Microsoft Enterprise Agreements: Navigating the Risks

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

As many CIOs and their teams know, Microsoft Enterprise Agreements (EAs) are challenging to decipher, manage and optimize. What used to be fairly straightforward perpetual licensing became considerably more complex when Microsoft began adding “strings” to its software assurance (SA) maintenance model. Today, assessing the value of maintaining SA on all or part of your Microsoft estate has become something akin to quant-based market analysis using supercomputers.

Why do I say this? Simply put, to truly determine the best EA for your organization, dozens of scenarios with dozens of variables must be modeled. Unfortunately, Microsoft (and other large vendors with similarly complex licensing) places the burden and risk of this analysis on customers.

Case in Point:

The typical CIO or CFO will may ask, “Should we continue to pay for SA on all or a portion of our MSFT estate?”  t’s an easy question on the surface. However, the answer is anything but.

In order to answer this question you have to, at a minimum, answer the following:

1)   Which versions of Microsoft’s desktop, server and collaboration products do we use and how long might we be happy staying on those versions? Of course the answer will likely vary by product (e.g., many organizations are very happy with Windows 7 and Office 201- or 2013, but they may want the more powerful features of newer Exchange and SQL server editions).

This means you have to model out the quantities and costs, by product, for 3, 5 or perhaps 7 years, to begin to see which combinations of products and timing make sense for your organization.

2)   Where, when and how is SA required by Microsoft? You need to understand all the intricate ways in which SA in now being required with many MSFT products. Do you need virtualization in your data center? You probably need SA on your SQL servers. Want to deploy VDI? You need Office Roaming rights.  Want to use MDOP? You need SA on the Windows OS … and the list goes on.

3)   Will a Select Agreement versus an Enterprise Agreement impact your SA requirements? You can buy certain products on either a Select Agreement or the Enterprise Agreement. But, you won’t get much discounting on Select, and some products like the eCAL require SA no matter which agreement is used.

4)   What about the cloud? This adds another layer of variables to consider.  When might you move to O365 (e.g., after your current SA benefits on Office end? 5 years out?)? What are the costs of the user-based licensing model as compared to the EA model? How do the numbers play out for Azure (yet another use/pricing model)?

5)   How can you determine whether the pricing tiers and discounts offered by Microsoft are in line with peer purchases in the market?

As you can see, a simple question can lead to very complex, forward-looking and assumption-riddled analysis. And if you get it wrong, you’re subject to true-ups or audits when you under-buy, and no ability to “true-down” when you buy too much.

License optimization for Microsoft, Oracle, IBM, SAP and other enterprise IT suppliers has become too complex for even the best IT sourcing professionals to navigate alone. That is why firms like Gartner are recommending that buyers tap into licensing experts in addition to technical and legal experts when entering into any enterprise license. It’s quickly becoming less of a luxury and more of a necessary best practice for obvious reasons – vendors profit from customers’ lack of insight in these areas.

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