6 Questions to Help Optimize Your Next Microsoft EA Renewal

Microsoft EA renewals have always been high-spend, high-stakes. But a number of factors have upped the ante. They include a greater number of software license audits (and higher penalties), changing product terms and the inherent complexity of migrating to Microsoft’s cloud offerings.

For IT Sourcing pros tasked with negotiating a renewal, the implications are serious. Their next Microsoft EA renewal shouldn’t be treated as business as usual as it will present greater opportunity for overspending and compliance missteps. On the flipside, it’s also an opportunity to level-set and fine tune the EA for more value, more flexibility and best-match licensing that cuts cost and risk.

Microsoft EA Renewal Checklist – Pre-Negotiation Optimization

Even before the ink is dry on an EA renewal, Microsoft is already strategizing how to extract more revenue from the customer’s next renewal event. This isn’t broad sales speak, by the way — it’s a formalized program to which sales and account teams are trained and measured. With that in mind, enterprise customers should respond with the same rigor, discipline and data/intel.

At least six months before the EA renewal event (and ideally nine to 12), enterprises should ask the following questions:

1. Are we renewing our EA using an accurate usage baseline for license/subscription counts? Most companies add up everything they already bought, and use that as the baseline for their renewal requirements. But the reality is that many companies are mis-licensed — either because their usage requirements have evolved or because they didn’t create accurate usage profiles with their prior purchases (see question #2!). You may be licensed for more units or more horsepower than you need. Or you may be inadvertently using more units than you’ve purchased (see #3). Now is the time to establish an accurate license position — compare actual usage to actual entitlements to identify gaps.  Then you have an accurate baseline onto which you can layer forecasted demand for the upcoming renewal term.
2. Are we a candidate for user profiles? As mentioned above, if you’re continuing year after year to license your organization exactly the same way for all users, it’s time for a change (and, most likely, material savings). The first important item to consider is how the users in your organization vary in their technology requirements, and if they truly require anything beyond a Core CAL. Once you’ve made the determination that there are separate profiles in your company, it’s imperative to carefully construct profile definitions and be prepared to defend your position when getting Microsoft’s approval to use these profiles in your renewal. It may require some effort upfront, but the payoff is typically well worth it — up to 70% license savings for certain user groups.
3. If we were to be audited by Microsoft today, would we be in or out of compliance? Enterprise software license audits are a fact of life. Prepare for them, starting with conducting an internal license position assessment. This establishes what you own and compares deployments to entitlements to identify over- and under-utilization. Most importantly, it gives you an opportunity to define remediation options and establish a plan on your terms. With the right discovery tools and licensing and product use rights interpretations, many companies find they’re able to fully mitigate their compliance risk.
4. Do we really need Software Assurance? For many EA customers, SA can account for 75-87% of the cost of a license over a three-year term. While upgrade protection is one of the primary reasons companies purchase and renew SA, the reality is there’s no guarantee that Microsoft will release a new version over the course of an EA or that the customer will want to upgrade. NPI estimates that 80% or more of Microsoft enterprise customers are overpaying for SA, and that half of these customers could benefit from dropping SA on at least one product group covered in their volume licensing agreement. If you think you fall in that category, determine if you already have upgrade rights to what you need for each offering, and whether you will deploy new releases from Microsoft over the next several years. Then, weigh the benefits of SA on a “must have” and “nice to have” basis for all products.
5. If using Microsoft’s cloud offerings — specifically Office 365 — does our agreement protect us should we want to move back to on-premise? This is a broad consideration with multiple facets, but an important one. Microsoft’s cloud offerings have certainly gained adoption momentum, but there are still numerous instances where companies have had to revert to on-premise. Engineer your agreement to protect you in the event this should happen. Examples include establishing data ownership rights and determining whether you need to maintain SA on on-premise licenses so you can retain rights to the most current version of on-premise products at the end of your agreement.
6. What transition assistance will be provided should you decide to move back to Microsoft’s on-premise solution or to another provider? At some point, you may want to go back to Microsoft’s on-premise solution – or switch vendors altogether. Migrating this data fully intact is a substantial undertaking. Historically, Microsoft hasn’t provided robust transition assistance, which means companies need to negotiate services or funding up front to lessen their burden down the road. Be sure to clearly specify your data transition needs in your agreement as well as Microsoft’s service/fiscal responsibilities.

If you have a Microsoft EA renewal on the horizon, here is a one-stop resource center with more guidance.

NPI is an IT sourcing consulting company that delivers transaction-level price benchmark analysis, license and service optimization advice, and vendor-specific negotiation intel that enables IT buying teams to drive measurable savings. For more information, visit www.npifinancial.com.