Case Study – Microsoft EA Renewal Service U.S. Healthcare Network – Microsoft EA Renewal Saves 30% and Increases Flexibility
Background
A large healthcare provider in the United States with 25,000 employees (annual revenue ~$4 billion) was approaching the end of its Microsoft Enterprise Agreement (EA).
The organization operates a network of hospitals and clinics across multiple states. Its Microsoft landscape included Microsoft 365 E5 for most staff, Azure services for data analytics and backup, and a few Dynamics 365 modules for administration.
Many systems remained on-premises (in a hybrid cloud environment) due to regulatory and legacy application requirements. With the EA expiring in six months, the healthcare network sought to renew in a way that aligned Microsoft investments with actual usage and future needs.
Read our guide to Microsoft EA renewals.
Challenges
The healthcare provider faced escalating EA costs and suspected significant “shelfware” in its licensing. Microsoft’s initial renewal proposal showed a 15% cost increase, driven by the high costs of M365 E5 licenses and Azure overcommitments.
Analysis revealed that many users had E5 licenses but primarily used basic Office and email features, rather than the advanced security or analytics features.
This mirrors industry trends – studies show nearly 44% of Office 365 licenses at a typical company are underutilized. Additionally, certain applications (e.g., Project, Visio) were licensed for broad user pools, despite only a fraction of them being actively used, a common source of waste.
The EA’s one-size-fits-all structure and auto-renewal clauses threatened to lock the hospital network into another three years of oversized licenses and rigid terms. The client also required flexibility to scale down licenses if staffing levels fluctuated (for instance, during off-peak seasons or operational changes) and to gradually incorporate new cloud services without incurring massive up-front costs.
Microsoft’s sales team was strongly pushing to maintain all users on E5 and even add new bundled products (like advanced security add-ons and Power Platform licenses) enterprise-wide.
The client was wary of these upsells, as they were unsure whether those tools would be fully utilized. Overall, the challenges included: rising renewal costs, under-used premium licenses, opaque EA bundling, and a lack of flexibility to adjust licenses to actual needs – all under the pressure of a looming EA deadline.
How Redress Compliance Helped
- Comprehensive Usage Analysis: Redress Compliance performed a full audit of the client’s Microsoft 365 and Azure usage. They identified hundreds of E5 licenses assigned to employees who only required E3 functionality, and discovered thousands of dollars in “shelfware”. For example, many Visio and Project licenses were assigned but rarely used. They also uncovered accounts for former employees still consuming licenses. This data-driven approach quantified exactly how much of the EA was underutilized.
- License Optimization Modeling: Using the analysis data, Redress modeled alternative EA structures. They proposed downgrading a significant portion of users from M365 E5 to E3 to better match their functionality needs, as E5 can cost approximately $21 more per user per month than E3. This change alone promised substantial savings. They also identified frontline staff who could use lower-cost licenses (e.g., Microsoft F3 for non-office workers) instead of full E3/E5 suites. Unused products (like idle Power BI Pro add-ons) were targeted for removal. Redress even explored a mixed licensing approach – keeping core services in the EA but potentially moving certain workloads (like a small research group’s Azure sandbox) to a month-to-month Cloud Solution Provider (CSP) model for flexibility
- Negotiation with Microsoft: Armed with detailed usage data and industry benchmarks, Redress led the negotiation with Microsoft. They leveraged the fact that enterprise deals often secure 15–30% discounts off list prices to push for better pricing. Microsoft had initially offered only a standard discount. Still, Redress countered with competitive pricing data and highlighted the risk that the client could remove or reduce licenses if a fair deal weren’t reached. They negotiated a 30% discount on the M365 E5 and E3 licenses, well above Microsoft’s first offer, and restructured the Azure commitment down to a level aligned with actual consumption (with the inclusion of flexible “grow-as-you-go” terms for cloud services). Additionally, Redress negotiated growth protections and price locks – ensuring that if the healthcare network needed to add more licenses later (for example, opening a new facility), those would be at the same discounted rate, with caps on year-over-year price increases.
- Flexible Terms and Long-Term Plan: Redress helped secure contract terms that allowed the client to right-size over time. The new EA included provisions to true-down certain license counts at renewal anniversaries (a rare flexibility in EAs) and a more forgiving true-up schedule for Azure services, avoiding overpayment for unused capacity. Together with the client’s IT leadership, Redress also developed a 3-year roadmap for Microsoft usage, planning a phased adoption of cloud services (such as moving some on-premises workloads to Azure) without overcommitting. This roadmap ensured the EA would support future needs, such as telehealth expansions and advanced analytics, with built-in checkpoints to adjust licenses if expectations changed.
Outcome and Impact
- Cost Savings: Microsoft’s original renewal quote was $30 million over three years for the existing scope. Following Redress Compliance’s optimization and negotiations, the finalized EA came down to $21 million, representing a roughly 30% reduction in spend. These $9 million savings could be redirected to patient care technology and other strategic investments. Importantly, these savings were achieved without compromising any necessary functionality for users – the hospital system remains fully equipped with the Microsoft tools it needs, but without incurring excess costs.
- Right-Sized Licensing: The new EA aligns licenses to actual usage. Over 5,000 users were moved from E5 to E3, reserving costly E5 licenses only for roles that truly require advanced features (e.g., certain IT security staff). Legacy applications and rarely used services were removed or moved to optional status. This right-sizing immediately eliminated wasteful spend (one large enterprise found 20% of its E5 licenses were effectively shelfware, and this client saw similar figures). The risk of paying for unused licenses in the future is dramatically lower, and processes are in place to regularly review license utilization.
- Flexible & Future-Proof Terms: The healthcare provider gained flexibility it never had in prior EAs. The agreement now includes downgrade rights for a subset of licenses, the ability to adjust Azure commitments annually without penalty, and clauses allowing the client to pilot new Microsoft products on a small scale before committing enterprise-wide. This flexibility allows the organization to adapt its Microsoft usage as its needs evolve (for example, scaling down during a slow period or after completing a major project) without being stuck with overspending. The EA is aligned with business needs and the unpredictable healthcare environment.
- Strategic Alignment: With Redress’s guidance, the Microsoft investment is now aligned to the client’s strategic plan. The lower annual cost baseline (22% of the IT budget down from 30%) frees up funds for other initiatives. The client has a clear path to gradually increase cloud adoption (such as using Azure for clinical data analytics) on its own timetable, with Microsoft providing incentives but not dictating terms. Overall, the EA renewal not only saved money but also transformed the Microsoft contract into a strategic asset, enabling innovation with cloud services while controlling unnecessary spending.
Client Quote
“Redress Compliance acted as our advocate in the Microsoft negotiations.
Their independent analysis identified significant savings that we would have otherwise missed. We ended up saving 30% on our EA while improving our terms. Redress helped us right-size our licenses and secure flexibility for the future – all with a client-first approach that put our needs above Microsoft’s sales agenda.
We now have confidence that we’re only paying for what we use, and we have the agility to adapt as our organization evolves.” – CIO, U.S. Healthcare Network.
Call-to-Action
Is your Microsoft EA renewal approaching? Contact Redress Compliance for a free Microsoft EA Optimization Assessment and discover how to cut costs and secure better terms for your organization. We’ll help you align your Microsoft investments with your business needs – on your terms.
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