How a New York Financial Services Firm Replaced Its EA with CSP, Cutting Costs by 34%
Challenge: A New York-based financial services firm – a regional investment company with roughly 2,500 employees – was approaching the end of its Microsoft Enterprise Agreement.
The firm’s leadership was pressured to reduce IT operating costs and increase flexibility, especially as business needs rapidly shifted with more cloud adoption.
They found that the rigid 3-year EA, with its upfront commitments, led them to pay for licenses and capacity they didn’t fully utilize. (Microsoft’s traditional EA often forces organizations to “overshoot” their actual needs due to long-term fixed commitments.) The company’s CIO and sourcing team wanted to explore alternatives before renewing the EA.
Around the same time, Microsoft announced plans to phase out Enterprise Agreements for smaller clients (generally those under 2,400-3,000 users) by 2025, encouraging them to move to more flexible licensing programs.
Given this context, the firm engaged Redress Compliance to evaluate replacing the EA with a Cloud Solution Provider (CSP) subscription model.
The key goals were to cut ongoing Microsoft licensing costs, gain agility in scaling licenses up or down, and ensure no loss of service quality or compliance in the transition.
Solution:
Redress Compliance guided the financial services firm through a comprehensive plan to assess, plan, and execute a migration from EA to CSP, while negotiating terms that maximized savings.
The approach can be summarized in four main phases:
- EA vs. CSP Cost-Benefit Analysis: First, Redress performed a detailed analysis of the firm’s current Microsoft usage and spending under the EA. They modeled the costs for renewing a similar 3-year EA versus moving to a CSP model (where licenses are subscription-based via a Microsoft partner). This analysis included examining the firm’s true software needs: how many Office 365 seats were actively used, what level of Azure consumption they had, and which EA benefits they utilized. It became clear that the firm had been maintaining more licenses than needed in certain areas (partly because the EA required forecasting for three years of growth). While the EA did offer a volume discount of about 5–10% on licenses, the pay-for-what-you-use approach under CSP would eliminate the waste of unused licenses. In other words, the flexibility of CSP – no upfront lock-in, monthly adjustable subscriptions – promised greater value than the modest EA discount, given the firm’s usage profile. This financial comparison forecasted that switching to CSP could reduce the firm’s Microsoft licensing costs by over one-third, even after accounting for the loss of EA-specific discounts or perks.
- Alignment of Licensing Needs: Next, Redress and the firm’s IT team reviewed all the Microsoft services to ensure a move to CSP would meet the company’s requirements. The CSP program covers nearly all Microsoft products and services in the EA, so that functionality would remain the same. One consideration was Software Assurance (SA) benefits that come with EAs (like certain upgrade rights or training days); the team identified that most of these benefits were not mission-critical for the firm or had equivalent solutions under CSP or separate offerings. For example, the company’s key workloads were Exchange Online, SharePoint Online, Teams, and Azure, all fully supported in CSP. They had minimal on-premises server software reliance, so losing traditional SA wasn’t a blocker. Compliance requirements in the financial sector (e.g., data retention, eDiscovery) remained satisfied through Microsoft 365’s features, which are identical regardless of EA or CSP licensing. Redress also helped the client evaluate and choose a qualified CSP partner who could provide responsive support and assist with license management. (A partner manages billing and support under CSP, so picking the right provider was important. The chosen partner offered dedicated account management and even a small additional discount on top of Microsoft’s base prices.)
- Transition Planning: A detailed migration plan was created to ensure a smooth switch at the EA’s end date. The plan covered timeline and milestones – for instance, when to notify Microsoft of non-renewal, how to transition accounts to the CSP licensing on day one after EA expiration, and steps to prevent service disruption. Redress coordinated with the selected CSP partner to pre-provision the necessary Microsoft 365 licenses in the new CSP tenancy so that when the EA lapsed, all user accounts could be seamlessly reallocated to the CSP subscriptions immediately. Azure usage was also transitioned: the firm took the opportunity to convert their Azure environment from EA billing to CSP billing, which involved transferring subscriptions (with Microsoft’s assistance behind the scenes) to the partner’s management. The plan accounted for data integrity and access, ensuring that all user mailboxes, files, and Azure resources would remain accessible and fully licensed throughout the changeover. The firm scheduled the cut-over for a weekend to minimize user impact and did extensive testing in a staging environment beforehand. Additionally, Redress advised on communicating the change internally, even though end-users wouldn’t notice a difference in their software; this was more to reassure stakeholders that the licensing change was under control and supported by experts.
- Execution of CSP Migration: When the EA term ended, the firm executed the switch with Redress’s oversight. The old EA was not renewed, and all Microsoft licenses were now purchased through the CSP program on a monthly subscription basis. Thanks to meticulous preparation, the cut-over was uneventful. Employees logged in on Monday as usual without interruptions to email, Teams, or other services. The IT finance team immediately began seeing the differences: rather than a huge upfront EA bill, they now get monthly invoices based on actual usage. If 50 new employees are hired in one month, licenses can be added for that month; if 50 employees leave the next month, those licenses can be removed the following month – a true pay-as-you-go model. In the first couple of months after the transition, Redress and the CSP partner closely monitored the license counts and Azure consumption to ensure everything was optimized. They identified some development/test Azure resources left running and incurring costs. They shut them down, which was an immediate benefit of closer billing visibility under CSP. Minor adjustments were made, such as fine-tuning user assignments for certain add-on licenses, but overall, the new model settled in quickly.
- Post-Transition Optimization: With the firm now off the EA and on the CSP model, Redress provided ongoing advisory support on license optimization best practices. The company implemented policies to regularly review and adjust licenses, which is now much easier with the flexibility of CSP. For example, they established a practice of reviewing license utilization monthly (via the CSP partner’s portal) and promptly removing any unassigned licenses or downgrading unused higher-tier licenses. The finance department also appreciated the improved cost transparency – they could see exact monthly costs per service, and charge back departments based on actual consumption. This real-time management approach ensured the 34% cost reduction was achieved and sustained over time. If usage increases, costs will rise accordingly, but the key is that they only pay for what they use when they use it, with no more overspending on idle capacity.
Results: By transitioning from an EA to a CSP licensing model, the financial services firm realized immediate and long-term benefits:
- Dramatic Cost Reduction: The move yielded a 34% reduction in Microsoft licensing costs compared to the prior EA. This was a substantial savings, cutting a third of their yearly Microsoft spend. The savings stemmed from no longer overpaying for unneeded licenses and excess capacity and avoiding the periodic EA true-up growth charges. Instead of locking into a fixed cost, the firm’s spend directly mirrors its usage. This case validates that for many mid-sized organizations, CSP can be far more cost-effective than an EA, especially if the EA had included significant shelfware and oversizing. (Notably, Microsoft has been steering smaller enterprises toward CSP for agility and cost reasons.)
- Enhanced Flexibility & Scalability: Under the new CSP arrangement, the company has gained unprecedented flexibility in managing licenses. They can scale licenses monthly to meet business needs, with no penalties. This agility was impossible under the old EA (which only allowed increases at yearly true-ups and never decreases mid-term). For the IT team, this means they can rapidly onboard software for new employees or new projects without worrying about long-term commitments, and likewise immediately dial back licenses if certain projects retire or if there is a downturn. This agility to respond to change is extremely valuable in a dynamic financial industry environment. It also improves their software asset management: capacity planning is no longer a high-stakes guessing game set in a three-year stone, but rather an ongoing process of fine-tuning month by month.
- Improved Budgeting & Cash Flow: The shift to monthly billing (away from large lump-sum EA payments) helped the finance department in budgeting and cash-flow management. Costs are now predictable and closely aligned to actual operational size. There are no surprise overage bills and no more sinking capital into unused prepaid licenses. This pay-as-you-go model effectively turned a fixed cost into a variable cost, which reduces financial risk if the company needs to tighten spending in the future. The CFO commented that this made planning quarterly budgets for IT expenses easier, as they can adjust forecasts quickly if the business scales up or down.
- Maintained Compliance & Support: Despite the licensing model change, the firm fully complies with Microsoft’s requirements and has not sacrificed any capabilities. All the security, compliance, and productivity features required in a regulated financial environment remained in place after moving to CSP. Additionally, the company now enjoys partner-managed support: their CSP provider supplies prompt support services and licensing expertise, supplementing Microsoft’s standard support. This has improved the service level – instead of being a smaller fish in Microsoft’s large EA pond, they are a priority client for a dedicated partner. Any issues or questions about licenses need to be addressed quickly. The CIO noted that having an expert partner “on call” for licensing matters has been a welcome change, allowing his team to focus more on strategic IT initiatives than contract administration.
- Strategic IT Realignment: Cost savings (which total hundreds of thousands of dollars annually) have been redirected toward strategic IT projects that add direct value to the business. The firm increased investment in advanced data analytics and cybersecurity tools – critical enhancements for a financial services company – using some of the freed-up budget. Moreover, by freeing the organization from the constraints of the EA, the IT department can adopt new Microsoft technologies or services more readily as needed (since they can just add them via CSP on the fly). This puts the company in a stronger position to innovate. In short, the licensing change supported a broader digital transformation strategy: it cut waste, improved flexibility, and funneled resources to innovation and growth.
Quote from the CIO: “Switching from a one-size-fits-all Enterprise Agreement to a CSP model was a game-changer for our IT strategy.
We’ve cut our Microsoft licensing costs by a third and are no longer trapped in an inflexible contract. Redress Compliance guided us smoothly through the transition, and their expertise gave us the confidence to make this big change.
Now, we only pay for what we use and can scale on demand. In an industry where agility and cost-efficiency are paramount, this move has freed up resources and made us far more nimble. It’s one of the best decisions for our software portfolio.”
Key Results:
- Cost Savings: 34% reduction in annual Microsoft licensing spend after moving to CSP (several hundred thousand dollars per year saved).
- Agility Gained: Licenses can be added or removed monthly, avoiding the over-commitment and shelfware of a static 3-year EA.
- Optimized Usage: No significant unused licenses remain; the firm only pays for what it uses each month.
- Financial Flexibility: Improved budgeting with predictable monthly costs and no large upfront payments.
- Full Functionality: 100% of required Microsoft services and compliance features are retained post-migration, with improved support from the CSP partner.
This case demonstrates how Redress Compliance enabled a financial services firm to break out of an outdated EA and adopt a modern CSP approach. The company achieved substantial cost savings and a more flexible IT operating model.
The success underscores a broader trend: for many organizations, especially mid-sized ones, Microsoft’s CSP program offers a compelling alternative to the traditional EA that aligns costs with actual use and empowers businesses to be more adaptive.
