressive about what they need and negotiating firmly on price. For instance, organizations have reported saving 15-30% at renewal by cutting unused licenses and securing larger discounts.
Treat renewal not as a formality but as a renegotiation of your Microsoft relationship – this mindset helps you maximize value and minimize cost.
Q: Who should be involved in the EA renewal process?
A: Renewal should be a cross-functional effort, not just left to IT or procurement alone. Key players to involve:
- IT leadership (CIO/CTO) and IT asset managers: They understand technical needs and can forecast what licenses are required. They also ensure the renewed agreement aligns with technology strategy (e.g., cloud adoption plans).
- Procurement/Sourcing: They bring negotiation expertise and ensure the process follows procurement policies. They’ll focus on getting the best commercial terms and contract protections.
- Finance: Because an EA is a significant financial commitment, finance should validate budget availability and approve expenditures. They can also help model the cost scenarios of different renewal options (e.g., up-front vs. annual payments).
- Business unit representatives: If certain Microsoft products are heavily used by specific departments (e.g., Visio in engineering, Power BI in analytics), get input from those departments. They can confirm what they need (or don’t need), and having them involved ensures buy-in and prevents later pushback like “Why did you drop our Visio licenses?”
- Legal (contract review): They should review the renewal terms for any changes, ensure compliance with corporate policies, and check that any negotiated amendments are properly captured.
- External advisor (optional): Some companies engage a Microsoft licensing consultant or their LSP’s advisory services to support the renewal with benchmark data or negotiation strategy. While not mandatory, their input can be valuable, especially for large or complex renewals.
Bringing all these parties together means the renewal decision is well-rounded—technically sound, financially prudent, and aligned with business needs. It also means that when the agreement is signed, everyone is on the same page about what was agreed upon (avoiding surprises like a department finding out too late that something was dropped). Essentially, treat the renewal as a project and assign a team to it.
Q: How does aligning with Microsoft’s fiscal year affect renewal negotiations?
A: Microsoft’s fiscal year ends June 30, and their Q4 (April-June) is when sales teams are pressured to hit annual targets. If your EA renewal can be timed to conclude in Q4, you might find Microsoft more flexible or generous with discounts to book the deal before year-end.
Many customers have observed that offers improve as quarter-end approaches. For example, if your EA expires in August, you might initiate talks early and aim to reach an agreement by June – Microsoft might fast-track approvals to get it in FYQ4, potentially yielding a better price.
Conversely, if your renewal is due in February (Microsoft Q3), you may still get a good deal, but Microsoft’s urgency is slightly less.
Q: What happens if we don’t renew our EA?
A: If you choose not to renew an EA, the outcomes are:
- Perpetual Licenses: Any perpetual licenses acquired during the EA are yours to keep at the last version obtained. You won’t have SA benefits on them anymore, but you can continue using the software indefinitely. For example, if you bought Office 2019 via the EA and don’t renew it, you still have perpetual rights to Office 2019, but you won’t get an upgrade to the next version.
- Subscription Services: Any subscription-based licenses (like Microsoft 365, Dynamics 365, and Azure usage commitments) will expire. After a grace period (often 30-60 days for O365), those services will cease functioning unless you transition them. Companies that don’t renew an EA typically move those subscriptions to a CSP agreement or Microsoft Online Subscription Program, so service continues. It’s important to coordinate that to avoid user disruption.
- Software Assurance benefits: All unused SA benefits (training days, support incidents, etc.) expire (usually immediately or within a short grace period after expiry). If you’re not renewing, try to use up benefits beforehand, or they will be forfeited.
- Future licensing: Without an EA, any new licenses you need must be purchased via other channels (CSP, Open, etc.) at potentially higher per-unit costs. Some companies that don’t renew do so because they are downsizing or switching platforms. Others might pause an EA for a year and start a new one later. Microsoft will welcome you back, though pricing/program may differ.
There’s no direct penalty for not renewing (it’s not a contract you’re breaching – it’s simply ended). The main “penalty” is the loss of the advantageous terms of an EA. So, if you plan not to renew, ensure a smooth transition plan: audit what perpetual rights you retain, set up alternative licensing for subscriptions, and communicate to users if anything changes (for example, they might lose the Home Use Program or other perks).
Many organizations only forego renewal if they have significantly changed their IT strategy (or dropped below EA minima), because the EA typically provides good ongoing value for large Microsoft shops.
Q: Can we get an extension or grace period if the EA renewal isn’t signed in time?
A: Talk to Microsoft and your LSP before the EA expires if you need more time. Microsoft can often provide a short-term extension (usually 30 to 90 days) of your existing EA to give you extra time to finalize a renewal.
This is usually done via a simple agreement or even an email confirmation. The idea is to avoid a lapse in coverage while negotiations continue. Most EAs also have a built-in grace period (often 30 days) after expiration, during which you can still renew with retroactive coverage. However, getting an official extension is safer if you know you’ll overshoot the end date.
If you’re very close to a deal but not quite there, you could also consider signing a short-term renewal (like a one-year EA) as a stopgap, but usually, an extension is simpler. The key is to communicate—don’t let the EA quietly expire, assuming you can fix it later.
If it lapses without renewal or extension, you technically lose the right to add new licenses or continue certain subscription services, which can complicate things. Microsoft aims to keep you as a customer, so they generally accommodate extensions to avoid disruption. Just make sure to document it so you’re covered. (And use that extension time wisely to wrap up negotiations!)
Q: Is negotiating a shorter or longer term during renewal possible?
A: The standard EA term is three years, but sometimes adjustments are possible:
- Shorter (e.g., 1-year) term: Microsoft doesn’t generally advertise 1-year EAs, but they have offered them in special cases (often called “bridge” agreements) – for instance, if a customer needs to align with a parent company’s agreement or is in the middle of a migration and wants flexibility. One-year terms might come with lower discounts (since the commitment is smaller) and require approval. If you have a compelling reason (like an upcoming company change that makes a full 3-year uncertain), you can request a 1-year renewal. Microsoft might prefer that over losing you entirely.
- Longer term (e.g., 5-year): Microsoft sometimes offers 5-year EAs to large customers or public sector entities for stability. This locks pricing for longer, which can be good if you expect prices to rise. However, many licensing experts caution that a lot can change in five years (your needs or Microsoft’s offerings), so you might end up stuck with terms that later feel suboptimal. Microsoft might also be conservative on discounts if they feel risk in a 5-year. But if, for example, you have a strategic partnership and want a 5-year deal, it can be negotiated.
In practice, most customers stick with three-year terms. It’s the right balance of commitment and flexibility. If you need a non-standard term, be prepared to articulate why it’s necessary – and be aware it may require higher-level approval at Microsoft.
Also, understand any implications (like pricing adjustments for inflation on a 5-year). Everything is negotiable, but whether it’s beneficial is case by case. Many companies find renewing every three years to adjust terms and pricing to market conditions is safer.
Read Microsoft EA Cost Optimization FAQs.
Q: What role does usage data play in an EA renewal?
A: Usage data is one of your strongest tools for renewal. By having detailed data on how licenses were utilized, you can:
- Justify reductions or changes: If data shows only 600 out of 1000 licenses were used, you have solid evidence to reduce that count (and save money) in the renewal. If certain features (say of E5) were rarely used, data supports moving those users to E3. Microsoft can’t easily argue against facts – if you show a chart of monthly active users well below licenses owned, it’s clear you don’t need to renew all of them.
- Support requests for discounts: Showing high adoption and growth can bolster your case for a better discount (“We increased our Office 365 usage by 30% over the term, and plan more growth – we need a discount that reflects this volume”). Conversely, you might push for a pricing adjustment if adoption was lower than expected since you didn’t realize the anticipated value.
- Identify new needs: Usage data might reveal trends, e.g., many users are installing Power BI Desktop even though you didn’t formally license Power BI for all. That indicates an unmet demand you might address by adding Power BI licenses in the renewal (and you can negotiate a bundle price with that knowledge).
- Demonstrate optimization: If you have been proactive (say you already reclaimed a bunch of licenses mid-term), you can show Microsoft that and focus the negotiation on what truly matters. It prevents Microsoft from overselling.
In short, data makes the renewal discussion factual rather than based on assumptions or Microsoft’s benchmarks. It puts you in control: you know exactly what you use and need. For example, a company that logged precise usage of each product could confidently remove a costly developer tool license from 200 people who never launched it, saving a ton – they had the data to back that move.
Microsoft often has some telemetry, too (especially for cloud services). Still, presenting your numbers signals that you’re an informed customer, likely leading to a smoother negotiation.
Q: Should we conduct an internal audit or inventory before renewing?
A: Absolutely. Performing an internal true-up or license audit before renewal is a best practice. This means verifying what software is deployed vs. what licenses you have and ensuring those match. Suppose you find gaps (unlicensed deployments) or surpluses (licenses purchased but not deployed). In that case, you can address them proactively: buy additional licenses via true-up to cover gaps or reclaim and potentially not renew surplus licenses.
By doing this audit, you enter renewal negotiations knowing your exact compliance position and actual needs. It also avoids any panic if Microsoft were to audit you – you’ve already self-corrected.
Many organizations do this inventory 3-6 months before renewal so that, for example, if they discover 100 extra installs of SQL Server, they can include those in renewal negotiations (or true-up) rather than dealing with it separately under time pressure. Internal audits also often uncover opportunities – e.g., realizing a department isn’t using a product and you can drop it.
It’s like cleaning the house before signing a new lease. The result is a cleaner, more efficient renewal. So yes, invest the time in an internal true-up to ensure you only renew what’s needed and remain compliant in the future.
