Case Study – Microsoft EA Renewal Service South Korean Electronics Manufacturer – Microsoft EA Optimization Yields 25% Savings and Scalable Cloud Terms
Background
A South Korean electronics manufacturing company, headquartered in Seoul with 7,000 employees globally, partnered with Redress Compliance to optimize its Microsoft Enterprise Agreement.
The company, producing consumer electronics and components, has an annual revenue of approximately ₩4 trillion (South Korean Won).
Its IT environment is diverse: Microsoft 365 is deployed for corporate functions (mix of E3 for general staff and E5 for certain technical and security roles), engineering teams use various development tools including GitHub and Visual Studio (some under Microsoft licensing), and the company leverages Azure for a combination of internal applications and customer-facing services (like IoT platforms for their smart devices).
They maintain significant on-premises infrastructure, especially for sensitive R&D data and factory operations, in a hybrid model.
With the Microsoft EA up for renewal, the company’s objectives were to trim unnecessary costs, gain more flexible terms to adjust to the cyclical nature of electronics manufacturing, and ensure they had the right mix of licenses for their evolving workforce (which includes a large number of factory and field service personnel who don’t need full productivity suites).
Read our guide to Microsoft EA renewals.
Challenges
The South Korean firm faced bundling pressure and underused top-tier services in its Microsoft agreement. In the previous cycle, Microsoft had bundled many products – for example, an “all-in” E5 bundle for a wide swath of users to encourage adoption of things like Power BI, Teams Phone, and advanced security.
However, not all those tools took root. They found that employees in production plants and field service used very little beyond Email, Teams (for communication), and perhaps SharePoint for manuals. These users didn’t benefit from the hefty E5 feature set. Yet, they were paying for it. This is a classic case of overselling features that sound good but aren’t practically used day-to-day in certain roles.
Moreover, the company had subscribed to Azure services, such as Azure AI and Machine Learning Studio, as part of a digital initiative. However, only a few data scientists utilized them, while the subscription covered a larger capacity. That appeared as “shelfware” spend that could be rationalized.
Another challenge was the need for scalability and downgrade rights. Electronics manufacturing can be subject to demand fluctuations. If a product line’s demand drops, they might downsize a team, or if a project ends, contractors leave – but the EA’s fixed count meant they couldn’t reduce license counts accordingly.
The company also acquired a small startup two years ago (bringing in 500 new employees). It integrated them, which increased licenses – but if any consolidation happened, they wanted the ability to adjust.
Microsoft’s standard EA didn’t accommodate that; they only talk about true-up (increases).
Additionally, the company planned a phased migration of some on-premises dev/test workloads to Azure, but they wanted to test the waters, rather than committing to huge upfront expenses. Microsoft, predictably, was pushing an Azure commitment based on optimistic cloud migration timelines.
The company needed a way to have Azure available but not be stuck overpaying if migrations took longer or if they decided to keep some workloads on-prem for longer (given concerns around intellectual property security, etc.).
Essentially, flexibility in both license count and cloud usage was key.
How Redress Compliance Helped
- Segmented Usage Analysis: Redress Compliance segmented the company’s workforce and services to pinpoint mismatches. They found that about 1,200 of the company’s users were in factories or service centers with basic IT needs. Many of these had been given M365 E3 or even E5 licenses in the broad deployment. Still, their usage data showed minimal usage of Office apps beyond email, and certainly not the fancy E5 features. Redress recommended moving a large portion of these users to more appropriate licensing – possibly Microsoft 365 F3 (which covers email, Teams, and online Office) or at most E1 (the cloud-only basic tier). This would substantially lower the cost per user while still covering their needs. For the office and R&D staff on E5, Redress examined E5 feature usage: they discovered that a few premium features (like Power BI Pro or Advanced Threat Analytics) were used by a relatively small subset. Rather than blanket E5, they suggested a plan to license by needed components: for instance, keep E5 for the cybersecurity team and certain leads (maybe 300 people), but provide E3 plus Power BI Pro add-on for data analysts, E3 plus Phone System add-on for those using Teams calling, etc., instead of full E5 for all. This component approach ensured no capability was lost, but you’re not paying E5 for someone just to use one E5 feature occasionally. On Azure, Redress reviewed the current and planned usage. They advocated for a conservative approach with flexibility: essentially echoing the company’s desire – to commit to what’s moving forward, but use pay-as-you-go or Azure “prepayment” for experimental projects. They identified that some Azure services subscribed to (like the AI/ML platform) could be scaled down or switched to a consumption model until the data science team was ready to use more, rather than flat paying for capacity not used.
- Rearchitecting the EA – Flexibility and Right-Sizing: Redress helped the company design an EA renewal proposal that dramatically right-sized the license allocation. They proposed shifting approximately 1,000 factory/service workers to Microsoft 365 F3 licenses from the more expensive tiers. Additionally, approximately 500 E5 licenses would be reduced, with those users being moved to E3 (accompanied by add-ons as needed). This alone represented a major cost reduction while maintaining necessary functionality. For the 300 or so who truly needed E5 (such as certain IT administrators using advanced security or executives requiring top-tier compliance features), those would remain. They also recommended an Enterprise Agreement Subscription (EAS) model for those frontline F3 licenses, meaning the company isn’t locked into owning them and can reduce count if needed at renewal – a nod to flexibility if operations scale down. Redress also pushed for including a clause to allow a one-time reduction of up to X% of licenses if a documented business event occurred (e.g., divestiture or automation reducing headcount in a division). Sometimes Microsoft can allow an extraordinary adjustment – Redress aimed to bake something like that in as a safeguard. On Azure, they structured the plan so that the EA would include a base Azure commitment sufficient for current steady usage (like hosting dev/test and some web services). Still, all new cloud projects would start as pay-as-you-go (via CSP or Microsoft’s MCA) and only be folded into the EA commitment once proven. This prevents overcommitting. They also ensured that the EA continued to cover their on-premises development tools (Visual Studio subscriptions, etc.) at a negotiated discount, as engineers heavily utilized those.
- Negotiation – Achieving 25% Savings and Terms: In negotiations, Redress presented the business case for these changes clearly. The result was a significant 25% reduction in EA cost achieved. Microsoft agreed to apply high discounts on the F3 licenses given the volume and the importance of securing that portion (they’d rather have them in EA at a lower price than lose them to no agreement or third-party solutions). Microsoft also provided some concessions: they included a “step-down” allowance – if the company automates, say, 10% of its factory jobs and doesn’t replace them, they could reduce that many F3 licenses at the next anniversary. This was somewhat innovative and not standard, but Redress’s argument that those users might vanish and then the company would otherwise consider not renewing EA at all, swayed Microsoft. Additionally, they managed to negotiate an extended price lock on the core products in KRW to handle any currency swings (though Korea is fairly stable, this gave predictability). On Azure, Microsoft allowed a flex commit: the company committed to a baseline, but could burst 50% over it at the same rate and only pay for what’s used (almost like a hybrid of commit and pay-go). Essentially, Microsoft didn’t force them to commit everything up front, acknowledging the project-based nature of adoption. Microsoft also included some Azure credits for training and pilot projects – an added sweetener that didn’t directly reduce the EA price, but added value. In monetary terms, beyond the license savings, the company’s projected Azure spend over three years decreased by 20% due to not committing to unused capacity – a significant avoidance of unnecessary expense.
- Implementing the Changes and Future Monitoring: Redress aided the company in planning the transition of licenses (ensuring moving users from E5/E3 to F3 didn’t interrupt their access, communicating changes, etc.). They provided guidance on how to enable key solutions like Teams, SharePoint on F3, so that frontline workers still stayed connected (like many didn’t have company email accounts before; now they would under F3, which was a boost for inclusion). They also coached the IT team on leveraging the new flexibility: for example, if they see an area where usage is dropping, prepare to reduce it at the anniversary; or if a new project is spinning up heavy in Azure, decide at what point to lock it into the EA vs let it run as an experiment. They established KPIs, such as license utilization rates and Azure consumption versus commit tracking, to be reviewed semiannually by management. The goal was to continually optimize: if a year later it made sense to add more E5 for a new need, they could – but they’d do it deliberately and likely secure a good deal since it was planned, not just added by default.
Outcome and Impact
- Massive Cost Savings (25%): The new EA achieved a 25% cost savings compared to the previous expenditure. This was one of the most dramatic optimizations the company had seen in any major expense category. In fact, the savings were so significant that they caught the attention of the executive board, highlighting effective IT cost management. In Korean Won terms, it freed up billions that could be reinvested into R&D and factory modernization. This was achieved largely by eliminating spend on underutilized features and aligning license levels to actual user needs – proving that efficiency doesn’t have to compromise capability.
- Empowered Frontline, Improved Adoption: Paradoxically, by giving many factory and field workers less expensive F3 licenses, the company gave them more digital tools than before in some cases. Previously, some of these workers shared logins or didn’t have full access; now with F3, each got their own account with email, etc. This improved communication and morale – they felt more connected to the company network. The company rolled out a simplified Teams-based workflow for reporting issues from the field, something they had hesitated to do before due to license costs. So the optimization not only saved money but also boosted productivity and inclusion. It’s a great example of smarter spending enabling better usage.
- No Loss of Key Functionality: The segmented approach ensured that everyone who truly needed advanced Microsoft features still had access to them. Engineers and security experts kept their E5 or equivalent capabilities, and even gained assurance that those services would be fully leveraged. People who lost E5 likely never noticed because they weren’t using those parts anyway. There was no internal backlash – in fact, the changes were either invisible or positive (as in the case of giving F3 to someone with no previous experience). The IT department carefully communicated that this was about tailoring tools to needs, which resonated well with users and managers. The advanced services, such as Power BI and Teams telephony, were now concentrated where they’d be used – and the company started seeing higher utilization rates for these services because they weren’t spread thin among uninterested users. That means better ROI on those premium features.
- Agile Cloud and Licensing Posture: The company’s IT landscape became more agile as a result. If demand shifts, they can adjust a chunk of licenses down (especially those frontline ones) at renewal without issue, and likewise scale up if they open a new facility or spin up a new team. This agility was exactly what they wanted to complement the unpredictable electronics market. With Azure, they now feel in control: they use the cloud for what makes sense (e.g., scaling test servers during a product development phase) and can dial it back without incurring a fixed, giant bill. If a cloud AI initiative proves successful and usage skyrockets, they know the EA can accommodate it at a known cost. If it fizzles, they’re not stuck with sunk costs. This flexibility reduces risk in their tech strategy.
- Cultural Shift to Cost-Conscious Planning: Having undergone this process with Redress, the company’s IT and finance teams adopted a more cost-conscious and data-driven approach to software planning. They recognized the value of regularly reviewing usage data and questioning whether the current allocation was optimal. This is likely to persist – the team set up a quarterly internal audit of license and cloud usage, something they hadn’t done before in a disciplined way. This means they will catch issues early (such as unused licenses) and take corrective action rather than letting them compound. Essentially, they transformed software licensing into an actively managed asset, rather than a passive cost – a significant strategic shift.
Client Quote
“Our Microsoft EA was full of bells and whistles we weren’t using – we were paying for a Ferrari but driving it like a sedan. Redress Compliance fixed that. Through their detailed analysis and tough negotiation, we reduced our Microsoft spending by 25% while still enhancing our IT capabilities where it matters. Now, our factory staff have the right tools without incurring excess costs, and our power users have exactly what they need to innovate. The flexibility we gain is equally important – we can adjust as our business changes, rather than being stuck in a rigid contract. Redress’s independent, expert guidance was instrumental; they truly aligned our Microsoft investments with our business needs. It’s been a game-changer for our IT budget and strategy.” – CIO, South Korean Electronics Manufacturer.
Call-to-Action
In fast-paced industries like technology manufacturing, an oversized Microsoft agreement can weigh you down. Contact Redress Compliance for a free Microsoft EA Optimization Assessment. We’ll help you shed the excess, empower every segment of your workforce appropriately, and negotiate an EA that flexes with your needs. Don’t pay for features you don’t use – let Redress Compliance ensure your Microsoft agreement is as innovative and efficient as you are.
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