New Microsoft EA Licensing Program Spells Higher Costs for Enterprise Customers

Spend Matters welcomes another guest post from Jon Winsett of NPI, a spend management consultancy focused on eliminating overspending on IT, telecom, and shipping.

On November 10, 2013, Microsoft will debut its new SCE licensing program – a three-year enrollment under the Microsoft Enterprise Agreement (EA). This program will effectively replace two of the most popular EA licensing programs, ECI and EAP, as well as raise EA costs for most enterprise customers.

In most cases, SCE discounts are lower. Under EAP, customers have received a 40 percent discount off of License and Software Assurance (L&SA). Under ECI, the discount has been 20 percent. Yet, under SCE, the discount drops to 15 percent.

For Software Assurance (SA) renewals, SCE offers a 5 percent discount. While this is an improvement for EAP customers, who previously received no discount for SA, it’s a drastic decrease for ECI customers. Under ECI, the current discount for SA renewals is 20 percent.

Minimum commitments are higher. Lower discounts aren’t the only way that SCE is introducing higher costs to Microsoft’s EA customers. Those enterprises under ECI will notice a change in minimum commitments. Whereas ECI has required a minimum commitment of 25 licenses, the SCE requires all Windows Servers in the customer’s environment to be covered. Customers can no longer pick and choose which servers to add to the ECI.

The negative cost impacts of SCE are in addition to Microsoft’s recent price increases. For some customers, SCE may feel like Microsoft is adding insult to injury – a claim that can easily be validated thanks to several significant price hikes from the vendor. Pricing for Windows Server 2012 R2 Datacenter Edition is up 28 percent. SQL Server client access license (CAL) pricing is up approximately 25 percent. And SharePoint Server costs have increased by a whopping 38 percent.

NPI anticipates Microsoft will announce additional price increases in the next few weeks. In October, Microsoft is scheduled to announce several more price changes for its application and infrastructure offerings. It’s safe to assume prices will be higher for most solutions, thereby rendering a one-two punch to enterprise IT budgets.

Enterprises that want to avoid these price increases need to act immediately and renew the EAP and ECI portions of their EAs before November 10. Those that wait may pay as much as 40 percent more in 2014.

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