Microsoft EA renewal - 6 tips to help you get the best deal
Are you are a business looking to upgrade your Microsoft software? Or a customer looking for the best deal on your Microsoft products? Either way understanding the process of negotiating a Microsoft Enterprise Agreement renewal is key.
Keep reading to discover 5 helpful tips that will support you in securing better deals and discounts from Microsoft when negotiating an Enterprise Agreement.
1. Prepare for your renewal
To get the most out of your Enterprise Agreement renwal you need to prepare! Don’t be left scrambling at the 11th hour. You sign an EA for three years and at the end of this three-year period you will have to renew if you want to continue using Microsoft products and services.
A poorly executed renewal can result in:
- wasted investment
- unnecessary overhead
- missed opportunities
Note: When you renew your Enterprise Agreement, you do not pay for on-premises licenses again. You only pay for the Software Assurance renewal as a mandatory component of the EA.
When deciding on an EA renewal, you need to consider the type of licenses and the features that it offers. For example, you might choose an EA that only includes the Windows 10 Operating System or decide to go for a full suite of products like M365 E3.
You will also want to choose an EA that allows you to buy Microsoft Cloud Solutions, or potentially use a different contract to the EA like Microsoft CSP. If your organization only has a few users, instead of adding this to your EA for most of your users it might make more sense to leverage a different contractual vehicle.
Note: The Enterprise Agreement renewal is actually made up of multiple underlying individual enrollments. Your enrollments could have different end dates depending on when you initially purchased the software or services for this enrollment.
2. List all entities
The first step is to prepare a list of all entities involved in the negotiation. Timewise, you ideally want to start a minimum of six months before the renewal deadline. This will allow you to get an idea of your requirements and to identify any optimization opportunities. Microsoft usually starts internally planning your upcoming renewal 6-12 months in advance.
To be successful in your negotiation with Microsoft, you need to understand how your specific requirements line up with their standardized terms (especially true for cloud services) and the different licensing options and subscriptions.
The world of Microsoft licensing is complex and continually changing. With all the options and innovations available, customers can lose sight of what they actually need and lose track of their compliancy. To be able to negotiate you need to understand Microsoft’s terms and conditions and know where they are willing to be flexible.
3. Identify actual usage
The second step is to identify actual usage of Microsoft software and services within your organization. Do a thorough inventory of your usage on the entire Microsoft portfolio. Also check if you are planning on using additional software or services in the upcoming 12 months. You might want to bring this into your renewal discussions by either price locking this item or purchasing some of your required quantities.
If you are not planning on using a certain product, don’t buy it just because Microsoft wants you to. Optimizing your current Microsoft licenses can lead to significant savings instead of receiving a higher discount through purchasing more.
4. Identify commercial levers
The next step is to identify the commercial levers that will most likely benefit your organization.
For example, Microsoft might propose a significant first-year discount, but then reduce this discount in subsequent years. Discounts can vary greatly between organizations even if they have similar requirements. If the final year of your original EA was based on suboptimal discounts, this will feed into your new agreement as to Microsoft this is the starting point for discussion. This can end up being less than ideal for you.
Make sure to perform price benchmarks on the entire Microsoft estate to find out if you are getting a good deal and if the price you are paying is at or above the market.
5. Not a one-time event
The most important point to remember is that the Microsoft Enterprise Agreement renewal process is forever changing. While the original agreement was a full-on, one-time event, Microsoft now makes it possible to renew at different points in time. While not a common process, this is sometimes used as a sales tactic to enable the Microsoft sales representatives to do business more quickly.
Customers will see the process as being completed once they sign the agreement, however Microsoft’s internal team will already be working on the next one before the ink is dry. They call this “T minus 36” – the three-year countdown until the next renewal.
Microsoft’s approach is geared to ensuring that at each renewal a customer’s licensing estate and spend grows. This happens at a yearly event called the “True up”. Organizations must be prepared for this push from Microsoft to purchase more and more on an annual basis. As stated, this push might be through True ups or through other means such as selling you additional contracts for products you don’t currently own.
Another way for Microsoft to reach their sales targets is through auditing, which is making a comeback in parts of the world where this was no longer common for Microsoft. If you have not had an audit, be prepared for one in the near future. In most cases, an audit will lead to another round of negotiating as you will probably have a settlement discussion if you are out of compliance to their licensing terms.
6. Do not wait until the last minute
In the past Microsoft customers could gain additional discounts by waiting until the very last minute to renew their EA agreement, however Microsoft is actively trying to prevent this.
Microsoft is starting to offer discounts and better prices earlier in the quarter to get customers to renew sooner rather than later. They want to penalize you by reducing discounts if you renew your contract later than the expiry date.
While these tactics are becoming more common, Microsoft is still reliant on making sales. Always try to suss out the sales team and figure out what their incentives are for working as hard as they can for you.
Finally, Microsoft has started outsourcing its paperwork which has led to big delays. They want to avoid the paperwork piling up at the end of the fiscal year, quarter end or the end of the calendar year as it means the revenue might slip to another quarter or even another fiscal year. This is terrible for their individual sales results.
If you start your renewal process on time, you can take advantage of this new approach and aim for the best deal possible.