Microsoft Customer Agreement: Understanding Your Options

Microsoft Customer Agreement: Understanding Your Options

The Microsoft Customer Agreement (MCA) is a new, flexible purchasing contract that is reshaping how enterprises buy Microsoft cloud services.

It offers an evergreen, digital agreement with no minimum purchase requirements, aiming to replace traditional multi-year Enterprise Agreements (EAs).

This advisory outlines what the MCA means for CIOs, CTOs, and CFOs at global enterprises – comparing it to existing options, highlighting benefits and pitfalls, and providing practical guidance to navigate this major licensing shift.

From Enterprise Agreements to the MCA

Microsoft’s licensing landscape is undergoing a significant shift. Historically, large enterprises signed Enterprise Agreements (EAs) – 3-year contracts with upfront commitments and volume discounts.

Starting in 2025, Microsoft began phasing out many EAs in favor of the Microsoft Customer Agreement for Enterprise (MCA-E). This change is driven by Microsoft’s push for a more streamlined, cloud-focused model.

Under an EA, organizations commit to a set number of licenses or spend for a specified period, often securing price locks and discounts in return for that commitment. However, EAs could be inflexible if business needs changed.

Microsoft’s move to the MCA reflects a desire for agility: the MCA is an evergreen agreement that doesn’t expire, allowing customers to continually add or remove services as needed without a formal renewal cycle.

For enterprise IT and finance leaders, this represents a major overhaul in how they plan and negotiate Microsoft investments.

Why the change?

Microsoft is aligning its sales model with cloud consumption trends. The MCA simplifies purchasing by eliminating the lengthy paperwork and annual true-up process associated with EAs.

Instead of negotiating a complex contract every few years, customers accept a one-time master agreement that is always current. Microsoft’s promise is a “consistent and simplified purchase experience” – whether you buy directly from Microsoft or through a partner, the core terms are the same MCA.

In short, Microsoft aims to reduce barriers and enable customers to move to the cloud with greater flexibility.

For CIOs and CFOs, this means your enterprise licensing strategy needs to adapt. If your EA is coming up for renewal, you may find Microsoft steering you toward the new agreement.

In some cases, Microsoft has already notified mid-sized clients that EA renewals will no longer be offered, instead pointing them to CSP (Cloud Solution Provider) programs or MCA-E. Large global enterprises might still have the option to renew an EA in the near term, but the writing is on the wall – the Customer Agreement is poised to become the default for Microsoft purchases moving forward.

Understanding your options under this new model is crucial to avoid unexpected costs and compliance issues.

How the Microsoft Customer Agreement Works

The Microsoft Customer Agreement is essentially a modern purchasing framework for all Microsoft cloud products and services.

Key characteristics of the MCA include:

• No fixed term or expiration: Unlike a 3-year EA, the MCA is open-ended. You sign once digitally, and it remains in effect perpetually. This evergreen nature means no automatic renewal deadline – but also no built-in opportunity to renegotiate pricing on a set schedule. You’ll need to proactively manage costs since the onus is on the customer to adjust subscriptions or seek discounts over time.
• Digital, modular acceptance: The entire agreement is accepted online, and as you add new services (such as Azure, Microsoft 365, and Dynamics 365), the relevant terms automatically attach to your master agreement. It’s modular – you only see and accept terms for the products you use. This can simplify legal review, as you’re not dealing with a single, comprehensive document covering every possible product.
• No minimum purchase requirement: The MCA has no user or spending minimums to sign up. This represents a significant shift from EAs, which typically required 500+ users or a certain spend level. Under the MCA, a small subsidiary or a large enterprise division can enter the same agreement without volume hurdles. Microsoft’s goal is to make it easy to onboard any customer onto cloud services quickly.
• Flexible purchasing channels: You can procure services through multiple routes under a single MCA. Enterprises can purchase directly from Microsoft (with the assistance of an account team), through a Cloud Solution Provider partner, or via self-service on the Azure/Microsoft 365 portals. All purchases roll up under the same customer agreement. For example, you might purchase core Azure services directly from Microsoft. At the same time, other departments acquire niche SaaS subscriptions through a CSP – both can fall under your organization’s MCA, providing consolidated billing and oversight.
• Consolidated billing and management: All cloud subscriptions under the MCA can be consolidated into a single bill (or a set of bills by department/country, as needed). The agreement allows for multiple “purchasing accounts,” enabling different affiliates or departments of a global company to purchase under the umbrella of the master agreement, each with its own billing if desired. This gives central IT a unified view while allowing decentralization where appropriate.
• Continuous updates to terms: Since it’s a living agreement, the MCA is automatically kept up to date. When Microsoft revises product terms or adds new offerings, you don’t have to re-sign a new contract; you simply accept new product terms as you go. This reduces administrative overhead in theory – no more negotiating a full contract every few years. However, it also means new terms (and possibly price changes) can be introduced by Microsoft over time, so you must stay vigilant on updates.

Importantly, the scope of the MCA is currently focused on cloud services. As of now, the Microsoft Customer Agreement covers Azure consumption and subscription licenses for Microsoft 365, Dynamics 365, Power Platform, and other cloud products.

Traditional on-premises software licenses (perpetual licenses with Software Assurance) are not yet fully integrated into the MCA.

Microsoft has announced that, starting in 2025, it will add more products (likely on-premises software and other services) to the MCA every six months.

For enterprises, this means that the MCA could eventually become a one-stop shop for all Microsoft purchases; however, during this transition period, you may still require separate arrangements for certain legacy software needs.

EA vs. MCA: Key Differences at a Glance

What does the Microsoft Customer Agreement change compared to a classic Enterprise Agreement?

The table below summarizes key differences between the old and new models:

Table: Enterprise Agreement vs. Microsoft Customer Agreement – how they differ for global enterprises.

As shown above, the MCA introduces greater flexibility but also removes some of the safety nets that EAs provided. For instance, volume discounts and price locks are largely gone under the standard MCA.

An EA Level D customer (the highest discount tier) may find that under an MCA, their pricing reverts closer to list prices unless they negotiate separate discounts or commit to specific spending levels.

Additionally, the lack of a fixed term means no automatic renewal point to renegotiate – so any discount or special pricing you need must be proactively pursued with Microsoft and written into an addendum (for example, a multi-year Azure consumption commitment for a discount, or a special price agreement on Office 365 seats).

It’s worth noting that Microsoft’s Cloud Solution Provider (CSP) program remains an option. CSP allows you to purchase through a partner who can provide guidance, consolidated services, and sometimes local billing.

CSPs now utilize the same Microsoft Customer Agreement framework as well – the difference is that you transact with a partner who then manages your subscriptions (often beneficial if you want local currency billing or additional support).

Enterprises that prefer an intermediary or have smaller subsidiaries in regions where Microsoft does not sell directly may opt for a CSP arrangement.

However, for large direct enterprise customers, Microsoft is encouraging the MCA-E route, essentially cutting out the traditional LSP middleman for direct sales.

Benefits of the Microsoft Customer Agreement

Microsoft pitches the Customer Agreement as a win-win for customers and IT procurement. From an enterprise perspective, there are some clear benefits to this new model:

• Agility and Scalability: The MCA enables you to scale cloud services up or down as needed, without waiting for a yearly true-up or contract renewal. If your workforce spikes suddenly, you can add licenses immediately; if you downsize or complete a project, you can reduce subscriptions the next month. This agility can prevent overspending on unused licenses and aligns with the cloud’s pay-as-you-go ethos.
• Simplified Procurement Process: Accepting a single digital agreement streamlines what used to be a months-long negotiation and paperwork process. New services can be provisioned in days under the existing agreement, since you’re not signing a new contract each time. This can accelerate project timelines – for example, quickly onboarding a new SaaS tool for a department, because the legal terms are pre-agreed in your MCA.
• Reduced Administrative Overhead: With an evergreen contract, you eliminate the significant renewal event and the complex contract amendments associated with EAs. There’s no need for a massive true-up audit at year-end – you simply manage changes as they occur. Many CIOs will appreciate not having to dedicate a team for 6 months to negotiate renewal with Microsoft; instead, you maintain an ongoing relationship. All documentation is digital and centrally accessible, which can simplify compliance tracking.
• Flexible Purchasing Options: The ability to consolidate various purchasing methods (direct, partner, self-service) under a single agreement provides flexibility for global organizations. For example, a business unit in Europe can procure through a preferred local partner while headquarters buys directly – both roll into the same corporate agreement. This hybrid procurement model allows you to select the most suitable purchasing method for each scenario, eliminating the need for multiple contract types.
• One Agreement for All Services: Over time, as Microsoft adds more products to the MCA, enterprises may manage all Microsoft spend within a single framework. This could improve the transparency of your software asset management. Already, many cloud services (Azure, Microsoft 365, Dynamics) can be tracked together. A single contract vehicle can also strengthen your negotiating position, since your total spend is visible in one place when discussing terms with Microsoft.
• Continuous Updates and Alignment: Microsoft keeps the MCA terms up to date with the latest legal and regulatory requirements, which helps ensure compliance. You’re always operating under current terms for security, data protection, and product use rights. This reduces the risk that an outdated contract clause causes an issue. It also means that any new benefits or licensing programs can be integrated more easily. (For instance, if Microsoft introduces a new cloud service or a promotional discount program, it may be extended to MCA customers without a special contract addendum.)

In summary, the MCA’s main appeal lies in its flexibility and simplicity. It is designed for a cloud-first world where usage can be dynamic.

From a strategic standpoint, enterprises can treat Microsoft services more like a utility – scaling on demand and mixing purchasing methods as needed.

For CIOs driving digital transformation, not being handcuffed to a fixed license count for three years can be a relief.

And CFOs may appreciate that, in theory, you pay only for what you use and avoid the classic “shelfware” problem of over-licensing.

Hidden Challenges and Cost Considerations

Despite its advantages, the Microsoft Customer Agreement also comes with potential pitfalls and new cost considerations that enterprise leaders must carefully manage.

In practice, the “flexibility” often shifts more risk and responsibility onto the customer.

Here are the key challenges to be aware of:

• Loss of Predictable Pricing: Under an EA, you enjoyed predictable costs – license prices were locked for the term, and you had a clear three-year projection of spend (with slight adjustments at true-up). With the MCA, prices can change more frequently. Cloud service rates (like Azure VM pricing or Microsoft 365 subscription prices) can and do adjust periodically. There is no built-in price protection or cap in place. This makes budgeting more fluid. CFOs will need to build more contingency into IT budgets for potential price increases, or negotiate price holds on critical services as a separate agreement with Microsoft.
• No Volume Discount Tiers: Large enterprises historically benefited from volume pricing levels (B, C, D), which could shave significant percentages off software pricing. The MCA has eliminated formal volume tiers, meaning if you simply transition to MCA pricing “as-is,” you might pay higher unit costs than under your EA. For example, a company with 10,000 Office 365 licenses under EA level D pricing may find that the MCA pricing for 10,000 licenses is at least the list price unless they secure a special discount. Actionable takeaway: Engage Microsoft early to discuss discounting if your EA had special pricing – you may need to negotiate an enterprise-specific term in your MCA to preserve those savings.
• Currency and FX Exposure: This is a major consideration for global companies. Microsoft’s direct MCA contracts are often billed in U.S. dollars. If you are based in EMEA or APAC (or anywhere outside the US), you could be exposed to exchange rate fluctuations every month. Under EAs, companies often contracted with local Microsoft subsidiaries in local currency, which insulated them from currency swings. Now, a Swedish or Indian subsidiary on an MCA might receive invoices in USD – meaning your costs could unexpectedly rise due to a strong dollar, not just due to usage. To mitigate this, some enterprises may use financial hedging or consider purchasing through a CSP partner that can invoice in the local currency. CFOS must factor in currency risk when evaluating the MCA’s impact on multi-national budgets.
• Lack of True-Up… and True-Down: The freedom to scale licenses as needed is a double-edged sword. Yes, you can reduce unused licenses and save money – but only if you actively identify and remove them. The old EA forced a kind of discipline via the true-up process (and true-down at renewal). With MCA’s continuous model, there’s no automatic checkpoint to turn down licenses; it’s up to IT to regularly audit usage and rightsizing. If you don’t have a strong SAM (Software Asset Management) practice, you might end up paying for subscriptions you aren’t using, with no annual true-up reconciliation to catch it. In essence, you need continuous license management to realize the cost-saving benefits of the MCA. This may require investing in better asset management tools or dedicating staff to monitor subscription usage on a month-by-month basis.
• Higher Cost for Flexibility: The MCA allows for month-to-month subscription changes, but that flexibility comes at a price. Microsoft’s New Commerce Experience model applies a ~20% premium on licenses if you choose a monthly term that you can cancel or reduce at any time. For instance, an Office 365 E5 license may cost 20% more per user per month if you don’t commit to an annual contract. Over a year, that’s a significant extra cost for the ability to adjust monthly. Enterprises can still opt for annual or 3-year subscription terms within the MCA to lock in better rates – but then you’re back to fixed commitments for that period (much like an EA, just without the paper contract). This dual model requires careful planning: decide which subscriptions you truly need flexibility for and which you can safely commit to in the long term to save costs.
• Missing License Options and Bundles: In the early stage of MCA rollout, some special licensing options are notably absent. Many enterprises use “From SA” (From Software Assurance) discounted licenses when transitioning from on-premises to cloud, or add-on SKUs (such as step-up licenses, academic/government variants). The MCA catalog has been more limited, sometimes forcing customers to buy higher-cost bundles because the niche SKUs or transition discounts aren’t available. One example raised is that certain standalone Microsoft Teams options had to be modified due to European regulatory requirements – e.g., in EMEA, Teams was unbundled from Office 365 suites, and under MCA, those might need to be added separately, which complicates procurement. Also, on-premise rights like Windows Server or SQL Server with SA are not on MCA, pushing customers toward cloud alternatives (Azure services or subscription versions of those products). These gaps are expected to be filled over time, but in the short term, ensure the MCA can provide all the products you need. If not, you may need to maintain parallel agreements (such as a last EA or Open Value for on-premises products) until Microsoft fully integrates these into the new model.
• Greater Management Responsibility: By cutting out the licensing partner in a direct MCA, Microsoft has effectively handed the customer the keys to drive themselves. Enterprises now must handle all the administration in Microsoft’s portals – from adding licenses to ensuring the correct pricing is applied. Tasks that an LSP or reseller might have helped with, like optimizing license counts, tracking renewal dates, or providing consolidated reporting, are now mostly DIY. This isn’t insurmountable, but CIOs should assess their internal capabilities. Do you have the tools and expertise to actively manage licenses and cloud costs? If not, consider working with a partner in an advisory capacity or leveraging Microsoft’s cost management tools to stay on top of it. The flexibility of the MCA can backfire if it leads to “sprawl” of subscriptions or cloud consumption without proper governance.

In summary, the MCA can potentially increase cost efficiency if managed well.

But without the traditional contract constraints, there’s also a greater risk of cost overruns or surprises.

Enterprise IT and finance teams should approach the MCA with a clear understanding: negotiate where possible to mitigate risks (e.g., multi-year price arrangements for key services, currency protections), and strengthen your internal processes for ongoing license management.

Global and Regional Considerations

For multinational organizations, adopting the Microsoft Customer Agreement requires understanding some regional nuances:

• Availability and Rollout: The direct MCA for Enterprise is being rolled out country by country. As of 2025, it’s available in most major markets (North America and much of Europe for sure, as well as parts of Asia-Pacific). However, some countries still might require an indirect approach via a partner. Microsoft has been expanding its reach, but if you operate in a country where Microsoft doesn’t offer MCA direct yet, your purchases there would go through a CSP partner. This might mean parts of your organization are on direct billing and others on partner billing, all under the MCA umbrella. Be prepared for a hybrid approach during this transition period.
• US vs. EMEA Contract Differences: The core terms of the MCA are largely standard worldwide, but recent European regulatory changes have created some differences in how products are offered:
  • In the EU (and UK), Microsoft had to unbundle Teams from Office 365/M365 suites for certain customers, due to antitrust regulations. Practically, this means if you’re signing an MCA in EMEA, you might see separate line items for Teams or slightly different product SKUs than your US counterparts. It’s an additional complexity for licensing your collaboration tools. Ensure your licensing plan accounts for these region-specific product structures so there are no surprises in user enablement or costs (e.g. budgeting for standalone Teams licensing if required).
  • Data privacy and residency requirements in the EMEA region are more stringent. The MCA itself is a commercial agreement, but make sure any data processing terms (like the Microsoft Data Protection Addendum) are in place, especially if your contract is with Microsoft Corp in the US. Typically, Microsoft includes GDPR-compliant terms by default; however, legal teams in Europe will want to review whether the MCA aligns with local requirements.
• Currency Strategy: As mentioned, one big regional factor is currency. If all your billing under the MCA is done in a single currency (USD being most common), international finance teams need to manage exchange fluctuations. One approach some enterprises take is to have their country subsidiaries purchase via a local CSP in the local currency and then have those roll up financially. Another approach is to negotiate with Microsoft for price lists in local currency for large markets (this may or may not be possible under MCA – it doesn’t hurt to ask, especially if your EA has historically been in EUR or GBP, for example). At the very least, budget owners in each region should be informed that their software costs may fluctuate with currency rates from month to month.
• Tax and Invoicing Entities: With the MCA, you’ll want to pay attention to which Microsoft entity you’re contracting with. Under EAs, you typically had an agreement with a regional Microsoft subsidiary (e.g., Microsoft Ireland for European customers, or Microsoft Singapore for the Asia-Pacific region) that handled invoicing and local taxes. Under the MCA, if you sign directly online, you might end up with an invoice from Microsoft USA or another central entity. This could have implications for how VAT/GST is handled, or whether your company is registered in that jurisdiction. Work with your tax and procurement departments to ensure that moving to the MCA doesn’t create any compliance issues – you might need to provide new vendor setup info, or Microsoft might route you to a specific regional billing entity depending on your address.
• Cloud-Only Focus (for Now): Global CIOs should note that some legacy procurement practices will change. For example, if your European operations used to buy perpetual Office licenses through an EA for certain secure environments, that may no longer be an option under MCA. You might need to shift those to subscription or cloud versions (e.g., Office 365). Ensure that all regions are ready for a cloud-first approach, as MCA is fundamentally a cloud-based agreement. In markets with unreliable internet or where cloud adoption is still in its early stages, this could pose a challenge. Microsoft is betting that even in EMEA and APAC regions with traditionally on-premise footprints, the future is all subscription/cloud. Your IT strategy should align with that, or you’ll have to manage exceptions via alternate licensing programs for a while longer.

Bottom line: The Microsoft Customer Agreement is largely unified across regions, but the differences in currency, product availability, and regulatory environment mean you should not assume a one-size-fits-all rollout.

Global enterprises should communicate with all stakeholders – from regional IT leads to finance controllers – about what the MCA will change and how to adapt locally.

Leverage Microsoft’s account team or licensing experts to clarify any regional issues, and consider phasing your transition by region if that mitigates risks.

Recommendations

Making the move to a Microsoft Customer Agreement (or optimizing your existing MCA) requires thoughtful planning. Here are some expert tips and best practices for CIOs, CTOs, and CFOs:

1. Negotiate Early and In Writing: Don’t assume the out-of-the-box MCA terms will meet your enterprise needs. Engage Microsoft early (well before your EA expires) to negotiate critical terms. For example, if substantial Azure or Microsoft 365 spend is at stake, negotiate a custom pricing addendum or Azure Consumption Commitment to secure discounts. Get any promises in writing as amendments to the MCA – since it doesn’t expire, these terms might cover price protections or incentives over multi-year periods.

2. Classify Your Workloads by Commitment Level: Analyze your licenses and cloud workloads to decide which ones are steady-state (and can be committed to annually or multi-year for savings) versus which need flexibility. Commit where you can – e.g., core Office 365 seats that you know you’ll need for the next 12-36 months – to avoid paying the 20% monthly premium unnecessarily. For more variable needs (project-based users, dev/test Azure environments), plan to keep those on flexible terms and budget the premium for the agility to turn them on and off as needed.

3. Strengthen Asset Management and Monitoring: Without a fixed EA true-up cycle, it’s on you to avoid waste. Invest in tools or processes to continuously monitor license assignments and cloud consumption. Set up alerts for unused Azure resources or inactive Office 365 accounts, and reclaim them promptly. Regularly review your subscription rosters (e.g., quarterly) to right-size license counts. This discipline will ensure that the MCA’s flexibility actually translates to cost savings, rather than overruns.

4. Consider a Phased Transition: If you’re a large enterprise with an existing EA, you might not need to flip everything to the MCA at once. Plan a phased approach: perhaps move certain business units or smaller country subsidiaries to MCA first, especially if their EAs end sooner or they have fewer complexities. Learn from those early deployments – identify any hiccups in billing or management – before moving your entire global footprint onto the new model. Microsoft’s licensing changes are still evolving, so a phased approach can help mitigate risk.

5. Engage Expert Help (if needed): The licensing world is complex. Don’t hesitate to consult with independent licensing advisors or your Microsoft partner for an outside perspective. They can help benchmark the offers Microsoft provides, identify potential pitfalls in the contract fine print, or find creative ways to optimize your licensing mix. This is especially useful if you’re concerned about losing discounts or if you have unique requirements (like specific regulatory needs or custom licensing arrangements).

6. Leverage the CSP Channel Strategically: Even with a direct MCA, you can still use partners. Compare what a trusted CSP partner can offer vs. direct purchasing. Sometimes, partners have promotions or can offer value-added services (such as enhanced support or billing in local currency) that make it worthwhile. You don’t have to choose one route exclusively. Some enterprises maintain a direct MCA for most large services but utilize CSPs for certain smaller or regional needs to achieve a local touch or specific expertise.

7. Keep an Eye on Microsoft’s Roadmap: The MCA and Microsoft’s licensing programs will continue to evolve. Stay informed through Microsoft announcements, product term updates, and industry analyst insights. For example, if Microsoft plans to bring on-prem software into the MCA or changes CSP partnership models, those could impact your strategy. Being proactive and adjusting your plans in anticipation of changes will put you ahead of the curve, rather than reacting under time pressure.

8. Budget for Contingencies: With variable cloud costs and potential currency impacts, make sure your IT budgets have a buffer. Scenario plan for growth or currency fluctuations – what if Azure usage increases by 20% more than expected? What if Microsoft 365 prices increase next year, or the exchange rate of the dollar fluctuates? Preparing for these possibilities will help avoid scrambling for funds or approvals later. Tie this into your broader cloud financial management (FinOps) practice.

9. Re-evaluate Software Needs Regularly: The move to an MCA is a good trigger to rethink what software and services you’re paying for. Do you need all those Visio or Project licenses, or that third-party security add-on, now that things are more à la carte? Use the flexibility as an opportunity to trim the fat in your software portfolio. This not only saves cost but also simplifies your environment.

10. Ensure Governance and Compliance: Finally, treat the MCA with the same rigor as any major contract. Set up governance checkpoints – perhaps an annual internal review of the agreement and its services, even if Microsoft isn’t forcing a renewal. Ensure that compliance terms (e.g., GDPR, data handling) remain up to date as you add new services. And maintain documentation of what you’ve agreed upon with Microsoft (including any custom terms or special pricing) so that knowledge isn’t lost if personnel change.

By following these recommendations, enterprise leaders can better control the transition to the Microsoft Customer Agreement and turn it into an advantage rather than a headache. The key is proactive management and not treating the MCA as “just another contract” – it’s a living framework that will require ongoing attention.

Checklist: 5 Actions to Take

1. Inventory Your Current Licensing: Compile a clear list of all your Microsoft licenses, cloud subscriptions, and agreements. Note when each EA or legacy agreement expires. This inventory will identify which parts of your estate will need to move to the MCA (and when), and highlight any products not yet supported under MCA (e.g., certain on-premises software).

2. Schedule an EA Exit Strategy Meeting: Don’t wait for the EA to end. Gather your IT, procurement, and finance stakeholders to formulate a plan for transitioning off your Enterprise Agreement. Assign responsibilities: Who will negotiate the new terms with Microsoft? Who will handle the technical transition in portals? Aim to engage Microsoft (or your reseller) at least 6-12 months before an EA renewal date to explore switching to MCA or CSP.

3. Analyze Cloud Usage Patterns: Dive into your Azure and Microsoft 365 usage data. Identify steady vs. variable usage. This analysis will help you determine whether to opt for annual commitments or monthly flexibility under the MCA. For example, if 90% of your Azure consumption consists of steady workloads, consider signing an Azure commitment for that portion to secure a better rate, and reserve 10% for burst/sporadic use on a pay-as-you-go basis.

4. Update Internal Financial Processes: Work with Finance to adjust how you handle Microsoft costs. If moving to monthly billing, ensure that purchase orders, invoice processing, and charge-back mechanisms are ready for a higher volume of invoices (12 smaller bills per year instead of one big annual bill, potentially). Update your budgeting process to accommodate variable spending. Set up internal reports or dashboards to track Microsoft spend trends over the year, so there are no surprises for the CFO.

5. Train Your Team & Communicate Changes: Ensure your IT asset managers and administrators are trained on the new licensing portal (the Microsoft 365 admin center, Azure portal, or Microsoft commerce portal) for managing an MCA. They should know how to add/remove licenses, check billing statements, and monitor usage. Additionally, communicate the new flexibility to business units: for instance, inform them that they can now request license changes more dynamically, but also establish governance to prevent overspending. Clear guidelines and training will help your organization take advantage of the MCA’s benefits responsibly.

Following this checklist will set a strong foundation for a smooth transition. It breaks the process into manageable steps, making the licensing change more predictable and controlled.

FAQ

Q1: What exactly is the Microsoft Customer Agreement and is it replacing the Enterprise Agreement?
A: The Microsoft Customer Agreement (MCA) is a modern purchasing contract for Microsoft cloud services. It’s an always-current, no-expiration agreement that customers accept digitally. Microsoft is using the MCA to eventually replace the traditional Enterprise Agreement for most customers. Starting in 2025, many new deals and renewals for mid-sized and some large organizations are being conducted via MCA instead of EA. The EA isn’t universally dead yet – very large enterprises may still have EA options in the short term – but the trend is that MCA becomes the primary way to buy Microsoft cloud offerings moving forward.

Q2: We’re a global company with an existing EA. What are our options when it comes up for renewal?
A: At renewal, you essentially have three paths: a) Renew the EA (if Microsoft still allows it for your size – this is becoming less likely for sub-2400 seat companies, but larger ones might still negotiate one more EA term), b) Switch to an MCA-E direct with Microsoft, or c) Move to a CSP partner who will transact via the MCA on your behalf. Each has pros and cons. Renewing EA could maintain your current discounts and terms, but it might lock you in for another 3 years and could even be off the table due to Microsoft’s new strategy. Going MCA-E gives you flexibility and direct control, but comes with the changes we discussed (no fixed discounts, etc.). CSP can be a middle-ground if you want a partner’s help or local presence. It’s wise to evaluate all options: ask Microsoft what incentives they’d give on MCA vs staying on EA, and ask a major reseller what they can offer via CSP. Then decide which option aligns best with your organizational needs for flexibility, support, and cost.

Q3: Can we still purchase on-premises licenses (like Windows or Office perpetual licenses) under the MCA?
A: Not directly. The Microsoft Customer Agreement is primarily used for cloud subscriptions and services today. Classic on-premises perpetual licenses with Software Assurance are generally not available through the MCA portal. Microsoft’s direction is to transition those to subscription equivalents (for instance, moving from a perpetual Office license to Microsoft 365 Apps subscription, or from a Windows Server license to an Azure-based solution or a subscription model if available). If you have a critical need for on-premises licenses, you may need to use a different program (such as a one-time purchase through a volume licensing reseller or an Open Value agreement) for now. Microsoft has indicated that it will continue to add product types to MCA, so this may change in the future. In the meantime, plan for a hybrid licensing approach if you still require traditional software in addition to pure cloud services.

Q4: How do we ensure we receive discounts on an MCA if the volume pricing levels are no longer available?
A: Under an MCA, discounts aren’t automatic by volume – they become a matter of negotiation and commitments. To get EA-like discounts, you should discuss Microsoft Azure Consumption Commitments (MACC) or multi-year subscription agreements for your key products. For example, you could commit to spending a certain amount on Azure over 3 years to get a discount off Azure’s pay-as-you-go rates. Similarly, for Microsoft 365, you might negotiate a fixed price per user for a 3-year enrollment of a certain number of seats (even though it’s under the MCA, Microsoft can give you a custom price if you commit). These agreements function like a “contract within a contract”: you still have the MCA as the foundation, but with additional terms that include discounts. Work closely with your Microsoft account team or reseller to outline your expected volumes and determine which discount programs or incentives are applicable. Additionally, keep an eye on Microsoft’s incentive programs – sometimes they offer credits or special pricing if you adopt new products (like Power Platform or security suites) as part of your cloud journey.

Q5: What happens to our relationship with our Microsoft reseller or LSP under the MCA?
A: It does change. If you move to a direct Microsoft Customer Agreement, you are essentially contracting directly with Microsoft, rather than through a Licensing Solution Provider (LSP). Your reseller can still play a role as an adviser or provide value-added services, but they won’t be the contractual middleman for license transactions if those go direct. That said, you also have the option to purchase via a partner under the MCA, specifically through the CSP program. Many traditional LSPs are also Cloud Solution Providers. In that case, you might sign the MCA terms (since all customers must accept Microsoft’s terms), but the partner handles the billing and provisioning for you. You could continue to work with your partner much as before, just under a different program. It’s important to clarify with your reseller what role they will serve going forward. Some enterprises use a hybrid approach: direct for some big-ticket items, and partner for others. Ensure that whichever approach you use, roles and expectations are clear – for example, if you rely on a partner for support or advice, maintain that relationship even if the contracts change.

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