Case Study – Microsoft EA Renewal Service U.S. Energy Corporation – Microsoft EA Negotiation Yields 20% Savings and Hybrid Cloud Flexibility
Background
A U.S.-based energy company (oil and gas sector) with 8,000 employees and operations across North America was nearing its Microsoft Enterprise Agreement renewal.
The company, headquartered in Houston, Texas, has an annual revenue of about $10 billion. Its IT environment is a mix of on-premises data centers for mission-critical applications and a growing Azure footprint for data analytics and IoT telemetry from remote drilling sites.
The Microsoft product landscape consisted of Microsoft 365 (primarily E3 licenses, with E5 reserved for certain security-sensitive roles), substantial Azure consumption for analytics and storage, and limited Power Platform usage for custom field service applications.
The EA was set to renew in three months, and the company wanted to ensure the new agreement supported its hybrid cloud strategy without unnecessary overspending.
Read our guide to Microsoft EA renewals.
Challenges
The energy firm’s primary concern was cost escalation and inflexibility in its current EA. During the last EA term, Microsoft 365 costs had steadily increased, and Azure spending was unpredictable – some months were far under the committed spend, while other months spiked due to project needs.
The existing EA had a large upfront Azure commitment that the company struggled to fully utilize, resulting in the risk of wasting budget on unused cloud credits.
Additionally, Microsoft was encouraging the company to adopt more Azure services and higher-tier licenses (like moving all users to M365 E5 and adding Dynamics 365 for asset management) in the renewal, which would significantly increase costs.
Another challenge was the opaque EA structure, which made it difficult for the company to identify which business units or projects were driving costs. True-up processes were cumbersome, and there was no easy way to reallocate unused licenses or reduce commitments mid-term.
The energy industry can be volatile; the client needed an agreement that could flex if there were a downturn or if certain projects ended.
They also maintained many on-premises servers with Windows and SQL Server – the company wanted to ensure it fully leveraged hybrid use benefits and wasn’t double-paying as it gradually moved these workloads to Azure.
In summary, the challenges included looming auto-renewals at higher pricing, potential overcommitment to Azure, underutilization of top-tier licenses, and a lack of flexibility to adjust to a dynamic business environment.
How Redress Compliance Helped
- License and Cloud Usage Audit: Redress Compliance conducted a thorough review of the client’s Microsoft 365 license assignment and Azure consumption patterns. This audit revealed that roughly 15% of M365 E5 licenses (held by certain corporate users) were not leveraging E5-only features. Additionally, several hundred M365 E3 licenses were assigned to shared or service accounts that could potentially use cheaper alternatives (or be consolidated). On the Azure side, Redress identified that the client was consuming only about 70% of its annual Azure monetary commitment, meaning 30% was effectively wasted—a common issue when companies overestimate their cloud needs. They also catalogued all on-premises servers under Software Assurance to ensure the client could use Azure Hybrid Benefit (to avoid paying for Windows Server licenses again in Azure).
- Modeling a Hybrid EA Structure: With detailed usage data, Redress modeled an optimized EA that fit the energy company’s hybrid cloud strategy. They proposed a rebalanced license mix: keeping critical cybersecurity staff on M365 E5 for advanced security, but shifting a large set of users to E3 (plus add-ons where needed) to cut costs. This aligns with best practices to downgrade over-provisioned users when premium features aren’t used. They also evaluated alternative licensing channels, such as using a Cloud Solution Provider (CSP) subscription for specific short-term projects or engaging third-party contractors. CSP could allow month-to-month flexibility for those users, matching the project-based nature of some field operations, rather than committing every user to the 3-year EAredresscompliance.com. Redress further crafted a plan to reduce the Azure committed spend in the EA to a realistic level based on the audit (with the option to purchase additional Azure as needed at the same discount). They also ensured that the new agreement would leverage the client’s existing on-premises investments through hybrid use rights.
- Negotiating Discounts and Terms: Redress Compliance entered negotiations with Microsoft, highlighting the client’s need for a cost-effective, flexible agreement. They used industry benchmarks to demonstrate that the client should receive substantial discounts given its volume. In negotiation, Microsoft conceded to a 20% overall discount on Microsoft 365 licenses – a competitive rate in line with large enterprise deals. More importantly for the client, Redress negotiated adjustments to the Azure commitment: the new EA reduced the annual Azure minimum by 25%, and Microsoft agreed to quarterly Azure consumption reviews with the ability to reallocate unused funds to other Microsoft services (e.g., Power Platform) if Azure usage fell short. Redress also secured downgrade and upgrade flexibility within the M365 suite: the client could shift a percentage of E3 licenses to E5 (or vice versa) mid-term if business needs changed, without waiting for the next renewal. This custom term provided valuable agility.
- Long-Term Cloud Optimization Plan: Beyond the immediate EA renewal, Redress provided the energy company with a roadmap to optimize Microsoft usage over the next three years. This plan included governance practices for Azure (to avoid over-commitment and monitor consumption), regular license audits to continue reallocating or eliminating unused licenses, and guidelines for when to use EA versus CSP or other licensing models. Redress’s plan emphasized commercial flexibility – for example, starting new IT initiatives on CSP to pilot them, then moving them into the EA once stable, to avoid locking into costs prematurely. This proactive management approach would help the client maintain cost efficiency throughout the EA term, not just at renewal time.
Outcome and Impact
- Significant Cost Reduction: The renegotiated Microsoft EA resulted in an immediate 20% cost savings, equivalent to approximately $5 million saved over the three-year term. The original Microsoft proposal of $25 million was reduced to approximately $20 million. This was achieved through the combination of license optimization (rightsizing the M365 mix) and negotiated discounts on both software and cloud services. By trimming excess Azure commitment, the company also avoided an estimated $1.2 million in wasted cloud spend that would have occurred under the old agreement.
- Hybrid Cloud Flexibility: The new EA is structured to support the client’s hybrid environment and volatile project-based workload. The company can now fully utilize Azure Hybrid Benefits to save on cloud infrastructure costs (no double-paying for Windows/SQL licenses). The Azure commitment was right-sized to actual needs, with built-in flexibility: if the company’s cloud adoption accelerates, they can still purchase more at the pre-negotiated discount, but if it slows, they won’t be stuck overspending on unused capacity. True-up/true-down provisions allow the firm to scale licenses annually. For example, suppose an oilfield project comes to a close and 200 contractor accounts are no longer required. In that case, the company can reduce those licenses at the next anniversary rather than paying for them until the EA ends. This level of flexibility is unusual in standard EAs and was a key win from the negotiations.
- Optimized License Allocation: By moving ~1,500 users from E5 to E3 and eliminating hundreds of unused licenses (including excess Visio and audio-conferencing add-ons that were not being used), the client greatly reduced shelfware. Every user now has the appropriate license for their role – engineers in the field have what they need for collaboration (Teams, Office apps) without costly extras. In contrast, cybersecurity and compliance teams retain E5 for advanced threat protection. The risk of shelfware and underutilized licenses is significantly lower, and internal processes are in place to maintain this level of efficiency.
- Strategic Value and Vendor-Agnostic Posture: Overall, the EA renewal not only reduced costs but also provided the energy company with a more strategic contract. The ability to adjust to business changes (whether growth or contraction) means IT spend can closely follow actual business activity. The company also sent a clear message to Microsoft that it would not simply accept bundled upsells without proven value – a vendor-agnostic stance that Redress encourages to ensure the client’s needs come first. By avoiding overcommitment to Microsoft’s agenda (like holding off on a costly Dynamics 365 addition until a proper ROI case is established), the company retained control of its IT roadmap. In short, Microsoft now works on the client’s terms, rather than the client bending to Microsoft’s sales tactics, all while maintaining a strong partnership.
Client Quote
“Redress Compliance delivered exactly what we needed – a leaner, smarter Microsoft agreement. We knew there were inefficiencies in our licensing, but Redress quantified them and negotiated them away. They secured significant savings and, importantly, flexibility for our hybrid cloud journey. Thanks to Redress, our Microsoft EA now aligns with our business – we have the right licenses at the right cost, and we’re not over-committed to anything we don’t need. Redress’s independent expertise gave us confidence to push back on Microsoft’s terms and get a deal that puts us first.” – IT Procurement Director, U.S. Energy Corporation
Call-to-Action
Every enterprise deserves a Microsoft agreement that fits like a glove. If your EA is up for renewal or not delivering value, contact Redress Compliance for a free Microsoft EA Optimization Assessment. We help you cut through vendor hype, optimize your licenses, and secure terms that power your business strategy.
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