Case Study – Microsoft Negotiation Service – U.S. Retail Chain – Microsoft EA Negotiation Saves 15% and Enables Seasonal Flexibility
Background
A U.S. retail chain with 8,000 employees and 300 store locations nationwide was approaching its Microsoft Enterprise Agreement renewal.
Based in Atlanta, this retailer operates in the specialty goods sector, with a mix of full-time and part-time seasonal employees.
The company’s IT infrastructure included Microsoft 365 for corporate and store management staff (mostly E3 licenses, with some E5 for head-office roles needing advanced analytics), and a growing usage of Microsoft Teams for company-wide communication.
They also utilized Azure for their e-commerce website and seasonal sales analytics, although much of their core retail POS systems remained on-premises.
The EA covered Microsoft 365, a block of Windows 10/11 Enterprise licenses for point-of-sale devices, and a small Azure commitment primarily for the e-commerce platform’s backend.
With the three-year EA term ending in three months, the retailer’s goal was to negotiate a renewal that reflected its business’s seasonal nature – ensuring they weren’t overpaying for licenses during off-peak months and that they had flexibility to scale during holiday seasons.
Read how to negotiate with Microsoft.
Challenges
The retail chain’s challenges centered on cost control and flexibility. The business is highly seasonal, with staff count and IT usage peaking in Q4 each year (the holiday season) and dipping in the spring.
Under the existing EA, the company was locked into a fixed number of Microsoft 365 licenses year-round, essentially over-licensing during the slow months. They had to maintain licenses for 1,000 seasonal employees even in periods when those employees were not working.
This rigid licensing resulted in wasted spending every off-season. Microsoft’s initial renewal offer didn’t solve this problem – it treated the retailer like a static enterprise, proposing even more licenses and an increase in Azure commitment, which would exacerbate over-licensing.
Additionally, Microsoft was attempting to bundle new services into the EA, such as Dynamics 365 Customer Insights (for customer data analytics) and Power BI Pro for all store managers, as a package deal.
While potentially useful, these were upsells that the retailer had not budgeted for and wasn’t sure it needed immediately. The cost of these bundles contributed to an inflated renewal quote.
Another challenge was that the IT team had limited visibility into license usage at the store level – the EA usage reporting wasn’t granular, so they often discovered, at true-up time, that certain store accounts had never logged in to their provided M365 accounts (often seasonal hires who had left). This pointed to inefficiencies in how licenses were allocated and reclaimed.
Finally, the retailer was concerned about cloud costs, as Azure scaling was unpredictable during major shopping events.
The existing Azure commitment was small, and it often burst beyond this limit during Black Friday, incurring overage costs; yet, in the proposal, Microsoft wanted to raise the baseline commitment (which would mean paying more during quiet periods).
The company needed a way to balance this seesaw of cloud usage without overspending.
How Redress Compliance Helped
- Assessment of Seasonal Workforce Licensing: Redress Compliance collaborated with the retailer to analyze staffing patterns and license assignments over the past three years. They quantified the seasonal fluctuation: about 800 additional users were added each November and dropped by January. Redress demonstrated that maintaining licenses for all 800 year-round employees was resulting in a roughly 20% overspend on Microsoft 365. To address this, Redress devised a hybrid licensing strategy. They recommended that the core full-time staff remain covered under the EA (ensuring volume discounts and coverage for critical roles), but that seasonal workers be handled via the Cloud Solution Provider (CSP) program on a month-to-month basis. This would allow the retailer to scale Microsoft 365 licenses up for the holiday surge and then dial them back down, paying only for the months those seasonal workers are employed.
- License Cleanup and Reallocation: The team performed a cleanup of unused and duplicate accounts. They found numerous instances of store employee accounts that were inactive (likely due to turnover) but still had an active Microsoft 365 (M365) license assigned. Redress set up a process with the retailer’s IT department to regularly audit and reclaim licenses when employees leave. Going into the renewal negotiation, Redress ensured that the baseline EA user count was accurate – trimming it by about 10% from what Microsoft had on record – by removing these ghost accounts. Additionally, for the new services Microsoft proposed (Dynamics 365 Customer Insights, Power BI Pro), Redress evaluated their necessity. They concluded that while customer analytics were useful, the retailer could pilot those with a small number of licenses first rather than licensing every store manager through the EA.
- Negotiating a Tailored Agreement: Redress took these findings to Microsoft in the negotiation. A key objective was to convince Microsoft to allow an unorthodox but more effective arrangement: a slightly smaller EA core license count, combined with the flexibility to use CSP for peak usage. Redress presented data showing that the retailer’s active user count fluctuated significantly, and that without flexibility, the retailer might consider moving entirely to CSP or even Google Workspace to achieve the necessary agility. This proved to be strong leverage. Microsoft, fearing the loss of the account to competitive options, agreed to an EA that accommodated the hybrid approach. In financial terms, Redress negotiated a 15% cost reduction compared to the initial proposal. This was achieved by removing the blanket inclusion of Power BI for all users (instead, a few dozen licenses would be bought via CSP as needed) and not immediately adding the expensive Dynamics 365 module into the EA. Microsoft instead agreed to a smaller pilot for Dynamics at no cost for the first year, with the option to expand it later based on the results. They also provided a modest discount increase on the M365 licenses (given the slightly lower quantity), to keep per-user pricing attractive.
- Azure Flexibility for Peak Retail Events: On the cloud front, Redress tackled the Azure commitment issue. Rather than a flat increase as Microsoft proposed, Redress negotiated a flexible Azure arrangement. The new EA includes a base Azure commitment close to the retailer’s average monthly usage (which was reasonable for most of the year), along with pre-negotiated burst rates for holiday traffic. Essentially, suppose the retailer’s Azure usage exceeds the monthly commitment by 20% in November/December. In that case, Microsoft will still charge the same discounted rate for that excess, rather than higher pay-as-you-go rates. This arrangement ensures the retailer isn’t penalized for success during big sales events, and it avoids locking them into a year-round higher commitment that they would underuse for 10 out of 12 months.
- Improved Reporting and Management: As part of the service, Redress also helped implement better tracking tools for license usage. They set up dashboards to provide the IT team with visibility into which store accounts are actively using their licenses. This way, the retailer can continuously optimize – for example, identifying if some part-timers never logged in, so their licenses can be freed. This proactive management was written into the renewal strategy, ensuring that the company maintains the efficiency gains won in the negotiation.
Outcome and Impact
- 15% Cost Savings on Microsoft Spend: The renegotiated agreement and supplemental CSP approach led to an immediate 15% reduction in Microsoft licensing costs for the retailer. By not renewing unnecessary licenses and leveraging the month-to-month model for seasonal staff, the company estimates it will save high six figures annually. These savings directly improve the retailer’s bottom line, a significant benefit in an industry with tight profit margins. Microsoft’s initial renewal package would have increased costs; instead, costs went down – a major turnaround achieved by eliminating overspend on idle licenses and avoiding overcommitment.
- Seasonal Flexibility Achieved: The retailer now has a much more flexible Microsoft licensing model that aligns with its business cycle. During the holiday rush, they can quickly deploy M365 to hundreds of seasonal hires via CSP and then remove those licenses afterward with no long-term commitment. This seasonal flexibility means the company only pays for what it truly uses. It’s a stark contrast to the old EA, which forced a pay-for-peak approach year-round. The new hybrid EA+CSP strategy ensures high utilization of EA licenses (no more paying for large numbers of unused off-season accounts) while still enabling rapid scaling. The IT department successfully implemented this approach in the latest holiday season: they ramped up 800 temporary licenses in November and scaled them down in January, and the process was smooth.
- Optimized License Management: The combination of contract changes and better internal processes has led to more disciplined license management. With improved reporting, the retailer can now see license usage patterns across all stores and departments. They have instituted monthly reviews to catch and reharvest any licenses that are not in use (for example, when an employee leaves, ensuring their license is removed promptly). This ongoing optimization ensures that shelfware is minimized not just at renewal, but throughout the EA term. It also prepares the company for the next renewal or expansion – they will be armed with clear data to justify exactly what they need.
- IT and Business Alignment: Perhaps most importantly, the Microsoft agreement now supports the retailer’s business strategy instead of constraining it. The cost savings and flexibility free up IT budget and resources, which the company can invest in customer-facing innovations (like a new mobile shopping app or in-store digital experiences). The retailer also gained confidence in negotiating with large vendors. With Redress’s help, they saw that even a mid-sized company can secure enterprise-grade terms by making a data-driven case. This sets a precedent for how they will approach not only Microsoft but also other IT supplier negotiations.
Client Quote
“Redress Compliance understood our world – retail is fast-moving and seasonal, and now our Microsoft deal finally reflects that. We were tired of paying for 100% of our licenses when only 80% were being used most of the year. Redress came in with a clear plan, and the results exceeded our expectations. We saved 15% on our Microsoft costs, but equally important, we gained the agility to scale licenses up and down as needed. During the holidays, we ramp up, and afterwards, we’re not stuck footing the bill for idle licenses. It’s like a weight lifted off our budget. Redress was able to negotiate terms that we didn’t even realize were negotiable. Thanks to them, we’re no longer at the mercy of our EA – it works on our terms. They’ve earned our trust as an independent advisor who puts our business first.” – CFO, U.S. Retail Chain.
Call-to-Action
Does your Microsoft agreement ignore the seasonal or flexible nature of your business? Contact Redress Compliance for a complimentary Microsoft agreement review or a personalized renewal strategy session. We’ll help you break free from one-size-fits-all contracts and craft a licensing strategy that saves money and flexes with your needs – whether it’s holiday staffing, project-based teams, or any change in your workforce.
Further Reading
- Read about our Microsoft Contract Negotiation Service.
- Read about our other Microsoft Case Studies.
