Enterprise Agreement basics explained

1. What is the Enterprise agreement?

The Enterprise Agreement is a commercial Volume Licensing program that allows companies to purchase Microsoft software and cloud services products through a single agreement, rather than buying individual licenses for each product or service separately. The idea behind this is that it should simplify the purchasing process for companies, save them money and make it easier to manage their software licenses.

The program also provides support through Software Assurance, flexibility in buying cloud licenses and the option to add specific service licenses. There are many options for organizations to purchase licenses, but the Enterprise Agreement is one of the most popular and most used in the world of Microsoft licensing.

Prefer to watch rather than read? Tune into the video below in which Floris discusses the basics of the EA. 

2. Who is the Enterprise Agreement for?

A few years ago, Microsoft announced a change to Enterprise Agreement licensing. Microsoft increased the minimum number of devices required to qualify for EA licenses from 250 to 500. If you are interested in an EA, it is important that you understand these new requirements.

This move was largely done to incentivize smaller organizations to move to the Cloud Solution Provider (CSP) program, as in CSP purchasing goes through a third party and as such makes Microsoft more scalable.

At this moment, you only qualify for the EA if your company has more than 500 users or devices (or if you are willing to purchase this minimum quantity).

Is your organization smaller? Then you can look at for example:

  • Microsoft Cloud Solutions Provider (CSP) 

    • Companies with fewer than 500 employees
    • Lower entry cost (minimum one license)
    • Pay for needed licenses only on a monthly or yearly basis
    • No three-year commitment
    • Drop users as needed (only possible if you purchase on a monthly basis)
  • Open Value Agreement 

    • Companies with fewer than 500 employees
    • EA for smaller organizations
    • Three-year commitment
    • Perpetual license option & Subscription option
    • Purchase via resellers

Note: The minimum requirement of 500 users/devices is only for commercial organizations. The minimum for public sector organizations is 250 users/devices.

Minimum of 500 Users or Devicers
Licensing Expert Floris Klaver

“Microsoft says that despite the complexity of these agreements, they have tried to simplify the process. In our view, the Enterprise Agreement aligns well with old on-premises software purchases but doesn’t necessarily work for Cloud Services all that well. It is an old model that has been refreshed time and time again but not to its full potential.”

3. What can be licensed with an Enterprise Agreement?

The Enterprise Agreement includes the most extensive offer in terms of license possibilities and services and almost the entire Microsoft portfolio is available. It might not be possible to purchase certain items under the EA, like Dynamics 365 Business Central (though concessions do exist).

Within the Enterprise Agreement you can purchase licenses for all products:

  • Cloud services (such as M365 and Azure)
  • More traditional Microsoft software (i.e., SQL Server and Windows Server)
  • Support & maintenance (called Software Assurance (SA) – read more about SA here)

In certain cases, you are able to include Microsoft Professional Services in the EA as well.

You can check which products are available on the Microsoft Product Terms website.

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    4. Basic features of the Enterprise Agreement

    The EA is meant for companies with more than 500 devices and/or users and it works on a company-wide level. For example, Enterprise Software products must be licensed for the whole organization when you decide to license these. Order them separately or in groups of products.

    The latter is known as the Enterprise Platform, which is a combination of Office Pro Plus, the Enterprise Client Access License (CAL) Suite and Windows Operating System. Let us clarify this with an example.

    Say your company has 1500 employees who each have their own device and you want to license your entire organization for Office. You can sign up to an Enterprise Agreement for Office Pro Plus, but you would have to cover all your devices with the Office Pro Plus license.

    Microsoft - Company wide commitment

    Contract term

    The contract term for the Enterprise Agreement is always three years (exceptions have been made). Throughout your contract, you can add and adjust products and services. You must also account for changes through the annual True-up process, which is the process through which you pay for additional licenses and services. Learn more about the True-up here. 

    When you sign your Enterprise Agreement, you fix the price for the products and cloud services that are included in the initial order throughout the term of your contract. If Microsoft increases the price for a certain product, you are protected from this price increase until your contract expires. This price lock is one of the most beneficial conditions of the Enterprise Agreement.

    Upgrade licenses

    Windows operating system licenses provided under the EA are upgrade licenses. You first need a base Windows operating system license for  devices before using a Windows upgrade license.

    Most devices sold on the market come equipped with an Original Equipment Manufacturer (OEM) license, the EA allows you to buy an upgrade license for these OEM licenses to access additional functionality.

    5. Structure of an Enterprise Agreement

    The EA program has four major components:

    • Enterprise Products

    • Additional Products (Enterprise & Additional)

    • Online Services

    • Software Assurance

    Major components of the EA

    The EA is a trust-based contract, meaning customers buy products and Microsoft will trust that this is according to the licensing rules.

    For Cloud Services this (usually) works differently as you can only use the service once you have activated the service, which is not possible until you have bought the licenses for your usage.

    A good Enterprise Agreement is designed to give customers the best possible value for money (or so Microsoft states). For example, a typical part of the EA is the mandatory nature to purchase Software Assurance and to standardize on certain licenses for the whole organization.

    Need support with your EA renewal?

    In this blog we have explained some of the basics of the Enterprise Agreement. The EA remains a complicated licensing model to understand and work with. LicenseQ can provide immediate support and go through the EA process with you. For more information, visit our Contract Negotiation page or contact our licensing experts at info@licenseq.com.