Microsoft EA

Microsoft Enterprise Agreement

What is Microsoft Enterprise Agreement?

Microsoft’s Enterprise Agreement is a commercial Volume Licensing program aimed at business clients that opt in for at least three-year licensing period. With Microsoft’s Enterprise Agreement, clients can acquire cloud services or Microsoft software via a single agreement instead of single ones. Essentially, Microsoft Enterprise Agreement is an agreement between Microsoft and the company that states that the acquired software would be paid off over the 3 years of the Enterprise Agreement. This program is intended to simplify the software purchasing for companies while also offering better prices for the licenses. The management of the acquired software licenses is also made easier through the Enterprise Agreement.

Benefits of Microsoft Enterprise Agreement

  1. Centralisation of software purchase and management: easier to track the software usage and compliance with Microsoft’s guidelines
  2. Cost reduction: discounts for larger license amounts compared to per-user and per-device licensing
  3. Software Assurance: Microsoft Enterprise Agreement includes Software Assurance which offers the company the benefit of technical support, training and access to newly released software
  4. Access to cloud technologies: in Microsoft Enterprise Agreement the cloud-based services Azure and Microsoft 365 are included

Drawbacks of Microsoft Enterprise Agreement

  1. Long-term contract: companies must commit to the agreement for 3 years; this can potentially limit its flexibility regarding adjusting the agreement to the
  2. Payment up-front: the payment model of Microsoft Enterprise Agreement is always up-front regardless of whether the company chooses to pay for the full 3 years or year by year
  3. Complexity: Microsoft Enterprise Agreement often entails complex licensing and pricing which could somewhat confuse companies in weighing the costs and benefits of the agreement

Who is Microsoft Enterprise Agreement for?

The main target audience of Microsoft’s Enterprise Agreement are companies with 500+ personal computers or users. As of July 1st 2016, the minimum quantity requirement was increased from 250 to 500. An exception is made only for public clients, that need to have at least 250 devices. Essentially, Microsoft Enterprise Agreement is a contract that facilitates the quantity-rich purchase of software licenses. This is mainly beneficial for bigger corporations as they can purchase high volumes at lower prices. The amount the company pays in the first year is determined by Microsoft based on a prediction of the company’s software usage. In case the company ends up using less than predicted, there is no refund. The long-term contract of the Enterprise Agreement cannot be flexibly modified. This means that in case a company uses less software than expected, it would still pay the full amount. Additionally, the payment also includes an annual amount for Software Assurance.

Microsoft Enterprise Agreement vs Cloud Solution Provider

As mentioned above, Microsoft Enterprise Agreement is mostly intended for bigger companies that can enter into a long-term contract for 3 years. Companies that prefer an agreement with a Cloud Solution Provider or another Microsoft software reseller, can negotiate both discounts and flexible contract terms. An agreement with a Cloud Solution Provider is paid for and can be cancelled monthly. The amount of licenses can also be modified. The payment of Microsoft Enterprise Agreement is upfront either for the whole or for the upcoming annual period. While both agreements – Cloud Solution Providers and Microsoft Enterprise Agreement allow for a license increase at any time during the contract, only with the former companies can decrease the amount of licenses. In case an organization needs to decrease the license amount during an Enterprise Agreement, this can be done only once a year.