Microsoft Enterprise Agreements vs. Open Licensing
- Enterprise Agreements (EA): Long-term, customizable agreements for large organizations.
- Open Licensing: Flexible, pay-as-you-go licensing for smaller organizations.
- EA: Includes volume discounts, centralized management, and long-term planning.
- Open Licensing: No upfront commitment, ideal for smaller IT budgets.
- EA: Better for organizations with over 250 users or devices.
- Open Licensing: No minimum order, easy for organizations with fewer devices.
Microsoft Enterprise Agreements vs. Open Licensing
Choosing a software licensing model is one of the most important decisions for any organization, especially for Microsoft products.
Two of Microsoft’s most widely used licensing models are the Enterprise Agreement (EA) and Open Licensing.
Both have distinct features and cater to different organizational needs. Understanding the key differences between these two models is crucial for businesses to make informed decisions that align with their goals, budgets, and technological requirements.
Key Differences Overview
At the core, the Enterprise Agreement (EA) and Open Licensing are designed to serve different types of organizations with different needs.
The EA is intended for larger enterprises with a minimum of 500 users or devices, while Open Licensing is more suited for smaller businesses or those with more dynamic needs. While both models offer access to Microsoft products, their structure, pricing, and management capabilities vary significantly.
This article will examine both models, exploring their structure, benefits, flexibility, cost considerations, and strategic fit.
Enterprise Agreement Deep Dive
Structure and Requirements
The Enterprise Agreement (EA) is a comprehensive software licensing program designed for larger organizations. A three-year contract allows organizations to license Microsoft products at a volume discount.
The agreement typically requires a minimum of 500 users or devices. An important aspect of the EA is that it includes Software Assurance (SA), which is mandatory and provides numerous benefits, such as access to the latest product versions, technical support, training, and deployment tools.
The EA is structured to provide predictable annual payments and is intended to simplify procurement and management for organizations with significant IT needs.
Organizations that enter into an EA benefit from consolidated billing, centralized license tracking, and the ability to procure various Microsoft products and services under one agreement.
Key Benefits of the Enterprise Agreement
The Enterprise Agreement offers several distinct advantages that make it an attractive option for large organizations:
- Centralized Procurement and Management: With an EA, the entire organization’s software procurement is handled through a single, comprehensive agreement, simplifying the management and tracking of licenses.
- Volume Discounts: EAs offer significant volume-based discounts, which can translate into large cost savings for organizations with large-scale licensing needs.
- Access to the Latest Technologies: Organizations under an EA benefit from having access to the latest Microsoft software, technologies, and cloud services. As part of the Software Assurance offering, they can access updates and upgrades without additional costs.
- Software Assurance (SA): This is a key benefit of the EA, which includes:
- Continuous access to new versions of Microsoft software
- Comprehensive technical support and training resources
- Deployment tools for easier installation and updates
- Flexibility: The EA allows organizations to add new products or adjust their license needs during the agreement term through a process known as “true-up.” Additionally, it supports hybrid licensing options, offering flexibility to mix on-premises and cloud solutions.
Flexibility Features in the Enterprise Agreement
One of the standout features of the EA is its flexibility. Some of the key features include:
- Organization-Wide Coverage: EAs typically cover both on-premises software and cloud-based services such as Microsoft 365, Azure, and other cloud solutions, enabling seamless integration and management across both environments.
- True-Up Flexibility: During the contract term, organizations can “true-up” by purchasing additional licenses as needed, reflecting any growth in user or device count. This provides flexibility in scaling the software footprint to match the organization’s evolving needs.
- Hybrid Licensing Options: The EA model allows organizations to mix and match on-premises and cloud services, allowing businesses to transition smoothly from traditional licensing to cloud-based solutions.
Open License Program Analysis
Program Fundamentals
Open Licensing is a more flexible, entry-level option for smaller businesses or those with less predictable growth.
Unlike the Enterprise Agreement, which requires a significant commitment, the Open License program allows organizations to purchase software licenses in smaller quantities with no minimum purchase requirement.
This makes Open Licensing an ideal choice for small businesses, startups, or organizations with a dynamic user base that does not require long-term commitments.
The Open Licensing program is designed to provide perpetual licenses for Microsoft products. These licenses are granted in a one-time purchase, and the organization owns the rights to use the software indefinitely, with the option to upgrade through Software Assurance if desired.
Core Advantages of Open Licensing
The Open Licensing program offers several benefits:
- Greater Purchasing Flexibility: Organizations can purchase software in smaller quantities to match their immediate needs. This is particularly advantageous for small businesses or those with fluctuating requirements.
- Simpler Management: Open Licensing is straightforward, requiring a single agreement and product key for each software purchase. This reduces the complexity of license management.
- Cost-Effective Upgrade Rights: Open License customers can include Software Assurance (SA), which gives them access to future upgrades and updates. SA is optional, so businesses can choose whether to invest in it based on their needs.
- Pay-As-You-Go Structure: Open Licensing operates on a more flexible payment structure. It often offers businesses the ability to purchase software as needed without a large upfront investment, which can benefit organizations with limited capital or more unpredictable cash flow.
Comparative Analysis
Commitment and Scale
The Enterprise Agreement typically requires a three-year commitment and is geared toward larger organizations with over 500 users or devices. Its cost structure relies on volume discounts, which offer significant savings over time but require a larger upfront investment.
In contrast, Open Licensing provides a more flexible option for smaller organizations with no minimum licensing requirements. Its pay-as-you-go structure is more suited to businesses with smaller or fluctuating needs but may result in higher per-license costs.
Read about hidden costs in Microsoft enterprise agreements.
Cost Considerations
When comparing the two models, the Enterprise Agreement typically offers greater long-term savings through volume commitments, making it a better option for organizations with large and stable user bases. The Open License, while offering more flexibility and lower initial costs, may lead to higher per-license fees as the organization scales.
For larger organizations with predictable needs, the EA is often more cost-effective in the long run due to its volume discounts and included benefits like Software Assurance. However, smaller organizations may find the Open License program more financially viable in the short term due to the lower initial costs and flexibility.
Read about the renewal process for Microsoft Enterprise Agreements.
Software Assurance Differences
Enterprise Agreement SA
Software Assurance is a mandatory part of the Enterprise Agreement, and it includes several key benefits, such as:
- Access to the latest software versions
- Comprehensive technical support
- Training and certification resources
- Deployment tools and guidance for installation
Open License SA
Under Open Licensing, Software Assurance is optional. Organizations can choose whether to invest in SA based on their needs. This can be advantageous for businesses that may not require frequent software updates or ongoing technical support, as they can manage costs more flexibly.
Strategic Considerations
Enterprise Agreement Fit
The Enterprise Agreement is best suited for organizations that:
- Have 500+ users or devices
- Need comprehensive software solutions, including cloud services
- Require predictable licensing costs and long-term stability
- Value access to the latest technologies and ongoing support
Open License Suitability
Open Licensing is ideal for organizations that:
- Need a small number of licenses or more flexibility in their purchasing
- Have unpredictable growth or budget constraints
- Prefer perpetual licensing over subscription-based models
- Are smaller businesses or startups that do not yet require large-scale enterprise solutions
Management and Administration
Enterprise Agreement Management
Organizations with an Enterprise Agreement benefit from centralized license management through a single, comprehensive agreement. The EA includes tools for:
- Annual true-up processes to adjust the number of licenses as the organization grows
- Comprehensive reporting for better visibility and tracking of license usage
- Integrated cloud and on-premises tracking, which simplifies administration
Open License Administration
The Open License program provides simpler management and is easier to administer, with:
- Basic license tracking through a single product key per purchase
- Minimal reporting requirements
- Flexibility in purchasing options, allowing organizations to purchase as needed
FAQ: Microsoft Enterprise Agreements vs. Open Licensing
What is a Microsoft Enterprise Agreement (EA)?
EA is a volume licensing program for large organizations. It provides discounts, flexible terms, and centralized management for software across multiple users or devices.
How is Open Licensing different from EA?
Open Licensing is more flexible, with no upfront commitment. Smaller organizations can purchase licenses on a pay-as-you-go basis without volume discounts.
Who should choose an Enterprise Agreement?
Large organizations with 250 or more devices or users should consider an EA for cost savings, volume discounts, and centralized management.
What are the benefits of Open Licensing?
Open Licensing offers flexibility, easy license management, and the ability to pay for software as you use it, with no minimum purchase requirement.
Is there a minimum number of licenses needed for EA?
EA is intended for organizations with 250 or more devices or users.
Can small businesses use Open Licensing?
Open Licensing is designed for small businesses or organizations with fewer devices, offering a more flexible and scalable solution.
Does EA offer volume discounts?
Yes, EA includes volume discounts based on the number of licenses purchased.
Is centralized management available with Open Licensing?
No, centralized management is typically only available through an Enterprise Agreement.
How does payment work with EA?
EA allows organizations to pay annually or over a longer period, possibly spreading payments across multiple years.
Can I switch from Open Licensing to an Enterprise Agreement?
Yes, businesses can transition from Open Licensing to an EA if they grow large enough to benefit from the discounts and centralized management.
Are there any upfront costs associated with open licensing?
Open Licensing offers flexibility with no upfront commitment, and licenses are purchased as needed.
Does EA include software updates?
Yes, EA includes rights to software updates and new versions, often at no additional cost.
What types of software are available through Open Licensing?
Open Licensing covers a wide range of Microsoft software, from operating systems to productivity tools and server software.
Can I add more licenses under an Open License agreement?
Yes, you can purchase additional licenses under Open Licensing as needed.
Are there restrictions on the number of users or devices in an Open License?
No, there is no minimum or maximum requirement for devices or users under Open Licensing. You can buy as few or as many licenses as needed.
