Microsoft EA Renewal Playbook: Restructuring Agreement Contents

Microsoft EA Renewal Playbook: Restructuring Your Enterprise Agreement

Executive Summary: The Microsoft Enterprise Agreement (EA) renewal presents a strategic opportunity for CIOs and CTOs to optimize their software investments.

By restructuring EA contents at renewal – dropping unused products and adding new cloud services with promotional rates – organizations can reduce costs and align licenses with actual needs.

A proactive renewal playbook ensures you only pay for what you use and secures favorable terms for new initiatives.

Treat EA Renewal as a Strategic Opportunity

EA renewals aren’t just contract extensions – they’re a chance to realign your Microsoft licensing with business strategy. CIOs and CTOs should treat the renewal as a high-stakes negotiation to drive value.

Microsoft often introduces price increases and new licensing models over time, so an EA that made sense three years ago may now be outdated.

By approaching renewal strategically, you can restructure your agreement to eliminate waste and invest in priority technologies.

In practice, this means carefully reviewing every component of your EA and determining what to retain, modify, or add based on current and future needs. The goal is to emerge with an agreement that fits your organization’s actual usage and growth plans rather than blindly renewing the status quo.

Read Microsoft EA Renewal Playbook for Large Enterprises.

Assess Current Usage and Needs Early

Start the renewal process early (ideally 6–12 months before expiration) and begin with a thorough usage audit. Gather data on every product and service in your current EA:

• License deployment vs. entitlements: Utilize Microsoft 365 admin portals, Azure dashboards, and SAM tools to determine the number of licenses allocated and actively used.
• User profiles and needs: Categorize users (e.g., knowledge workers, frontline staff) to ensure each has the appropriately tiered license. Not everyone needs a top-tier E5 or premium add-ons.
• Future roadmap alignment: Consult your IT roadmap – are you moving to more cloud services or retiring legacy systems? Identify which EA components support future projects and which don’t.

This assessment often reveals substantial shelfware – licenses paid for but not utilized. Studies have found that a significant portion of enterprise licenses remain unused (in some cases, 10–30% or more), representing millions of dollars in wasted IT spending.

By quantifying your actual usage and business priorities, you have a factual basis for restructuring the EA. CIOs should socialize these findings with finance and operations leaders early, building consensus on what the company truly needs going forward.

Read Microsoft EA Renewal Playbook: Negotiating Pricing and Discounts.

Eliminate Unused Products and Licenses

One of the quickest wins in an EA renewal is to drop or reduce unused licenses. Every product or service in your EA that isn’t fully used is a cost savings opportunity:

• Remove shelfware: Discontinue products that adoption data shows are barely used (for example, an analytics tool or developer suite that only a handful of staff ever opened). Eliminating these can save significant costs overnight.
• Right-size license counts: Even for core products like Office 365 or Windows, adjust the quantity to match the current active headcount. If you originally licensed 5,000 users but only 4,500 are active, renew for 4,500. Inflexible EAs often lock you into higher counts, so take advantage of renewal to reset to reality.
• Downgrade where appropriate: Not all users need premium editions. If 1,000 users have an E5 license but only 300 use the advanced features, consider renewing 700 of them on E3 licenses instead. This kind of license optimization can maintain productivity while significantly lowering the cost per user.

By cleaning up unused products and over-provisioned licenses, enterprises routinely reduce their annual Microsoft spend by 10–20% (or more). It also simplifies your estate – fewer products mean less administrative overhead and clearer compliance.

Be sure to coordinate with department heads and IT admins to verify that nothing mission-critical is accidentally dropped.

The EA renewal is typically the only time you can reduce quantities (since mid-term reductions aren’t allowed in most EA contracts), so seize this chance to trim the fat.

Add New Cloud Services with Promotional Deals

Renewal time is also an ideal opportunity to add or upgrade services your organization needs for the future, especially cloud-based solutions.

Microsoft strongly incentivizes customers to adopt its latest cloud offerings, so leverage this to your advantage:

• Identify strategic gaps: Determine if there are new Microsoft cloud services that align with your IT strategy – for example, transitioning on-premise workloads to Azure, enhancing security with Microsoft 365 E5 features, deploying Power Platform apps, or exploring new AI services.
• Seek promotional rates: Microsoft often provides promotional discounts or credits for adopting new services at renewal. For instance, enterprises have received 15% off new Microsoft 365 E5 seats or Azure consumption credits as an incentive. Always ask your Microsoft representative or reseller about current promotions – these may not be advertised, but they can significantly defray costs in the first year.
• Bundle for value: Consider replacing standalone products with a bundled suite if it’s more cost-effective. For example, moving from separate Office, security, and mobility licenses to a unified Microsoft 365 bundle can sometimes yield a better per-user rate (especially if Microsoft is pushing the bundle with a discount). Ensure the bundle’s features are ones you will use, however, to avoid trading one form of shelfware for another.

By adding new cloud services during EA renewal, you position your organization to modernize its IT stack under favorable terms.

Microsoft is eager to showcase wins in cloud adoption – use that as leverage to negotiate extras like extended free trials, deployment support, or discounted pricing for the first 6–12 months.

That said, remain guided by your actual needs: only incorporate new services that have a clear business case rather than chasing a discount on a shiny new product you’re not ready to implement.

Negotiate Timing and Terms Strategically

Many Enterprise Agreement costs ultimately come down to negotiation. Microsoft’s sales teams have quotas and timing pressures, and savvy CIOs and CTOs use this to drive better terms.

A few negotiation tips for renewal:

• Leverage Microsoft’s fiscal calendar: Microsoft’s fiscal year ends June 30, and Q4 (Apr–June) is when account teams are most eager to close deals. If your EA renewal is approaching, you may secure better pricing or incentives by timing final negotiations when reps are most in need of the sale.
• Bring data and options: Enter talks armed with your usage audit and clear asks (e.g., “We plan to cut 15% of licenses due to low usage, and we’re considering moving those workloads to an alternate provider”). The credible threat of reducing your Microsoft footprint or exploring competitors (like AWS, Google, or even other license channels like CSP) can motivate Microsoft to “sharpen its pencil” on price and concessions.
• Ask for the extras: Don’t settle for the first quote. Negotiate beyond just unit price – for example, request extended payment terms to smooth cash flow, or a contractual right to reduce licenses (true-down) at anniversaries if your headcount drops. Ensure any promised promotional discounts on new services are written into the agreement (with their duration). If you’re upgrading to a higher product tier, push for a step-up discount (e.g., a temporary discount when moving from E3 to E5 licenses).
• Maintain prior discounts: If your last EA included special discounts, anticipate that Microsoft might initially remove them (claiming they were one-time). Be prepared to push back and retain those discounts – or even improve them if your volume is growing. Large enterprises (thousands of seats or multi-million-dollar spending) can negotiate double-digit percentage discounts off list prices for many products, especially Azure commitments or Microsoft 365 E5 packages. Know the benchmark ranges for discounts for an organization of your size, and aim high within reason.

Remember that everything should be documented: if Microsoft offers a concession verbally or via email, get it added to the EA amendment or a side agreement.

A successful negotiation leaves you with not only better pricing but also flexibility safeguards (like price locks or caps on future increases) and clear terms on how you can add or reduce services over the term.

It’s often wise to involve a licensing expert or advisor in these negotiations – they speak Microsoft’s language. They can identify hidden gotchas in contract language that a CIO or CTO might overlook.

Real-World Example: EA Restructuring in Action

To illustrate the impact of restructuring an EA at renewal, consider a global manufacturing company with a 3-year EA coming up for renewal:

• Initially, they had 1,000 users on Office 365 E5, but usage analysis showed only about 500 users actively needed the advanced E5 features (phone system, advanced analytics). The other 500 primarily used email and Office apps.
• They also had 500 Visio Pro licenses and 300 Project Online licenses in the EA, purchased for various teams over the years. The audit revealed that fewer than 200 regular Visio users existed, and that an entire department had ceased using Project Online after completing a project, resulting in most of those licenses remaining idle.
• The company was planning a cloud data warehouse initiative, for which they intended to start using Azure services – something not originally in their EA.

Restructuring actions:

At renewal, the CIO removed 300 Visio and all 300 Project licenses from the EA, as they were no longer needed.

They downsized the Office 365 E5 count from 1,000 to 500 and added 500 Office 365 E3 licenses for the remaining users who didn’t require E5 functionality.

Additionally, they negotiated to add an Azure consumption commitment of $200,000/year, which Microsoft incentivized by offering a 20% discount on Azure rates (saving $40,000 per year on that planned cloud spend).

The outcome was a more efficient agreement that matched actual usage and new goals.

The table below summarizes the before-and-after EA costs for key components:

Net result: The organization removed over $486,000 in wasted licenses annually, while adding $160,000 in new cloud services at a discounted rate, resulting in a net operational savings of approximately $326,000 per year.

Equally important, they reallocated the budget to strategic cloud projects (Azure) instead of overspending on underutilized software. This example illustrates how a carefully planned renewal can simultaneously reduce costs and drive innovation.

Plan for the Future and Mitigate Risks

Restructuring an EA should also consider risk management and future flexibility. Microsoft licensing is complex, and changes can introduce risks if not handled properly:

• Compliance risk: When you drop products or reduce counts, ensure you have met all licensing requirements up to the end of the previous term. Keep documentation of license usage and retirement. This helps if Microsoft initiates a true-up or audit – you can demonstrate that reductions were justified by actual usage.
• Operational continuity: Don’t remove a product your teams might need. Double-check with stakeholders that alternative solutions are in place for any items you plan to eliminate. For example, if you drop a legacy server product, ensure you have a cloud alternative ready or no ongoing dependency.
• Flexibility for growth or cuts: Consider building in terms that allow some agility. If your industry is volatile and you might need to downsize, consider an Enterprise Subscription Agreement (EAS) or adding more subscriptions (which allow scaling down at the anniversary) rather than purchasing all perpetual licenses. Conversely, if you expect growth, negotiate fixed pricing for additional licenses to avoid surprise costs when you expand.
• Stay informed: Microsoft’s product terms and cloud offerings evolve constantly. Plan periodic internal reviews (even mid-term) of your license usage and new Microsoft releases. This way, by the next renewal, you won’t be caught off guard by unused products or attractive new services you could adopt.

It’s wise to document a post-renewal management plan. Assign someone (or a team) to monitor license utilization and compliance throughout the EA term.

Many enterprises implement an internal quarterly true-up review to check if they can reharvest licenses from departed employees or if new projects will require licensing changes.

Proactive management ensures that the optimized state achieved at renewal continues rather than gradually drifting back into inefficiency.

To summarize some common risks and how a smart renewal strategy addresses them, see the breakdown below:

By addressing these areas, CIOs and CTOs can renew their Microsoft EA with confidence that they are minimizing risks and maximizing value.

The result of a well-executed renewal playbook is a leaner, more relevant set of Microsoft investments that support the business at a lower cost and with fewer surprises down the road.

Recommendations

• Start planning early: Begin the EA renewal process 12 months in advance. Early planning gives you time to audit usage, set goals, and avoid last-minute concessions.
• Audit and optimize licenses: Perform a detailed license usage audit. Remove or reassign unused licenses and align each product to a clear business need. Only renew what delivers value.
• Tailor licenses to users: Map license levels to job roles. For example, downgrade users who don’t need premium features to lower-cost plans (e.g., E5 to E3) at the time of renewal. This right-sizing avoids overspending on features no one uses.
• Leverage Microsoft’s priorities: If you plan to adopt cloud services (Azure, Dynamics, Power BI), introduce them during renewal negotiations. Microsoft often offers promotional discounts or credits for new cloud commitments – take advantage to get better pricing.
• Negotiate beyond price: Push for flexible terms, such as the ability to true-down licenses annually, extended payment schedules, and multi-year price locks. Use Microsoft’s fiscal year timing (or competitive alternatives) as leverage to secure extra discounts and concessions.
• Document everything: Ensure all negotiated discounts, promotional rates, and special terms are written into the contract. Verbal promises should be codified in the EA paperwork to avoid misunderstandings later.
• Compliance plan: When reducing licenses, maintain records to prove compliance and entitlement. Have a governance process post-renewal to monitor license usage and avoid compliance surprises (or wasted spending) mid-term.
• Continuous improvement: Treat the EA as a living agreement. Conduct periodic internal reviews of usage and new Microsoft offerings to ensure optimal utilization. This proactive stance means your next renewal will be even more efficient, with no nasty surprises.

FAQ

Q1: How far in advance should we start preparing for an EA renewal?
A1: Ideally, start at least 6–12 months before your EA expiration. Large enterprises often begin planning a full year. Early planning allows you to audit usage, consult with stakeholders, establish budget expectations, and engage with Microsoft on your terms. The more lead time, the less likely you’ll rush into an unfavorable deal.

Q2: What’s the best way to identify unused licenses or products before renewal?
A2: Conduct a thorough software asset assessment. Use Microsoft’s admin portals (e.g., M365 usage reports, Azure cost analyzer) and any SAM tools to list all licenses and check their actual usage/assignment. Collaborate with department heads to identify which tools are mission-critical and which are rarely utilized. This data-driven approach will spotlight shelfware that can be eliminated or scaled down in the new EA.

Q3: Can we reduce or eliminate certain products at renewal without incurring a penalty?
A3: Yes. The EA renewal is your opportunity to remove products or reduce license counts without incurring penalties as you negotiate a new contract term. During the EA term, you generally cannot drop licenses, but at renewal, you can redefine your mix. Just be sure to meet any final true-up requirements for the expiring term (pay for any added usage through the end date), and then you’re free to downsize for the next term. Microsoft might push back if you’re significantly cutting, but that’s also your leverage to negotiate better pricing on what remains.

Q4: How can we leverage Microsoft promotions or discounts for new services?
A4: Ask your Microsoft account rep (and your reseller partner) about any promotions tied to products you’re interested in. Common examples include percentage discounts on Microsoft 365 E5 upgrades, free trial periods for new Azure services, or credits if you commit to a certain Azure spend. Timing matters – Microsoft may have special offers each quarter. Outline which new services you’re considering, and explicitly request incentive pricing or value-adds. Aligning your needs with Microsoft’s strategic products (cloud, security, AI, etc.) will typically unlock the best offers.

Q5: Should we consider alternatives to an EA, like Microsoft’s CSP or other licensing models?
A5: It depends on your organization’s size and flexibility needs. Cloud Solution Provider (CSP) programs or the newer Microsoft Customer Agreement allow for monthly subscription purchasing with greater flexibility to increase or decrease licenses; however, they may have higher unit costs or less predictability for large enterprises. If you’re a very large customer (thousands of users), an EA often yields the best discounts. However, you can still use the threat of switching to CSP or splitting some services off the EA as a negotiation tactic. In some cases, a hybrid approach works – keep core licenses under EA for volume discounts and put variable or smaller workloads on a CSP agreement. Always evaluate the cost-benefit and administrative overhead before moving away from the EA, but do consider all options to ensure you’re getting the best value.

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