Alternatives to Microsoft’s Enterprise Agreement could mean lower prices. Important changes underway!

In July 2016, Microsoft will take the next step towards simplifying its licensing. There will be important changes to the company’s Enterprise Agreement (EA). The minimum seat requirement will be raised from 250 users/devices to 500 users/devices.

Companies that by the new metric can no longer make use of the Enterprise Agreement program will be advised choosing the Microsoft Product and Services Agreement (MPSA) and Cloud Solutions Provider (CSP) programs. However, end users who already have an Enterprise Agreement in the 250-500 users/device range will be allowed to extend their current EA for one additional 36-month period at their time of renewal.

Government End Users enrolled in the Microsoft EA, as well as those enrolled in the Server and Cloud Enrollment (SCE), will not be impacted by this change. Mark Nowlan, director of licensing marketing Worldwide Licensing and Pricing, revealed that EA end users were informed of the change in December 2015. Resellers were notified in January. Microsoft went public with the changes on February 1st.

Besides Microsoft’s obvious push for the cloud, the change is due to the low renewal rates for EA end users with less than 500 users/devices. Apparently EA is not the appropriate licensing model for these organizations anymore.

We believe that the complexity and rigidity of the EA agreement was the main trigger. Some end users may end up paying millions for products and services they don’t use before they can exit or change the three-year EA contract. The rapid growth of cloud computing just stresses this problem. Let’s therefore look at EA alternatives, and the advantages they bring to the table.

EA alternatives and advantages      
The main advantage of the Microsoft Products and Services Agreement (MPSA) licensing model is that it makes software procurement fast, flexible and consolidated. In this way, end users can purchase all software and cloud services they need through one simplified agreement.

Other advantages include licensing cost reduction. MPSA customers only need to license the exact amount of users/devices they require at the moment of signing the contract. They have the flexibility of adding or subtracting licenses as the business requirements change.

In addition, this agreement brings no annual commitment and no minimum purchasing requirements. End users also have access to Microsoft Azure and can pay as they go, so storage scales with the business requirements.

The Cloud Solution Provider (CSP) program is designed for end users who are fully committed to online services and looking to outsource service management. End users benefit from the easy purchase of partner tools, products, and/or services with their subscription in one predictable monthly bill. Beyond the inherent benefits of the cloud, CSP customers are entitled to use in-product tools to directly provision, manage, and support their users.

Is this a better deal?

It seems that Microsoft’s ultimate goal is to have one unified approach to volume licensing. Any step in that direction will have a beneficial impact on all parties involved.

EAs were originally designed for big companies deploying Microsoft products. Just a few years ago, a 1000-employee organization only had 250 devices in a day and only power workers used a PC. Nowadays a 50-person organization may have as much as 200 devices.

A subscription model may offer more flexibility. The ability to drop licenses based on changing business requirements over time may save software licensing costs.

Every time a software publisher changes licensing and contracts definitions, it is important to fully understand the impact of these changes on your organization. Only then, you can determine the best option for you, from a business perspective and a cost perspective.

If you feel your organization is in need of expert knowledge, feel free to contact B-lay. We will help you make software compliance an exciting opportunity to improve your business!