Case Study – Microsoft Negotiation Service – U.K. Financial Services Firm – Microsoft EA Renewal Secures 35% Savings and Contract Flexibility
Background
A U.K.-based financial services firm, with 10,000 employees across the UK and Europe (spanning commercial banking, insurance, and wealth management divisions), was up for a Microsoft Enterprise Agreement renewal.
The firm, headquartered in London, relies on Microsoft technologies for secure communication, regulatory compliance, and data analytics.
Its EA covered Microsoft 365 E5 for all employees (largely to meet advanced security and compliance needs), Dynamics 365 for CRM in the wealth division, and significant Azure usage for risk modeling and data warehousing.
The EA was also tied to several Microsoft compliance and security products (Azure Information Protection, Defender, etc.) to satisfy stringent financial regulations.
With the 3-year term ending in 4 months, the company engaged Redress Compliance to overhaul the EA in a way that would dramatically improve cost efficiency—leadership felt they had been overpaying—and introduce flexibility to adjust to regulatory changes or market swings.
The stage was set for a high-stakes negotiation, as the initial Microsoft proposal was extremely costly and the firm knew it needed expert help to push back.
Read how to negotiate with Microsoft.
Challenges
This financial firm’s challenges were multifaceted. Cost was front and center: Microsoft’s renewal quote came in at £30 million for three years, which was alarmingly high—management noted it was a ~20% increase over the last term.
Microsoft justified this with the inclusion of additional Power Platform and AI tools, along with standard price increases. The firm suspected there was significant padding in those numbers, given their user count had not grown by 20%.
Indeed, a closer look revealed over-licensing issues: thousands of users had E5 licenses with capabilities beyond their needs. Many back-office staff and branch employees rarely used the E5-only features (like advanced analytics or certain security workloads).
There was likely an opportunity to trim costs by downgrading a portion of users to E3 or selectively using E5 add-ons. The bundled products were another challenge. Microsoft was pushing a bundle of Power Platform licenses (Power BI, Power Apps) for all users, whether they needed them or not, and an Azure AI Services package, touting it as the future—yet the company wasn’t ready to roll those out broadly.
The bundle approach threatened to make the firm pay for technology adoption on Microsoft’s timeline rather than its own. Compliance and regulatory considerations introduced further complexity. The firm had to ensure any agreement complied with UK and EU financial regulations around data protection and auditability.
The existing EA had standard audit clauses that allowed Microsoft broad rights—given the sensitive client data the firm held, they wanted more say in how and when Microsoft could audit systems.
How Redress Compliance Helped
- Deep Usage and License Profiling: Redress Compliance kicked off with a detailed analysis of the firm’s Microsoft 365 usage patterns. They discovered that approximately 40% of users with E5 licenses did not utilize key E5 features, such as Advanced Threat Protection, audio conferencing, or Power BI Pro. These were employees in roles such as customer service or support, whose work primarily involved email, documents, and occasional Teams meetings. Redress identified about 3,500 such accounts that could be switched to M365 E3 without affecting productivity (and perhaps given a smaller set of security add-ons for the few features they required). Redress also examined the usage of the Power Platform bundle Microsoft proposed: only a few hundred employees (mostly in data analyst roles) actively used Power BI; company-wide Power Apps usage was almost nil. This analysis provided a factual basis to resist blanket bundling. On the Azure side, Redress reviewed consumption and found that the firm was consistently underutilizing its yearly Azure commitment by ~15%, equating to millions of dollars in paid-but-unused services – a strong argument for reducing that commitment.
- Benchmarking and Target Setting: Given the scale of this renewal, Redress extensively leveraged its financial industry benchmarks. They knew that large banks and finance firms often negotiate high discounts due to competition between Microsoft and other providers (and the strategic logo value for Microsoft). Redress had data points from other negotiations, including cases where financial institutions secured discounts of 25–30% or special terms. They set an aggressive target for this client: to achieve around 30–35% cost savings compared to the initial quote. They also prioritized contract terms, such as flexible true-ups/downs and audit limitations. Internally, Redress prepared a negotiation brief for the client’s C-suite, outlining exactly what to ask for and what leverage to use. One key piece of leverage: the firm was evaluating shifting some workloads to AWS or Google Cloud if Azure costs were not reined in – a fact Redress made sure Microsoft understood.
- Strategic Negotiation Execution: Redress led the negotiation with Microsoft’s enterprise sales team in London. First, they tackled pricing and discounts, presenting the usage data. Redress made it clear that the client would drop unnecessary licenses if forced to, so Microsoft had more to lose by insisting on overselling. This spurred Microsoft to improve its discount offers on the remaining licenses. Redress highlighted that enterprise deals of this size often get 15–30% off list price, and given the competitive environment, the client deserved the high end of that range or better. In the end, Microsoft offered substantial additional discounts, especially on Microsoft 365, to avoid the client eliminating licenses. For Azure, Redress negotiated a right-sized commitment 20% lower than before, with an added benefit: should the firm exceed the commitment by adopting more Azure, it would receive the same discounted rate for the overage (so growth wouldn’t be penalized). Next, they addressed flexibility and terms: Redress succeeded in inserting a clause allowing an annual license count adjustment of up to 5% without penalty, acknowledging the firm’s potential divestitures or efficiency moves. They also negotiated an audit protocol: Microsoft agreed to provide a 60-day notice before any formal software audit and to engage in a good-faith discussion with the firm to resolve compliance issues informally first—a significant win for the client’s peace of mind. Regarding the pushed bundles, Redress maintained that the firm would pilot Power Platform with 500 users in year one, not all 10,000, and only expand usage (and costs) if the value was proven. Microsoft conceded to this, structuring the deal to include a small pool of those licenses initially with the option to scale up later at the negotiated price.
- Innovative Contract Protections: As a capstone to the negotiation, Redress introduced a forward-looking concept into the agreement: a cloud exit protection clause. This stipulated that if the firm decided to shift a portion of workloads off Azure in the later years of the agreement (due to regulatory needs or strategic decisions), Microsoft would allow a proportional reduction in the Azure commitment or conversion of unused Azure credits toward other Microsoft products. This kind of term is not standard, but Redress used the client’s strong negotiating position to secure it. Additionally, price increase caps were implemented. For any new Microsoft product the firm might adopt later, any price increases would be capped at a single-digit percentage annually, ensuring cost predictability. Redress ensured the final contract document reflected all these negotiated improvements, and they double-checked that nothing was lost in the legal fine print.
Outcome and Impact
- 35% Cost Savings Realized: The outcome was a resounding success financially. The final agreement came in roughly 35% lower than Microsoft’s initial £30M proposal for three years. This translates to around £10.5 million in savings. The savings were achieved through a combination of hard discounts and the scope reduction of unnecessary items. By rightsizing the license count and removing or delaying the adoption of certain products, the firm dramatically reduced spend without sacrificing capabilities for users. The IT budget team was astonished – not only was the feared cost increase averted, but the new EA’s annual run-rate was significantly below the previous term’s spend, a rarity in software renewals. These savings free up capital that the firm can now invest in other technology initiatives (some of which might even be non-Microsoft, giving them diversification in their IT spend).
- Highly Flexible and Customized EA: The firm secured an Enterprise Agreement that is unusually flexible for a company of its size. The ability to adjust license counts annually by 5% gives the business room to maneuver if it restructures or adopts new efficiency programs. This means if, for example, a business unit is sold or operations are streamlined, the firm won’t be stuck paying for excess licenses that no one uses – a flexibility that could save additional money down the line. The Azure commit adjustment and conversion option is another key flexibility: it protects the firm in case regulatory changes force them to move certain sensitive data off the public cloud, or if they choose to diversify cloud providers. Essentially, the firm won’t be trapped in a “use it or lose it” cloud spend; they have an out clause that removes a lot of risk from the deal. This makes the Microsoft agreement much more aligned with the firm’s strategic risk management approach.
- Improved Vendor-Client Relationship and Oversight: By setting clear terms for audits and engagements, the firm has enhanced the balance of power in its relationship with Microsoft. They no longer feel at the mercy of a surprise audit – with 60 days’ notice and a cooperative approach mandated, they can manage compliance proactively and calmly. This is extremely important in finance, where an unexpected audit can cause operational panic. Moreover, the negotiation process itself set a tone: Microsoft now recognizes that this firm negotiates hard and smart, and is willing to calibrate its usage to avoid waste. This likely means Microsoft will approach future dealings with more realism and respect. Internally, the CIO and procurement team now have a much stronger handle on Microsoft licensing. Redress helped implement an internal quarterly review of Microsoft license usage against the EA, ensuring the firm stays on top of any underutilization and is prepared to adjust at yearly checkpoints.
- Strategic Alignment and Future-Proofing: The new EA is not just a contract, but a strategic tool. It’s aligned to the firm’s business goals: supporting growth and innovation (with provisions to add new tech when needed at fixed prices), protecting against downside (with flexibility to reduce costs if the firm contracts or pivots), and ensuring compliance (with audit terms and data residency considerations accounted for). The firm is better positioned to embrace new Microsoft technologies on its schedule. For instance, if they find value in the Power Platform or Azure AI in a specific area, they can expand their usage knowing the cost per unit is locked in, but they’re not paying enterprise-wide until that value is proven. In short, the Microsoft agreement is now tailored to the firm, rather than the firm having to contort itself to fit Microsoft’s standard agreement. This level of customization and savings in an EA renewal was virtually unheard of for the company before working with Redress. It sets a new benchmark for what they will expect in all large vendor negotiations.
Client Quote
“This renewal was a night-and-day difference from our last one. With Redress Compliance guiding us, we achieved what we thought was impossible – a massive 35% cost reduction and an EA that finally gives us, the customer, the driver’s seat. Redress’s team dissected our usage data and came to the table armed with facts and benchmark insights that completely changed Microsoft’s tune. We ended up with a highly flexible deal: we can scale down if needed, and Microsoft will listen to our needs instead of dictating terms. The audit protections alone are a game-changer for a regulated business like ours. It’s not just about saving money (though believe me, saving 35% is fantastic); it’s about having control and clarity in our Microsoft relationship. Redress was the independent advocate we needed – they kept Microsoft honest and got us an outcome that puts our business strategy first.” – COO, U.K. Financial Services Firm
Call-to-Action
Facing a high-stakes Microsoft renewal in banking, insurance, or another highly regulated industry? Contact Redress Compliance for a complimentary Microsoft agreement review or a personalized renewal strategy session.
We bring financial industry savvy and tough negotiation expertise to help you secure better pricing, tighter compliance safeguards, and the flexible terms you deserve. Don’t settle for Microsoft’s first offer – let us help you get a deal that truly meets your needs.
Further Reading
- Read about our Microsoft Contract Negotiation Service.
- Read about our other Microsoft Case Studies.
