Microsoft / Microsoft Enterprise Agreement

What is a Microsoft Enterprise Agreement? – 2024

A Microsoft Enterprise Agreement is:

  • A volume licensing program for large organizations (500+ users/devices).
  • Offers customizable solutions, price protection, and simplified license management.
  • Includes options for cloud services, software, and support.
  • Flexible for growing businesses to adapt to changes in technology and staff size.
  • Typically, a three-year commitment.
  • Provides access to Microsoft’s latest technologies and updates.
Microsoft Enterprise Agreement

What is a Microsoft Enterprise Agreement?

What is a Microsoft Enterprise Agreement
  • Overview: The Microsoft Enterprise Agreement is a comprehensive volume licensing package for large organizations with 500 or more users or devices. It provides a manageable program for buying software licenses and cloud services under one agreement.

Understanding the Microsoft Enterprise Agreement

  • Definition and Purpose: EA is a commitment-based licensing agreement for commercial organizations. It includes a range of Microsoft products on-premises and online services, with pricing set directly by Microsoft.
  • Benefits and Savings: EA offers tiered pricing based on the total quantity of users/devices, with levels A through D providing different discounts. There are options for perpetual licenses and subscription-based online services.

Critical Components of Enterprise Agreement

  • Enterprise Enrollment and Server and Cloud Enrollment: These enrollments under EA provide specific benefits like best pricing terms, simplified license management, and options for a mix of perpetual and subscription licenses.
  • Software Assurance: Included in EA, Software Assurance offers a range of benefits for planning, deploying, and using Microsoft technologies, including support, training, and IT tools.

Enterprise Agreement vs. Other Licensing Options

  • Comparative Analysis: EA is compared with other Microsoft licensing agreements such as Server and Cloud Enrollment (SCE), Enterprise Agreement Subscription (EAS), and Cloud Solution Provider (CSP).
  • Criteria for Choosing: Considerations include upfront and long-term costs, license flexibility, software update needs, business size, and commitment period.

Two Types of Microsoft Enterprise Agreements

Two Types of Microsoft Enterprise Agreements

Microsoft Enterprise Agreement (EA)

The Microsoft Enterprise Agreement (EA) is an extensive volume licensing package designed for organizations with 500 or more users or devices.

Key features of the EA include:

  • Broad Coverage: Licenses are available for a wide range of Microsoft products and services, including Office 365, Azure, and Dynamics 365.
  • Volume Discounts: Beneficial for large-scale operations due to cost savings on bulk licensing.
  • Flexible Licensing: Adjust license counts to match business needs, with annual True-Up for assessing changes.
  • Three-Year Term: Offers a stable licensing environment over a medium-term period.
  • Software Assurance Included: Ensures access to the latest software versions, comprehensive training opportunities, and dedicated support.

This structure is designed to provide balanced flexibility, cost-efficiency, and access to cutting-edge Microsoft technologies, making it suitable for large organizations seeking a comprehensive licensing solution.

Microsoft Enterprise Subscription Agreement (EAS)

Microsoft Enterprise Subscription Agreement - EAS

Microsoft Enterprise Subscription Agreement (EAS) The EAS is a subscription-based alternative to the EA, ideal for organizations needing flexible licensing.

Key aspects include:

  • Subscription Model: Microsoft’s product suite licenses are subscribed to, not purchased, for 1-3 years.
  • Cost-Effectiveness: Particularly beneficial for organizations with varying staff numbers.
  • Annual Adjustment: Allows increasing or decreasing subscription counts each year.
  • Greater Flexibility: EAS permits lowering license counts during the agreement term, unlike EA.

Difference between EA and EAS

microsoft Difference between EA and EAS

Difference between EA and EAS The primary distinctions are:

  • License Ownership: EA provides license ownership after a three-year term, enabling indefinite software use. EAS requires ongoing subscription renewal.
  • Flexibility in Licensing: Both allow adding licenses; however, EAS uniquely offers the ability to reduce licenses during the term, enhancing adaptability to changing organizational needs.

Pros and Cons of Microsoft Enterprise Agreement

Pros and Cons of Microsoft Enterprise Agreement

Pros of Microsoft EA:

  • Volume Discounts: Organizations benefit from discounted rates due to the bulk purchase of licenses.
  • Software Assurance: Included in the agreement, it provides access to the latest software versions, training, and support.
  • Flexibility: Ability to add licenses as needed throughout the contract term.
  • Simplicity: One agreement covers all licenses, making management and compliance easier.
  • Predictability: Organizations can plan their IT budget better as the cost of licenses is known upfront for the three-year term.

Cons of Microsoft EA:

  • Minimum Commitment: Requires a minimum of 500 users or devices, limiting its applicability to smaller businesses.
  • Lock-in Period: The agreement is for three years, which may not suit organizations with short-term needs.
  • Limited Decrease: Organizations can only decrease the license count at the end of the three-year term, not annually.
  • True-Up Costs: If an organization adds licenses during the agreement term, they must pay for the additional licenses at the next annual True-Up.
  • Ownership Costs: While owning licenses might seem beneficial, it could lead to higher costs in the long run if not appropriately managed due to ongoing maintenance and support costs.

The risks of not actively managing and preparing for negotiations

  • Overspending: You may pay for unused or unnecessary licenses without regular reviews.
  • Compliance Issues: Failing to track and manage licenses can lead to non-compliance and potential legal or financial penalties.
  • Missed Opportunities: Not staying informed about new offerings or changes in Microsoft’s licensing structure can result in missing out on cost-saving or efficiency opportunities.
  • Ineffective Utilization: Organizations might not fully utilize the available resources and technologies without proper management, leading to inefficiency.
  • Challenging Renewals: Unprepared negotiations can result in less favorable terms or missed chances to align the agreement with organizational needs.

Pros and Cons of Microsoft EAS

Pros and Cons of Microsoft EAS

Pros of EAS

  • Lower Upfront Costs: As a subscription model, EAS offers lower initial costs than EA’s upfront licensing fees.
  • Flexibility: EAS allows you to adjust the number of licenses up and down annually, providing better adaptability to changes in your business size.
  • Always Up to Date: With EAS, organizations always have access to the latest versions of Microsoft software.
  • Transparency: The subscription model provides predictable, recurring costs, making budget planning easier.
  • Software Assurance: Like EA, EAS includes Software Assurance, providing access to the latest updates, training resources, and support.

Cons of EAS

  • Ongoing Payments: Unlike the EA, where you own the license after the initial cost, EAS requires continual payment to maintain access to the software.
  • Potential Long-Term Cost: Depending on the length of usage, the subscription costs could surpass the one-time purchase cost of EA.
  • Minimum Commitment: EAS also requires a minimum commitment of 500 users or devices, which may not be suitable for smaller businesses.
  • Lock-in Period: EAS agreements typically last three years, which might not be ideal for organizations with rapidly changing needs.
  • True-Down Limitations: While EAS allows the reduction of licenses, it’s limited to once per year at the annual true-down period.

Expert Advice on EAS vs EA – What Should You Pick?

CriteriaChoose EA (Enterprise Agreement) WhenChoose EAS (Enterprise Agreement Subscription) When
Upfront CostsYou have a sufficient budget to pay the upfront licensing fees and prefer to have a one-time cost.Your budget is limited, and you prefer lower initial costs with a subscription model.
Long-Term CostsYou plan to use the software for an extended period, making the one-time purchase cost cheaper in the long run.You require the software for a shorter period, making the subscription cost-effective.
License FlexibilityYou expect the number of licenses required to remain fairly stable over time.Your business is dynamic, and the number of licenses needed may change annually.
Software UpdatesYou don’t require immediate access to the latest software versions and can manage with Software Assurance updates.You want immediate access to the latest software versions as they are released.
Business SizeYou have a more significant business with over 500 users or devices and want to own the licenses.You have a medium to large business with over 500 users or devices and prefer a flexible subscription.
Commitment PeriodYou can commit to a more extended contract period and want to avoid recurring payments.You prefer a shorter commitment period and are comfortable with ongoing payments.

Ten questions to ask yourself before you negotiate or enter a Microsoft EA

Ten questions to ask yourself before you negotiate or enter a Microsoft EA
  1. What are our current and future technology needs? – Assess if Microsoft’s offerings align with your organization’s long-term technology strategy.
  2. How many users/devices need licenses? – Accurate counts ensure you’re not overpaying for unnecessary licenses.
  3. What is our budget for software licensing? – Determines affordability and influences negotiation strategy.
  4. Do we need flexibility in licensing numbers? – Crucial for organizations with fluctuating staff numbers.
  5. Are we prepared for the commitment of a multi-year agreement? – Understand the implications of a long-term commitment.
  6. Do we have the expertise to manage this agreement? – Ensures effective utilization and compliance.
  7. What are the terms and conditions? – Understanding these helps avoid unexpected obligations or penalties.
  8. How does Software Assurance benefit us? – Evaluates the value of additional support and training.
  9. What are the implications of non-compliance? – Important for legal and financial planning.
  10. How will this agreement impact our overall IT infrastructure? – Assesses integration and compatibility with existing systems.

Each question is essential for making an informed decision and ensuring the agreement aligns with your organization’s needs and capabilities.

Microsoft EA Renewal Check-List

Microsoft EA Renewal Check-List
  1. Review Current Agreement: Look at the details of your current Microsoft agreement and ensure you understand all the terms and costs.
  2. Evaluate Usage: Monitor and review your actual usage of Microsoft products. This includes software and cloud services. Make sure you’re using all the licenses you’ve paid for.
  3. Identify Needs: Determine your future needs. Will you need more licenses or fewer? Are there additional products or services you’ll want to include?
  4. Assess Compliance: Ensure that you comply with your current licensing agreement. This includes the number of licenses, their use, and optimizing your EA.
  5. Benchmark Costs: Compare your current agreement costs to market averages. Are you paying more or less than similar organizations?
  6. Understand Changes in Microsoft’s Offerings: Microsoft regularly updates its software offerings and licensing models. Make sure you’re aware of any changes that could impact your renewal.
  7. Consider Alternatives: Look into alternative licensing agreements, like an Enterprise Agreement Subscription (EAS) or Cloud Solution Provider (CSP), to see if they might fit your organization better.
  8. Negotiate: Once you understand your needs and options, negotiate your renewal agreement with Microsoft. Engaging a licensing expert or consultant to assist with this process might be beneficial.
  9. Plan for the Future: Think about your organization’s future needs. You might want to include options for adding licenses or services in the future.
  10. Documentation: Make sure all agreements and changes are documented. This is important for future reference and for maintaining compliance.

Microsoft Enterprise Agreement Negotiations

Microsoft Enterprise Agreement Negotiations

When negotiating a Microsoft Enterprise Agreement, there are several strategies to consider:

  1. Understand Microsoft’s Engagement Model: Be prepared for multiple requests to gain significant concessions. Microsoft’s negotiation often involves trading legal or business concessions for discounts.
  2. Customize Contract Concessions: Each organization has specific requirements. Consider how different user profiles and licensing options impact your negotiation, especially regarding compliance and price.
  3. Pricing Concessions and Expectations: Be aware of Microsoft’s discount levels and ensure these are applied throughout the contract term, including true-ups and subscriptions.
  4. Ramping Strategy: Align your contract with Microsoft’s fiscal year-end for better negotiation leverage. Consider gradual purchase increases over time rather than a total commitment upfront.
  5. Legal Concessions: Review the Microsoft Business and Services agreement carefully. Negotiate terms like self-audit options, fee caps, and partner fees.
  6. Expert Assistance: Consult with licensing experts to guide your negotiation, ensuring all aspects like business requirements and potential downsizing are considered

Products part of Microsoft Enterprise Agreement

Products part of Microsoft Enterprise Agreement
Product CategoryProducts
Office ProductsOffice 365, Microsoft 365, Exchange Online, SharePoint Online, Teams
Windows OSWindows 10 Enterprise, Windows 11 Enterprise
Server ProductsWindows Server, SQL Server, Exchange Server, SharePoint Server
Cloud ServicesAzure, Dynamics 365
Enterprise Mobility + SecurityIntune, Azure Active Directory Premium, Azure Information Protection
Developer ToolsVisual Studio Enterprise, Visual Studio Professional

Microsoft EA vs. CSP

Microsoft EA vs. CSP
Comparison CriteriaMicrosoft EACSP
Contract TermIdeal for SMBs and larger organizations seeking flexibilityNo fixed term, monthly subscription
CommitmentRequires a minimum commitmentNo minimum commitment
PricingFixed pricing for the term of the contractDynamic, can change as per market
FlexibilityTypically three yearsHigh flexibility, can change subscription anytime
BillingAnnually upfrontMonthly
Customer SupportDirect from MicrosoftProvided by the partner
License ManagementManaged through Volume Licensing Service Center (VLSC)Managed through Partner Center
Target AudienceSuitable for large organizationsSuitable for SMBs and larger organizations seeking flexibility

FAQs About The Microsoft Enterprise Agreement 

What is the difference between an Enterprise Agreement and an Enterprise Subscription Agreement?

The Enterprise Agreement is a traditional licensing program that provides perpetual licenses for Microsoft software products. The Enterprise Subscription Agreement is a subscription-based licensing program that provides access to Microsoft software products for a specified period.

Can I pay for software licenses in installments?

Yes, the Microsoft Enterprise Agreement provides the option to pay for software licenses in installments rather than upfront.

What is an enterprise subscription agreement?

An enterprise subscription agreement is a contract between a software provider and an organization that allows the organization to use the software on a subscription basis. The agreement usually includes terms for updates and support.

What are the benefits of Microsoft Enterprise Agreement?

The Microsoft Enterprise Agreement (EA) offers several benefits, including discounted pricing, the ability to spread payments annually, simplified license management through a single agreement, and the flexibility to add and adjust products and services to meet changing business needs.

What are the disadvantages of Microsoft Enterprise Agreement?

The primary disadvantage of a Microsoft Enterprise Agreement is that it requires a three-year commitment, which may not suit organizations with fluctuating numbers of users. Also, it can be complex to manage, requiring a minimum of 500 users/devices.

What is the difference between CSP and enterprise agreement?

The Cloud Solution Provider (CSP) program allows businesses to go month-to-month or commit to longer terms for cloud services, providing flexibility. On the other hand, an Enterprise Agreement (EA) requires a three-year commitment but offers a discount for this upfront commitment.

What is the threshold for Microsoft EA?

The threshold for a Microsoft Enterprise Agreement is 500 users or devices. This makes the EA better suited for larger organizations.

What are the benefits of Microsoft E5 over E3?

Microsoft E5 includes all the features of E3 plus additional features such as advanced threat protection, voice capabilities, Power BI Pro, and advanced compliance tools.

What does EA stand for in Azure?

In Azure, EA stands for Enterprise Agreement. It’s a volume licensing package for large organizations, including discounts for purchasing bulk software.

What does Microsoft EMS mean?

EMS stands for Enterprise Mobility + Security. Microsoft provides tools to manage and secure users, devices, apps, and data.

How does Windows Enterprise licensing work?

Windows Enterprise licensing is typically done on a per-device or per-user basis. Licenses are usually sold through volume licensing programs like the Microsoft Enterprise Agreement.

What is a Microsoft Enterprise Enrollment?

Enterprise Enrollment is part of the Microsoft Enterprise Agreement that organizations complete enrolling in specific Microsoft services, like Office 365 or Azure.

What are the types of Microsoft licenses?

Microsoft offers several types of licenses, including individual retail licenses, OEM licenses, volume licenses (like the Microsoft Enterprise Agreement), and subscription-based licenses (like Office 365).

What are the two features of an enterprise agreement?

Two key features of an enterprise agreement are the ability to spread payments over the contract term and increase or decrease license counts annually to accommodate changing business needs.

How long is a Microsoft Enterprise Agreement?

A Microsoft Enterprise Agreement typically lasts for three years.

How long does a CSP agreement last?

A CSP agreement can be as short as one month or as long as three years, depending on the specific terms of the agreement.

What is a subscription in Microsoft Azure?

A subscription in Microsoft Azure is an agreement with Microsoft to use one or more cloud-based services, often for a specific amount of usage at a set price.

What is a Microsoft MCA?

Microsoft Customer Agreement (MCA) is a simplified agreement that provides consistent customer purchasing terms, regardless of the organization’s size or purchase volume.

What is the percentage discount for Microsoft Level D?

Level D is Microsoft’s program’s highest volume licensing level, typically offering the highest discounts. The discount varies by product and volume but can be up to 45%.

What minimum commitment must an EA customer make to purchasing the Azure services each year?

The minimum monetary commitment for an Azure Enterprise Agreement customer is typically $15,000 per year. However, this may vary depending on the specifics of the agreement.

How does MS EA compare to Select Plus?

Select Plus was no longer eligible after 2015. It was aimed at organizations with smaller users than EA.

MS EA vs Open Value, what are the differences?

Microsoft Enterprise Agreement is ideal for larger organizations with 500+ users or devices. In contrast, Microsoft Open Value suits small to mid-sized businesses with five or more desktop PCs.

MS Enterprise Agreement vs MPSA?

While the Enterprise Agreement is designed for larger organizations with 500+ users or devices, MPSA offers a more flexible approach for organizations of various sizes.

Is Microsoft 365 Copilot part of Microsoft EA?

Microsoft Copilot 365 is not automatically included in the standard Microsoft Enterprise Agreement (EA). It is an additional service available for a separate subscription fee. Organizations with an EA can add Copilot 365 to their plan, but it requires an additional cost of USD 30 per user per month. This service offers enhanced productivity tools integrated with Microsoft 365 applications but is not a default component of the standard EA package.

Microsoft Enterprise Agreement Optimization Service

Our Microsoft Enterprise Agreement (EA) Optimization Service is designed to help organizations maximize the value of their Microsoft licensing agreements while ensuring compliance and cost efficiency.

This service is perfect for businesses seeking to get the most out of their Microsoft EA, especially as renewal time approaches.

Service Overview

  • License Inventory Assessment: We start by thoroughly reviewing your existing Microsoft licenses. This includes identifying all active, inactive, and underutilized licenses and understanding the specific software and services each license covers.
  • Usage Analysis: We analyze your actual usage data to identify areas of over-licensing and under-licensing. This information is critical to ensure your organization is fully compliant and not paying for unnecessary licenses.
  • License Optimization: Our team will recommend reallocating and reclassifying licenses to ensure you have the right licenses for your needs. This process often results in significant cost savings.
  • Renewal Support: We provide strategic guidance during the EA renewal process, helping to negotiate better terms and prices.
  • Risk Assessment: We identify potential areas of non-compliance and provide recommendations on how to mitigate these risks.
  • Strategic Planning: We help you plan for future Microsoft software needs, ensuring your EA aligns with your organization’s strategic goals and budget.

Key Benefits

  • Cost savings: By optimizing your license usage, you can avoid paying for unnecessary licenses and negotiate better terms in your EA renewal.
  • Compliance assurance: Our service helps you fully comply with Microsoft’s licensing rules, avoiding costly penalties and legal risks.
  • Strategic alignment: We ensure that your Microsoft EA aligns with your organization’s strategic goals and budget, helping you to get the most value out of your investment

Contact us today if you need expert help with your Microsoft Enterprise Agreement!

Author

  • Fredrik Filipsson

    Fredrik Filipsson brings two decades of Oracle license management experience, including a nine-year tenure at Oracle and 11 years in Oracle license consulting. His expertise extends across leading IT corporations like IBM, enriching his profile with a broad spectrum of software and cloud projects. Filipsson's proficiency encompasses IBM, SAP, Microsoft, and Salesforce platforms, alongside significant involvement in Microsoft Copilot and AI initiatives, enhancing organizational efficiency.