Australian Government Department Leverages Usage Reports to Restructure EA Scope

Case Study: Australian Government Department Leverages Usage Reports to Restructure EA Scope

Industry: Government | Country: Australia

Challenge

A major Australian government department (one of the country’s federal agencies) sought to renew its Microsoft Enterprise Agreement under intensifying budget scrutiny. Public sector organizations often face strict mandates to do “more with less.”

This department was no exception; leadership needed to find cost savings in IT spend due to overall budget pressures on government agencies.

Government IT officials have long noted that agencies frequently overpay for software due to duplicative and underused licenses and that a comprehensive inventory is the first step in identifying savings opportunities.

With an upcoming EA renewal, the department realized it had to leverage detailed usage data to rethink which Microsoft products and services it truly required in its agreement. The overarching goals were to:

• Inventory and Analyze Usage: Collect granular usage reports for all Microsoft software and cloud services covered by the current EA (e.g., Office 365, Exchange, Azure, SharePoint) to determine actual utilization levels. This would highlight any licenses paid for but not actively used (such as subscriptions assigned to inactive accounts or rarely used applications) and identify areas to cut or scale back.
• Restructure the EA Scope: Based on the usage insights, decide which services and how many licenses should continue under the EA. The department was prepared to remove certain components from the enterprise agreement if they were non-critical or better suited for alternative procurement channels. For example, suppose analysis found that only a small fraction of staff used a particular product (say, Project or Visio). In that case, those might be removed from the enterprise-wide agreement and handled via smaller subscriptions as needed, rather than blanket coverage.
• Optimize Costs in Line with Budget Constraints: To meet the government’s budget objectives, significant cost reductions on the Microsoft contract were achieved. This meant rightsizing quantities and negotiating pricing and terms, ensuring the department got maximum value for each taxpayer dollar spent on software. Notably, the Australian government has previously demonstrated the scale of savings possible through smarter Microsoft licensing (e.g., a whole-of-government contract consolidation once saved around AU$100 million on Microsoft spendtheregister.com), so the department was motivated to capture its own savings by restructuring its EA.
• Ensure Continuity and Compliance: Any changes to the EA scope had to be implemented without disrupting services for the agency’s thousands of employees or violating Microsoft’s licensing rules or government procurement policies. The department needed to remain compliant with Microsoft’s requirements (such as covering all “qualified devices/users” for chosen products) even if it reduced the scope and had to maintain necessary capabilities for its operations and citizen services.
• Future-Proof the Agreement: Align the new EA with the department’s future IT plans and the broader governmental IT strategy. This included accounting for the adoption of new technologies (for instance, moving some workloads to the cloud or planning to deploy Microsoft’s latest collaboration tools) while avoiding locking into unwanted products. Flexibility was key; the department wanted the ability to adjust license counts or add/remove services in the future without punitive costs.

In summary, the challenge was to use data-driven insights to trim the fat from the Microsoft EA, reducing costs substantially (“restructure EA scope”) while still supporting the agency’s mission.

The department engaged Redress Compliance to guide this initiative, which aims to demonstrate prudent financial management and set a precedent for smart licensing within the government.

The Process

1. Comprehensive License Audit: The project started with a thorough inventory of the department’s Microsoft licenses and their usage. Redress Compliance helped the agency’s IT asset management team pull detailed reports from Microsoft’s administration portals (Microsoft 365 admin center, Azure usage reports, etc.), covering every product included in the EA. They audited user login/activity logs, feature usage metrics, and allocation records. This audit revealed clear opportunities: for instance, hundreds of Office 365 accounts had been assigned to users who no longer worked at the department, and certain advanced features (like Power BI and Teams telephony integrations) were enabled for all 5,000 staff despite only a few hundred actively using them. By quantifying these findings, the team established a data-backed foundation for redefining the EA’s scope.
2. Stakeholder Consultation & Needs Assessment: Before making changes, the team consulted with key stakeholders across the department, including IT operations, business unit leaders, and the government procurement office, to understand which Microsoft services were essential. They cross-referenced the usage data with qualitative feedback. For example, while the data might show low usage of a product like Microsoft Visio, interviews revealed that only specific teams needed it for specialized work. This step ensured that removing from the EA would not catch critical users by surprise. It also built internal consensus that certain licenses or services could be safely dropped or scaled down. The department’s leadership emphasized that maintaining continuity of citizen-facing services was paramount, so the restructuring plan had to guarantee no downtime or loss of capability for important applications (like email and collaboration) used daily by staff.
3. EA Scope Redefinition: Redress Compliance. The department formulated a new scope for the EA renewal using the insights gathered. This was essentially a tailored list of Microsoft products and quantities the department would commit to in the enterprise agreement. Major changes included:
   • Reduction of License Counts: The department decided to reduce the quantity of certain licenses to better match actual active users. For example, the EA previously covered 5,000 Office 365 E3 licenses (covering all staff broadly), but the audit showed roughly 4,500 active users on average; thus, the renewal was committed to 4,500 licenses, with the ability to true-up if hiring increased. Similarly, unnecessary licenses for niche software were eliminated.
   • Removal of Low-Usage Products: Several Microsoft products that saw negligible use were removed from the enterprise enrollment. For instance, a bundle of developer tools and a legacy on-premises server product were dropped, as legacy hold-overs no longer needed in day-to-day operations.
   • Segmentation of Services: The department opted for a more segmented approach to high-cost, specialized services. Microsoft Power BI Pro licenses, for example, were removed from the “all-in” EA and will instead be procured for the specific data analytics teams that need them. This meant the EA renewal did not include an organization-wide commitment for Power BI, only a smaller set via separate licensing, instantly trimming costs for users who never used that service.
   • Inclusion of Essential New Features: On the flip side, the department identified a few new Microsoft offerings it valued (such as enhanced security add-ons in Microsoft 365) and ensured those remained or were added, but only for the subset of users who required them. By narrowing the scope to what’s needed, the department avoided paying for enterprise-wide coverage of tools that only a fraction of employees use.
4. Negotiation and Pricing Strategy: With a clearly defined and slimmed-down scope, the department approached Microsoft to negotiate the renewal. Redress Compliance provided negotiation support, leveraging the usage data to justify each reduction. The department’s message to Microsoft was clear: “We are willing to commit to what we use, but we need fair pricing on that commitment.” Microsoft was initially resistant to granting additional discounts because the agency was reducing the total value of the contract (by not renewing certain items). However, Redress helped the department present a compelling case that keeping this government client satisfied with Microsoft’s pricing was in Microsoft’s long-term interest (especially in light of public sector budget oversight). They also compared other public sector deals and market rates, ensuring the department wasn’t paying above market price for any product. In the end, Microsoft agreed to maintain the department’s existing discount level on the core products (despite the reduced volumes). It even introduced new promotional pricing for specific government-use programs, further lowering costs. The negotiation resulted in a restructured EA with flexible terms, including clauses allowing the department to scale certain licenses down annually if usage continued to drop, providing an opportunity for future savings without waiting for the next renewal cycle.
5. Implementation of the New EA and Monitoring: After signing the re-scoped EA, the department, with Redress Compliance’s guidance, implemented the changes methodically. They transitioned users off the removed products smoothly by uninstalling unused software or shifting heavy users to alternative arrangements as planned. A communication plan ensured all employees understood any minor changes (for example, some users were informed that Visio would now be available by request instead of blanket availability). Importantly, the department set up continuous monitoring procedures to track license usage going forward. This included quarterly internal reviews of Microsoft 365 and Azure usage reports to catch any new underutilization early. The agency is committed to saving costs and preventing waste from creeping back in by instituting this ongoing governance. This proactive stance aligns with broader government initiatives; as one federal CIO put it, reducing wasteful software spending is an enterprise effort and requires vigilance so that agencies can still accomplish their mission for taxpayers while cutting unnecessary costs.

Results

• Significant Cost Reduction: The restructuring of the EA scope immediately lowered the department’s Microsoft licensing expenses by an estimated 20% annually. By cutting out unused licenses and dropping superfluous services, the department saved a substantial sum, roughly AUD 1.5 million per year in direct licensing costs. Over the three-year term of the new EA, this amounts to about AUD 4.5 million in savings compared to the previous status quo. In terms of the agency’s overall IT budget, this optimization freed up approximately 8% of their IT budget that was previously tied up in excess Microsoft fees, allowing those funds to be reallocated to other critical public service IT projects. This result proved that careful analysis and negotiation can yield tangible budgetary benefits for the government.
• EA Tailored to Actual Needs: The department’s Microsoft agreement fully aligns with real usage and requirements. The new EA covers the core services that every employee relies on (like email, Office apps, and collaborative tools) and ensures ample capacity for those. Still, it no longer includes one-size-fits-all quantities of specialized products that only a sliver of the workforce uses. This tailored approach means the agency isn’t paying for idle enterprise-wide entitlements. Every component in the EA was scrutinized for value, leading to a leaner contract. Importantly, the department retained the flexibility to acquire any omitted software in smaller numbers if needed, so there’s no loss of capability – just avoidance of overspending. Microsoft’s provision of flexible pricing for add-on licenses outside the EA also validated the department’s approach, as it can still support power users without burdening the entire organization with those costs.
• Improved Governance and Compliance: The department significantly improved its software asset management practices through this process. The agency strengthened its compliance with Microsoft’s terms and government procurement policies by conducting a full license inventory and implementing regular usage monitoring. The risk of non-compliance (e.g., having more users than licenses or using software not covered by agreements) was reduced, since the new arrangement is clearer and easier to manage. The department now has detailed records of who is assigned what license, and excess assignments have been cleaned up, meaning it is far less likely to pay penalties or scramble during audits. Furthermore, the outcome aligns with government-wide calls for better accounting of software assets and eliminating waste – the department can serve as a model, having demonstrably “stopped paying for what we don’t need” in its IT portfolio. This success will feed into internal audits and parliamentary budget reviews as evidence of the department’s commitment to efficiently using taxpayer funds.
• Budget Reinvestment and Enhanced Services: The cost savings were not merely left on the table; the agency could reinvest the freed funds into priority areas. For instance, a portion of the saved budget was redirected to bolster the department’s cybersecurity tools and to upgrade network infrastructure – initiatives that had been flagged but unfunded before the EA savings. Optimizing the Microsoft licensing spend created room in the budget to improve services elsewhere, benefiting the department’s operational resilience and the citizens who rely on its services. This aligns well with public expectations that government agencies spend wisely; resources are now better allocated without compromising any Microsoft-dependent capabilities internally. In fact, by shedding unnecessary software, IT support teams reported fewer helpdesk tickets for unused or little-known applications, allowing them to focus on supporting the essential tools employees use daily.

Quote from the CIO:

“Leveraging detailed usage data was a game-changer for us. It revealed exactly where we were overspending on Microsoft licenses and gave us the evidence to make bold changes. With Redress Compliance’s guidance, we confidently negotiated a slimmed-down agreement that fits our agency like a glove. We’ve achieved considerable cost savings – about twenty percent off our previous Microsoft spend – and redirected that money to other critical IT projects. Importantly, we did this without disrupting our users or sacrificing any capabilities. This exercise proved that even in government, with all our budget constraints, we can be agile and smart about software licensing. It’s been a win for our financial mandate and the taxpayers we serve.”

Key Results:

• Cost Savings: ~20% reduction in Microsoft licensing costs (approximately AUD 4.5 million over three years) by removing or reducing low-value licenses and securing negotiated discounts.
• Optimized Scope: The Microsoft EA now covers only what the department truly needs, improving utilization rates and ensuring no significant software is paid for without being used. Any niche requirements are handled via smaller-scale licenses as needed.
• Enhanced Governance: Full license inventory and quarterly usage reviews are in place, strengthening compliance and preventing overspend. The department sets a precedent in government for proactive software asset management to eliminate waste.
• Budget Reallocation: Savings have been successfully reinvested into higher-priority areas such as cybersecurity and infrastructure upgrades, enhancing the department’s service delivery without requiring additional budget allocations.

Through this case, the Australian government department demonstrated a proactive approach to software licensing: using data and expert help to restructure its Microsoft EA for maximum value. The initiative met immediate budget pressure by cutting costs and established a culture of continuous license optimization. By aligning spending with actual usage, the department can confidently report that it is being a responsible steward of public funds, all while maintaining the technological capabilities needed to fulfill its mission.