Case Study: Nordic Bank Renews Microsoft EA with 24% Discount After Usage-Based Right-Sizing
Industry: Banking | Country: Sweden/Norway
Challenge
A leading Nordic bank with extensive operations across Sweden and Norway engaged Redress Compliance to assist in renewing its Microsoft Enterprise Agreement (EA).
Facing internal budget pressure to reduce IT costs, the bank needed to ensure it wasn’t paying for licenses it didn’t use, a common issue, as studies show nearly 44% of Office 365 licenses at a typical company are underutilized or oversized.
With the EA expiration looming, the bank’s objectives were to:
- Assess Current Usage: Perform a thorough audit of Microsoft license deployment and actual usage (Office 365, Azure, etc.) to identify underutilized licenses and redundancies. Previous analysis has indicated that businesses could simply lower Office 365 costs by around 14% by reclaiming inactive or oversized licenses, underscoring the potential savings in this step.
- Right-Size License Portfolio: Align license quantities and tiers with real needs – for example, downgrading users from premium E5 to more appropriate E3 plans where high-end features were not required, and eliminating or reassigning any licenses associated with departed or inactive users.
- Align with Strategy & Compliance: Ensure the new EA meets the bank’s future IT roadmap (cloud adoption, security requirements, etc.) and stringent financial industry compliance standards while maximizing value.
- Negotiate Cost-Effective Terms: Leverage the usage data and industry benchmarks to negotiate a more favorable renewal price. The goal was to secure significant discounts reflecting the right-sized license count and to introduce flexibility for future adjustments.
- Benchmark Against Peers: Compare the bank’s Microsoft spending and proposed terms with similar financial institutions in the Nordic region to validate that the negotiated pricing was competitive and in line with market standards.
Given the highly regulated banking environment and the bank’s mandate to trim unnecessary spending, optimizing the EA before renewal was imperative. The challenge was achieving substantial cost savings (targeting a double-digit percentage reduction) without disrupting mission-critical Microsoft services.
The Process
- Usage Data Analysis: Redress Compliance consultants collaborated with the bank’s IT team to gather detailed usage reports from Microsoft 365 and Azure dashboards. They comprehensively reviewed all Microsoft software and cloud services in use, mapping the bank’s entitlements to actual consumption. This analysis pinpointed numerous instances of underutilization – for example, software deployed on hundreds of rarely used PCs, and thousands of Office 365 accounts with inactive users. (Indeed, underutilization is a widespread issue; one SaaS audit found over one-third of premium Microsoft 365 E5 licenses could be downgraded based on real usage patterns.) The team built a clear case for rightsizing the license count by quantifying these gaps.
- License Right-Sizing and Cleanup: Using the insights from the audit, the bank systematically right-sized its Microsoft license portfolio. This involved reclaiming or reassigning licenses from departed employees, removing duplicate or obsolete deployments, and shifting many users to the correct license tier for their needs. For instance, certain departments had been provisioned with E5 licenses despite only using email and basic Office apps – these were switched to more cost-effective E3 licenses with no loss in productivity. Similarly, unused add-ons (such as idle Power BI Pro subscriptions) were terminated. This rightsizing exercise ensured the bank was compliant with Microsoft’s licensing rules and immediately eliminated wasteful spending. (By optimizing license assignments, organizations can significantly cut costs – one financial firm reduced its Microsoft licensing bill by 14% annually without impacting productivity.)
- Strategic Roadmap Alignment: The project team worked with the bank’s CIO and architects to develop a three-year IT roadmap and ensure the EA renewal would support it. A key consideration was the bank’s ongoing digital transformation, including a planned increase in cloud services and advanced analytics. The team identified which Microsoft products would be critical going forward (such as Azure cloud services for a new data platform) and which legacy systems could be phased out or moved off the EA. They also addressed regulatory and security requirements, ensuring that licensing changes (like removing unneeded services) would not compromise the bank’s data governance or audit obligations. This strategic alignment meant the new EA would be leaner in scope but fully capable of supporting the bank’s future initiatives in a compliant manner.
- Benchmarking and Negotiation Planning: Redress Compliance brought in industry pricing benchmarks and past experience from similar EA negotiations in the banking sector. The bank’s Microsoft spend and proposed license volumes were compared against peer institutions to gauge where additional discounts could be justified. Knowing that Microsoft offers volume-based discounts (up to 45% off list prices for the largest enterprise deals in some cases), the team set an ambitious target for the renewal discount. They crafted a negotiation strategy emphasizing the bank’s efficient license usage and long-term partnership value to Microsoft. Armed with data showing the bank’s true needs (post-optimization) and the risk that the bank could reduce scope or consider alternatives, the team was prepared to push for a substantial price reduction.
- Negotiation and Renewal Outcome: The bank presented its detailed findings and the streamlined licensing plan in negotiations with Microsoft. This data-driven approach made a compelling case – Microsoft representatives could clearly see the bank’s usage profile and understood that the days of overpaying for excess licenses were over. The negotiation resulted in Microsoft offering significantly improved terms: They were basing the renewal on the reduced number of licenses and granted an additional discount on top of the standard volume pricing. The new EA included provisions for flexibility (such as the ability to scale down certain licenses mid-term if business units shrink) and assurances that the bank would retain favorable pricing if it needed to scale back up. By the end of this phase, the bank secured a renewal deal that was far more cost-effective and tailored to its actual requirements.
Results
- Cost Savings: The EA renewal delivered immediate and impressive savings. The bank achieved a 24% reduction in its Microsoft licensing costs due to the right-sizing and negotiation. In financial terms, the optimization of licenses translated to roughly SEK 20 million in wasteful spend eliminated, and the negotiated discount off Microsoft’s pricing brought an additional SEK 10 million in savings. Total savings over the three-year EA term are about SEK 30 million, compared to the projected status quo spend without these efforts. This substantial cost reduction freed up the budget that the bank could reallocate to other pressing IT investments, even while fully compliant with Microsoft licensing.
- Operational Efficiency: By removing unused licenses and simplifying the Microsoft product set under the EA, the bank reduced administrative overhead in managing its licenses. The licensing costs dropped by roughly 24% (aligning with the savings achieved) while maintaining full operational capability. Processes for tracking licenses are now more efficient, with better visibility into who needs which software. The risk of paying for duplicate or forgotten licenses has been greatly mitigated. Equally important, the bank’s IT team can more easily ensure that every software deployed has a clear business owner and purpose, improving governance.
- Strategic Outcomes: The bank’s new EA aligns with its strategic goals. It is a leaner, more flexible agreement that supports the bank’s planned cloud adoption and growth, without excess. Removing unnecessary products and adding flexible terms means the bank can adapt the EA as its business evolves (for example, scaling licenses up for new projects or down after project completions, with predetermined pricing). By cutting out the bloat, the EA funds innovation: resources saved are being redirected to digital transformation projects (such as mobile banking app enhancements and AI-driven analytics) that drive competitive advantage. Furthermore, the bank upheld all regulatory compliance needs – the right-sizing did not compromise any required capabilities or controls. The institution is better positioned to innovate under a sustainable IT cost structure.
- Financial Compliance: The initiative also satisfied the bank’s finance and audit requirements. All changes were documented and justified, demonstrating prudent financial management. The significant savings achieved directly address the budget pressures, and the finance department can report a successful cost optimization effort to the bank’s stakeholders and regulators. This case exemplifies how a data-driven licensing review can yield major budgetary benefits while meeting business and compliance needs.
Quote from the CFO:
“By partnering with Redress Compliance, we gained a crystal-clear view of our Microsoft usage and costs. This enabled us to eliminate waste and negotiate a better deal with Microsoft. In an environment where every IT dollar is scrutinized, achieving a 24% cost reduction without hindering our operations is a huge win.
Redress’s expertise in right-sizing our licenses and pushing for the best terms was instrumental in helping us meet our budget targets while empowering our teams with the tools they need.”
Key Results:
- Savings Achieved: ~SEK 30 million total savings (24% cost reduction) over three years.
- Optimized Licensing: Eliminated redundant and underutilized licenses, ensuring the bank pays only for what is used, fully in line with Microsoft compliance requirements.
- Operational Efficiency: Simplified license management and improved transparency in software usage, reducing oversight effort and risk of overspending.
- Strategic Alignment: A renewed Microsoft EA tailored to the bank’s current and future needs, providing flexibility for growth and innovation while maintaining rigorous cost control.
This case highlights how a large banking institution leveraged detailed usage analytics to drive a successful EA renewal negotiation.
With Redress Compliance’s guidance, the Nordic bank turned licensing insights into tangible savings and a stronger strategic position. This demonstrated that even in a highly regulated industry, it is possible to significantly cut costs without compromising technology or compliance.
