How a Multi-State Energy Company Used Forecast Modeling to Renegotiate Its Microsoft EA
Overview:
A major energy and utilities company operating across several Midwestern states felt the upcoming Microsoft Enterprise Agreement renewal was urgent. The company, which we’ll call Midwest Energy Co., supplies power to millions of customers across state lines and relies heavily on Microsoft software for office productivity and critical operations.
With thousands of employees (from corporate offices to field crews) and increasing cloud usage, their Microsoft licensing needs were complex. Historically, the company’s approach to EA renewals was conservative, often accepting Microsoft’s terms with minimal changes.
But this time, budget pressures and an evolving IT strategy (including cloud migration and IoT projects) meant they needed a better deal. Midwest Energy Co. engaged Redress Compliance to help transform how they planned for and negotiated the EA, specifically by developing a data-driven forecast model to anticipate needs and strengthen their bargaining position.
Challenge:
Without detailed insight, the utility’s IT and procurement leaders knew that they risked overcommitting (and overpaying) for the next three years. Their user base and technology requirements were moving targets. For example, some regions were scheduled to roll out smart grid software (increasing Azure usage), while other business units were downsizing or automating (potentially reducing Windows/Office user counts).
Microsoft had presented an initial renewal quote that assumed growth and included pricey additions like advanced security licenses for all users. “In the past, negotiating our EA felt like guesswork,” recalls the IT Asset Management (ITAM) manager at Midwest Energy Co. “We lacked a clear picture of future usage, so we often erred on buying more than we needed. That left money on the table.”
The company needed to accurately forecast its user counts and workloads and use that knowledge to oppose Microsoft’s proposal. Another challenge was getting internal executives on board with a hard-nosed negotiation stance that would require solid evidence and planning.
Solution – Forecasting and Scenario Planning:
Redress Compliance’s team stepped in as a strategic advisor, helping Midwest Energy Co. build a robust forecasting model and negotiation strategy.
Working with the company’s ITAM and finance teams, they collected extensive data on current usage and plans.
The forecasting model factored in multiple variables, including:
- User trends: Projected headcount changes by department and region (e.g., accounting for retirements, new hires, or potential outsourcing). This identified areas where license counts could shrink or needed to grow.
- Workload shifts: Planned IT initiatives affecting Microsoft product usage, such as an upcoming move of on-premise systems to Azure cloud services, deployment of Microsoft 365 to field technicians, or adoption of Dynamics 365 for customer service. Each initiative was modeled to estimate additional licenses or cloud consumption required and any legacy systems that would be phased out.
- License optimization opportunities: Analysis of current license assignments revealed several true-down opportunities. For instance, not all employees needed the premium Office 365 E5 license that was being paid for – many could be perfectly served with an E3 license at a lower cost. Similarly, certain server and database licenses were found to be oversized relative to actual usage. These findings were built into the forecast, assuming the company would drop or downgrade those licenses if Microsoft didn’t offer a compelling reason to keep them.
- Multiple scenarios: Redress helped develop a few scenarios (best-case, expected, worst-case) for the coming three years. In a conservative scenario, user count would stay flat, and some cloud projects might be delayed, meaning the company would need fewer licenses than Microsoft’s projections. They factored in business expansion and new projects requiring more licenses in a growth scenario. This scenario planning ensured the team understood the cost implications under different futures and identified the most likely scenario. It also highlighted a “Most Likely” case that became the basis for their target negotiation position, while keeping the other scenarios as fallback plans.
Negotiation Levers and Tactics: Armed with the detailed forecast and scenario data, Midwest Energy Co.’s procurement lead and Redress Compliance crafted a negotiation strategy that put the company in the driver’s seat.
Rather than accepting Microsoft’s one-size-fits-all renewal quote, they came to the table with clear demands and alternatives.
Several specific negotiation levers emerged from the analysis:
- Rightsizing and Phased Deployment: The company made it clear they would only commit to the number of licenses truly needed. For example, they prepared to turn down hundreds of underutilized licenses at renewal (particularly those E5 licenses not in heavy use). They also planned a phased rollout of certain new features—if Microsoft wanted to sell security add-ons, only critical user groups would get them initially, with an option to expand later if justified. This prevented blanket purchases of expensive upgrades for everyone on day one.
- Flexible Terms for Growth or Contraction: Thanks to scenario planning, the negotiators pushed for flexible contract terms, such as adjusting license counts annually without penalty. Specifically, Midwest Energy Co. proposed shifting parts of the agreement to a subscription-based EA, allowing them to decrease license quantities at the yearly anniversary if their workforce or usage dropped. This was a significant ask, but they used their forecasts to show it was reasonable – for instance, if a power plant division was being automated, they could predict a reduction in staff needing Office 365 in year 2. By highlighting these upcoming changes, they convinced Microsoft to include provisions for mid-term adjustments (something not typically offered freely).
- Exploring Alternative Sourcing: The team signaled that they had alternatives if the deal wasn’t satisfactory to strengthen their hand. They analyzed which services could be moved from the EA to other licensing channels or competitors if needed. One example was leveraging Microsoft’s Cloud Solution Provider program for certain Azure workloads, which they could shift to if the EA pricing for Azure didn’t come down. Another considered Google Workspace for a subset of users if Microsoft 365 costs couldn’t be contained. They didn’t necessarily want to take this route, but having these well-researched options gave them credible leverage. It told Microsoft that the company was prepared to leave parts of the deal unless the terms improved.
Redress Compliance played a critical role in scenario planning and executive alignment throughout this process. They helped the ITAM and procurement leads translate the forecast numbers into a compelling story for senior executives.
Together, they prepared executive briefing materials illustrating how different negotiation outcomes would impact the IT budget and operational capabilities. In one board meeting, the team presented three scenario outcomes: a status-quo renewal (high cost, unnecessary extras), an optimized renewal (with the identified cuts and discounts), and a no-deal scenario (using minimum licenses or alternate solutions as a stopgap).
Seeing these side-by-side gave the CEO and CFO confidence that pushing for the optimized scenario was safe and smart. Redress even coached the internal team on negotiation messaging – how to confidently present the data to Microsoft’s sales reps and where to stand firm.
Outcome:
The result was a renegotiated Microsoft EA far more favorable to Midwest Energy Co. than what Microsoft initially proposed. The company secured substantial cost savings and future flexibility in the final agreement. The total Microsoft spend for the next three years was about 18% lower than without these efforts, translating to several million dollars saved.
This included immediate savings (eliminating unnecessary licenses and getting discounts on the rest) and avoided future costs (not committing to licenses until needed). Moreover, the new EA included clauses allowing the company to adjust down some license counts at each anniversary, providing a safety valve if the business needs a contract. “It was the first time we backed a Microsoft negotiation with solid data, and the difference was night and day,” said the procurement lead in charge of vendor negotiations. “We went from Microsoft dictating our costs to having an upper hand. The forecast model and scenarios let us say ‘no’ to overspending, because we could prove what we required. Ultimately, we achieved a deal aligned with our reality, and our leadership was thrilled.”
Perhaps just as important as the dollar savings, the exercise changed the company’s whole approach to IT procurement. The ITAM manager noted that forecasting and data-driven planning are standard practices before any major software renewal. Departments are more disciplined about communicating their roadmaps so that license planning is proactive.
The collaboration with Redress Compliance empowered the internal team to manage Microsoft licensing with a new level of confidence and precision. Executive stakeholders also gained trust that IT and procurement can control large vendor costs with the right analysis.
Midwest Energy Co.’s case demonstrates how even a traditionally “old-school” industry like utilities can innovate in contract negotiations. Using forecast modeling and careful scenario planning, the company turned a routine EA renewal into a strategic win, achieving immediate savings and a more flexible contract to weather whatever the next three years bring.
