A Stockholm-based automotive components manufacturer with 4,500 employees across Sweden, Germany, and the U.S. was facing an EA renewal with pressure to move to all-E5 and expand Azure prematurely. Redress Compliance conducted a 360-degree licence audit, right-sized E5 to E3, unlocked Azure Hybrid Benefit savings, eliminated shelfware, and negotiated hybrid-friendly terms — reducing the 3-year EA from $8M to $6M, a 25% cost reduction that preserved the company’s ability to modernise at its own pace.
A Stockholm-based automotive components manufacturer with 4,500 employees and approximately $1.2 billion in annual revenue, supplying major carmakers, engaged Redress Compliance to optimise its Microsoft Enterprise Agreement. The company operates across Sweden, Germany, and the United States.
The IT landscape was a blend of legacy on-premises systems and growing cloud usage: Microsoft 365 company-wide (mostly E3, with ~500 E5 licences for engineering, IT, and management), on-premises Windows Server and SQL Server running critical ERP and factory systems, and Azure for R&D projects including simulations and IoT data from production lines. The EA was due to renew mid-2025, and the company’s goals were clear: reduce costs, avoid being pressured into all-cloud or all-E5 licensing, and negotiate terms that supported modernisation at their own pace.
Microsoft was pushing to move more users to E5, citing security and compliance benefits. But the company had dedicated CAD/design systems and existing security tools that overlapped with E5 features. Of 500 E5 licences, roughly half were not utilising E5-only features. ~100 E5 licences were allocated for a completed project and never adjusted. Paying for full E5 across the board was overkill.
A previous bundle included enterprise-wide Project Online and Power BI Pro, but only the PMO team and a few analysts actually used them. ~300 unassigned or redundant M365 E3 licences existed from past hiring fluctuations and a recent divestiture. These were pure waste inflating the EA cost.
Manufacturing sites had latency and regulatory requirements to keep systems on-premises. Microsoft’s push for a larger Azure commitment did not align with the company’s cautious timeline. Existing Windows Server licences with Software Assurance were not being fully applied via Azure Hybrid Benefit — effectively paying twice for some Azure VMs.
Seasonal production fluctuations affected temporary staff counts. The company wanted the ability to adjust licence counts if a division downsized or a project ended. The standard EA offered no mechanism to scale down mid-term, and Microsoft’s approach favoured cloud services at the expense of on-premises investments.
Redress conducted a comprehensive audit spanning both cloud and on-premises Microsoft assets. M365 analytics revealed that of 500 E5 licences, only ~250 were utilising E5-specific features (Advanced Compliance, Power BI Pro, Defender suite). The remaining 250 could downgrade to E3 with no productivity loss. ~100 of those E5s were left over from a completed project. Additionally, ~300 surplus E3 licences were identified (unassigned or from a recent divestiture). On the on-premises side, Redress catalogued all Windows Server and SQL Server licences with Software Assurance and discovered the company was under-utilising Azure Hybrid Benefit — Azure VMs were running Windows without applying eligible on-prem licences, resulting in double-payment. Azure consumption was on track but any major expansion was 1–2 years away per the IT roadmap.
Redress designed an optimised licensing plan balancing on-prem and cloud. 250 E5 users moved to E3 with targeted standalone add-ons (e.g., Power BI Pro for specific analysts only). 300 surplus E3 licences eliminated. Project Online reduced from broad allocation to PMO-only (~15 licences). Power BI Pro reduced from blanket assignment to ~30 active power users. For on-premises, 20 Windows Server Datacenter licences were matched to Azure VMs via Hybrid Benefit — a significant Azure cost avoidance previously missed. Redress also proposed converting certain M365 licences to an EA Subscription (EAS) model, enabling potential true-down at renewal for maximum flexibility.
Redress leveraged the client’s future Azure expansion potential as a negotiation asset. Microsoft agreed to a 25% overall cost reduction: additional discounting on M365 E3 (maintaining seat revenue while shifting from E5), promotional discounts on retained E5 licences (originally reserved for new upsells — Redress argued they should reward existing adoption), and the ability to re-purpose under-used on-prem licence value toward Azure credits. Azure Hybrid Benefit usage was explicitly documented in the contract. A price lock was secured for future Azure growth. The EA included an option to convert to EAS at the next anniversary — a built-in downgrade option for additional flexibility. Microsoft’s push for premature Azure expansion was deflected with a clause allowing growth on the client’s timeline.
Redress aligned the EA with the company’s hybrid cloud strategy. Year 2–3 provisions allow leveraging EA pricing or negotiating a side agreement if production systems migrate to Azure. Azure commitment decisions would be data-driven (based on actual IoT project usage), not vendor-pressured. A quarterly licence governance process was established: a small “licence optimisation” task force in IT, trained by Redress, now reviews M365 and server usage to prevent creep. The roadmap ensures the company maximises existing on-premises investments (fully use Windows Server rights in Azure before buying new capacity) while preserving the option to accelerate cloud adoption when business-ready.
Redress Compliance provides independent Microsoft licensing advisory services — fixed-fee, no vendor affiliations. Our specialists have helped enterprises save millions through EA optimization, cloud right-sizing, and renewal negotiation.
Explore Microsoft Advisory Services →| Dimension | Before (Microsoft’s Initial Position) | After (Negotiated with Redress) |
|---|---|---|
| 3-year total cost | ~$8M | ~$6M — $2M saved (25% reduction) |
| E5 licences | 500 (Microsoft pushing more) | 250 retained for users with genuine need; 250 moved to E3 |
| Surplus E3 licences | ~300 unassigned/redundant | Eliminated at renewal |
| Project Online / Power BI Pro | Broadly assigned enterprise-wide | Project Online: PMO only (~15). Power BI Pro: ~30 power users. |
| Azure Hybrid Benefit | Under-utilised; paying twice for some VMs | 20 Windows Server Datacenter licences applied; double-payment eliminated |
| Azure commitment | Microsoft pushing premature expansion | Modest commitment + price lock for future growth on client’s timeline |
| Flexibility | Static EA, no downgrade options | EAS conversion option at anniversary; built-in downgrade path |
| Licence governance | Reactive; no ongoing management | Quarterly review task force; trained by Redress |
The 25% cost reduction freed $2M over three years. For an automotive manufacturer competing on engineering innovation, these savings were redirected to R&D programmes and factory modernisation — investments with direct revenue impact, not enterprise software overspend.
The EA now supports the company’s actual hybrid reality: on-premises systems where latency and regulation require it, Azure where it adds value, and the freedom to shift the balance over time without contractual penalties. Azure Hybrid Benefit is fully activated. Every licence has a purpose and an owner.
The company controls its cloud migration timeline. Provisions for future Azure growth, EAS conversion options, and quarterly governance ensure the EA adapts to business needs rather than dictating them. Microsoft is a partner, not a constraint. The next renewal will be negotiated from data, not default.
“Redress Compliance understood our hybrid reality from day one. They didn’t push us toward all-cloud or all-on-premises — they built a licensing strategy that matches how we actually operate. The 25% savings were significant, but what we value most is the flexibility: we can now modernise our factory systems at our own pace, apply our existing investments to Azure properly, and we’re not locked into products we don’t use. For the first time, our Microsoft agreement feels like it works for us, not the other way around.”
— CIO, Swedish Automotive Components Manufacturer
Most EA audits focus only on M365 cloud licences. But for hybrid organisations, on-premises Windows Server and SQL Server licences with Software Assurance represent significant value that is often under-utilised. Ensure Azure Hybrid Benefit is fully activated for all eligible VMs. Redress found this automotive firm was effectively paying double for some Azure workloads — a common issue in hybrid environments.
E5 is only justified when users actively consume E5-specific features: advanced security (Defender), compliance (eDiscovery, Audit Premium), Power BI Pro, or Phone System. If your organisation has dedicated security tools, CAD systems, or specialised analytics, many E5 features overlap and go unused. Moving 250 users from E5 to E3 with targeted standalone add-ons delivered the same functionality at significantly lower cost. See M365 E3 vs E5 vs F3 Guide.
Microsoft sales teams incentivise larger Azure commitments. But if your IT roadmap shows major cloud migration 1–2 years away, committing now wastes money on unused capacity. Negotiate modest Azure commitments with price locks for future expansion and pay-as-you-go for current overages. Let business needs drive cloud timing, not vendor pressure.
Completed projects and divestitures leave behind allocated licences that are never reclaimed. This firm had 100 E5 licences from a finished project and 300 surplus E3 licences from a divestiture. These represent pure waste. Before every renewal, audit for orphaned licences tied to completed initiatives, departed staff, or divested business units.
Consider EA Subscription (EAS) for licence categories where flexibility matters more than ownership. EAS allows potential true-down at renewal, which is valuable for manufacturers with production fluctuations, M&A activity, or evolving cloud strategies. Negotiate the option to convert EA to EAS at the next anniversary — a built-in escape valve if your needs change. See Microsoft Negotiation Guide.
Book a free consultation with our licensing specialists. No obligations, no vendor ties — just independent advice tailored to your situation.
Book Your Free Consultation →