Case Study – Microsoft Negotiation Service – U.S. Financial Services Firm – Microsoft EA Renewal Secures 22% Savings and Strengthened Compliance
Background
A U.S.-based financial services company (investment banking and insurance) with 12,000 employees across the United States was nearing its Microsoft Enterprise Agreement (EA) renewal.
Headquartered in New York, with regional offices nationwide, the firm relies on Microsoft 365 for office productivity and SharePoint for document management, as well as Azure services for data analytics and risk modeling.
The existing EA, a 3-year contract, covered Microsoft 365 E5 for all knowledge workers, Dynamics 365 for CRM, and a significant Azure consumption commitment.
With the EA set to expire in 4 months, the firm wanted to control costs and address compliance requirements in the new agreement.
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Challenges
The primary challenge was the escalating renewal cost. Microsoft’s initial EA renewal proposal reflected a 12% price increase over the expiring contract.
Bundled additions drove this; the firm had not originally planned for it. Microsoft was pushing an upgrade of all users to the latest E5 Security & Compliance add-ons and a higher Azure minimum commitment. The financial firm was also wary of license compliance and audit risk.
In the past, software audits in the finance industry have resulted in substantial true-up bills or penalties, and the company’s leadership sought to avoid any surprises. (Under Microsoft’s licensing policies, unaddressed compliance issues can result in audits and unexpected costs.)
The lack of flexibility in the old EA was another concern – the firm had undergone restructuring, resulting in reduced headcount in certain divisions. Yet, it was still paying for EA licenses that could not be reduced mid-term.
Microsoft’s standard EA terms didn’t allow scaling down; only adding (“true-up”) licenses was permitted, which resulted in over-licensing.
Finally, the company operates in a heavily regulated sector, so contractual protections for data and audits were a top priority.
The initial proposal did not sufficiently address the client’s need for clearer audit clauses and the ability to adjust to regulatory changes.
Microsoft’s negotiation stance seemed oriented toward its sales agenda rather than the client’s needs, leaving the firm with the impression that the proposed terms were one-sided.
How Redress Compliance Helped
- Comprehensive License & Usage Audit: Redress Compliance performed a detailed review of the firm’s current Microsoft 365 and Azure usage. The analysis revealed that approximately 800 E5 licenses were underutilized – many users primarily used email and Office apps, rather than the advanced E5 security features. (This was not surprising, as industry studies show nearly 44% of Office 365 licenses in a typical company go underused.) Redress also identified overlapping functionality in the E5 Security bundle with existing third-party security tools the bank was using. On Azure, they discovered the firm was consuming only about 70% of its annual Azure commitment, meaning 30% of the prepaid cloud spend risked going to waste.
- Contract Review and Compliance Protections: Redress’s licensing experts scrutinized the EA documents for onerous terms. They highlighted broad audit rights language that could allow Microsoft to initiate a formal audit without ample notice. Redress drafted revised contract clauses to introduce audit protections – including a requirement for reasonable notice and an opportunity to resolve findings before any penalties. They also recommended adding a clause to allow for license quantity reductions at anniversaries in the event of divestitures or downturns, thereby increasing flexibility.
- Benchmarking & Negotiation Strategy: Using its database of financial industry benchmarks, Redress demonstrated to the client that similar firms typically negotiate discounts of 15–30% off Microsoft’s pricing. Microsoft’s initial offer included only a 10% discount on certain products, which Redress deemed too low given the volume. Redress formulated a negotiation strategy, positioning the client as prepared to optimize or even eliminate unnecessary licenses if Microsoft didn’t improve terms. Armed with the internal audit data, Redress presented Microsoft representatives with a clear plan to remove shelfware licenses, signaling that the firm would not simply renew “as is.” This leverage helped drive a deeper discount.
- Optimization of License Mix: Redress proposed a new licensing model aligning with actual use. They advised keeping only compliance officers and power users on M365 E5 (for advanced eDiscovery and security features) and downgrading approximately 2,000 users to M365 E3 with add-ons as needed. They also identified opportunities to eliminate unneeded products (for example, reducing Dynamics 365 seats in departments that had adopted a third-party CRM). Additionally, Redress explored a hybrid licensing approach, suggesting that for contingency staffing and contractors, short-term Cloud Solution Provider (CSP) subscriptions be used rather than committing all those users to the EA, thereby providing month-to-month flexibility.
- Securing Concessions and Future Flexibility: In direct negotiations with Microsoft, Redress advocated for the client’s need to contain costs and reduce risk. Microsoft, facing the prospect of the client cutting licenses, eventually offered improved pricing. Redress negotiated the EA renewal to include a 22% overall discount on the Microsoft 365 and Dynamics 365 components, significantly better than the original offer. They also obtained agreement on an Azure commitment calibrated to the client’s actual usage (about 15% lower than Microsoft’s proposal) with “flex-down” rights – if Azure consumption remained lower than expected, the client could reallocate unused commitment to other Microsoft services. Critically, Redress secured Microsoft’s incorporation of the revised audit clause, along with an annual opportunity to adjust license counts in the event of business unit sales or downsizing —a rare yet valuable flexibility for the client.
Outcome and Impact
- Cost Savings: The final negotiated agreement yielded a 22% cost reduction compared to Microsoft’s initial renewal quote. Over the 3-year term, this represented roughly $4.5 million in savings. The original proposal’s cost was brought down by eliminating unused licenses and securing larger discounts. The savings freed up the budget, which the firm reallocated to bolster its cybersecurity tools and data analytics initiatives – expenditures that deliver direct value to the business, rather than overpaying for licenses.
- Strengthened Compliance & Audit Readiness: The new EA included much more favorable terms for the client. The clarified audit provisions mean the firm can address any licensing issues proactively without fear of a sudden, disruptive audit. The company’s leadership and compliance teams now have peace of mind, knowing that an unexpected true-up bill won’t blindside them; any compliance gaps can be discussed and remedied informally with Microsoft first. By right-sizing licenses and ensuring full compliance from the start, the firm is less exposed to compliance penalties. This proactive stance aligns with best practices in the financial industry, where governance and risk management are of paramount importance.
- Flexibility and Future-Proofing: Redress’s negotiations delivered flexibility that is rarely seen in standard Microsoft agreements. The firm can adjust certain license counts annually, which is crucial in the fast-changing financial sector (e.g., if a business unit is sold, it will not continue paying for its licenses indefinitely). The Azure flexibility enables the company to scale up or down cloud usage with significantly less waste. If market volatility leads to fewer analytics workloads in one quarter, they aren’t stuck overpaying for unused cloud credits. Additionally, the bank can utilize CSP channels for temporary needs, which means the EA will cover baseline usage while spikes are handled on a pay-as-you-go model. Overall, the Microsoft EA is now aligned with the firm’s business strategy and risk posture, rather than forcing the firm to conform to Microsoft’s rigid contract model.
Client Quote
“Redress Compliance was a game-changer for us. They approached our Microsoft renewal with a client-first mindset and a deep understanding of the fine print. We knew we had some redundant licensing, but Redress quantified it and used it as leverage in negotiations. They didn’t just save us 22% on costs – they also secured contract terms that shield us from compliance surprises.
Now we have an EA that fits our business like a glove. We can scale up or down as needed, and we’re not afraid of audits lurking around the corner.
Redress’s independent expertise gave us the confidence to push back against Microsoft’s initial offer and get a deal that truly works for us.” – CIO, U.S. Financial Services Firm.
Call-to-Action
Is your Microsoft Enterprise Agreement renewal approaching, or is it leaving you vulnerable to compliance risks?
Contact Redress Compliance for a complimentary review of your Microsoft agreement or a personalized renewal strategy session. Our team will help you uncover savings, tighten compliance, and negotiate an agreement that prioritizes your organization’s interests.
Further Reading
- Read about our Microsoft Contract Negotiation Service.
- Read about our other Microsoft Case Studies.
