How to Prepare for Your Next Microsoft EA Renewal

How to Prepare for Your Next Microsoft EA Renewal

Executive Summary: Renewing a Microsoft Enterprise Agreement is a strategic process beyond paperwork. To prepare for an EA renewal, companies should begin well, typically a year before expiration, by auditing current license usage and forecasting future needs.

Key steps include cleaning up unused licenses, aligning stakeholders on requirements, developing a negotiation strategy, and exploring all options (like Microsoft’s Cloud Solution Provider program) to ensure the renewed agreement delivers maximum value at the best cost.

Start Early and Set a Renewal Timeline

Don’t wait until the last minute.

A successful EA renewal process often starts 8–12 months before your agreement expires. This lead time is crucial for gathering data and avoiding rushed decisions. Create a timeline with milestones for each phase of the renewal.

For example, at 12 months out, kick off an internal project and assign a team; by 6 months out, complete your usage analysis and define needs; at 3 months out, finalize negotiations with Microsoft.

Microsoft typically expects final terms to be agreed upon a month before the expiration date, so building in ample time is key. Starting early also allows you to align with Microsoft’s fiscal year timing.

For instance, Microsoft representatives may be more flexible with discounts if negotiations occur before their year-end (June for Microsoft).

In short, treat the renewal as a project with a clear schedule and deliverables, rather than a last-minute contract extension.

To visualize the process, here’s a high-level timeline of renewal prep phases:

Conduct an Internal License Review (Current State Audit)

Before you decide what to renew, you need a clear picture of what you have and are using. Conduct a thorough, effective license position (ELP) review of your current EA.

This means inventorying all the products and licenses under your EA and comparing that to actual usage data. Identify any unused licenses or under-deployed services – these are potential cuts for renewal.

For example, you might find you purchased 2000 Visio licenses but only 500 people actively use Visio, or you have Microsoft 365 E5 for everyone, but only a fraction use the advanced features. These findings are gold: they show where to trim down (reduce quantities) or shift to lower-cost editions.

Also, check for any license shortfalls (overuse) so you can address compliance via true-up before renewal. Knowing your status is better than having Microsoft discover it during negotiations. This internal audit phase often requires input from IT (for usage stats) and asset management teams.

The outcome should be a spreadsheet or report detailing: what you own, what’s in use, what’s not, and any gaps. With that, you can make informed decisions rather than blindly renewing the same numbers.

Read about Microsoft EA pricing.

Forecast Future Needs and Changes

An EA renewal should not just mirror the past; it must account for your organization’s plans for the next three years. Engage with business units and IT planners to forecast changes impacting Microsoft licensing.

Are you expecting user growth or hiring freezes? Are there any acquisitions or divestitures on the horizon that will add or remove users? Perhaps there’s an initiative to roll out new technology, e.g., deploying Dynamics 365 or Power Platform widely, which would require adding those licenses.

Conversely, you might plan to retire some on-premises systems in favor of third-party SaaS, meaning certain Microsoft server licenses could be dropped.

Cloud adoption plans are particularly important: if you intend to move more workloads to Azure or Microsoft 365, ensure the renewal can accommodate that (perhaps by including an Azure commitment or additional Office 365 services).

On the other hand, if you foresee moving some workloads off Microsoft (say to Google Workspace or AWS), factor that in and consider not renewing those components.

The goal is to align the EA with your future state. Create a forecast of users and required licenses for each new term year. This helps avoid overcommitting and gives Microsoft a heads-up on your expected growth (which can sometimes get you better terms if they see potential for increased usage).

Optimize and True-Up (or True-Down) Before Renewal

With the data from your audit and forecast, it’s time to optimize your license portfolio. This is arguably the most critical step in reducing costs.

Go line by line through your current EA components:

• Eliminate Shelfware: Identify licenses that were paid for but not used. Common culprits are extra Office 365 seats, or products like Visio, Project, or Power BI, assigned broadly but used sparingly. Plan to drop these licenses at renewal (turn down to zero or a minimal number actually in use). Every license you remove is immediate cost savings.
• Rightsize License Levels: Evaluate whether all users have the appropriate edition. If they don’t need the premium features, it might be possible to downgrade some users from, say, Office 365 E5 to E3 or from Windows 10 Enterprise E5 to E3. Implementing a tiered licensing model (different profiles for different user types) can trim costs without impacting productivity.
• Consider Subscription vs. Perpetual: If you realize you have more licenses than needed during your term, it might be because a traditional EA locks you in. Consider shifting certain products to subscription (if available) so you can scale down. For example, some organizations switch to an Enterprise Subscription Agreement (EAS) at renewal if they expect downsizing because it allows annual adjustment of quantities.
• Address True-Ups: If you have unreported usage (i.e., more users deployed than you contracted), strategize the true-up. It might be wise to true up right before renewal so you can enter negotiations in compliance. However, if those extra users will only be short-term, you could negotiate a concession or plan to remove them at renewal instead of paying a full year true-up. Microsoft often requires resolving any overuse (via true-up payment) as part of renewal, but you might negotiate some leniency if you’re also cutting back elsewhere.
• Optimize Cloud Commitments: If your current EA had an Azure monetary commitment you didn’t fully use, consider reducing it or moving to a pay-as-you-go model in the new EA (or vice versa if you undercommitted and then paid a lot of overage). Align Azure commitments with your actual cloud consumption patterns to avoid tying up budget unnecessarily.

By the end of this optimization phase, you should have a clear target of what products you need and how many of them you need for renewal. Often, this exercise alone yields significant savings – companies frequently discover 10-30% of their licenses can be cut or downgraded.

Engage Stakeholders and Align on Strategy

Preparing for an EA renewal isn’t a job for IT alone. It requires a cross-functional effort.

Key stakeholders include IT (to provide technical requirements and usage info), Procurement/Sourcing (to handle negotiations and vendor management), Finance (to set budget constraints and approve funding), and often department or business unit leaders (to validate what tools their teams need).

Early in the process, convene a stakeholder group to share findings from your license review and the proposed plan for the new term.

Getting buy-in is important, for example, if you plan to remove a certain product from the EA, ensure the affected business unit agrees and has an alternative if needed. Likewise, finance leadership should understand the anticipated spending and savings.

A unified internal front will make negotiation smoother; you don’t want last-minute internal disagreements when you’re about to sign. Set clear goals for the renewal as a team: e.g., “reduce total EA cost by 15% without losing key capabilities” or “include Office 365 for 500 new users within the same budget.”

These goals will guide your discussions with Microsoft and prevent scope creep. Internally, also define your negotiation walk-away conditions – know what you are willing vs. not willing to compromise on (for instance, a maximum price per user, or a requirement for a certain product to be included).

Explore Alternatives and Leverage Options

While renewing the EA might be the default path, it’s wise to consider alternatives as leverage. Research if Microsoft’s Cloud Solution Provider (CSP) program or other licensing models could serve your needs, especially if your organization’s profile has changed.

For example, if you now have 400 users instead of 500, an EA may no longer be the best fit, and CSP or smaller volume agreements could save money.

Alternatively, if you’re unhappy with Microsoft’s offering or pricing, evaluate competition in specific areas (Google Workspace for collaboration, AWS for some cloud workloads, etc.) – even if you don’t switch, having those comparisons can strengthen your negotiating position with Microsoft.

Another aspect of alternatives is considering a partial renewal: you don’t necessarily have to put every Microsoft product in the EA. Sometimes, leaving certain non-core products out and buying them separately or on different plans might be beneficial.

During negotiation, subtly letting Microsoft know that you have options (like “we’re evaluating moving some users to Exchange Online Plan 1 via CSP” or “considering third-party security for some functions”) can pressure them to offer a better deal to keep your whole estate in the EA.

Just be careful not to bluff unrealistically – focus on credible alternatives. Additionally, if multiple resellers or a Licensing Solution Provider (LSP) are involved, you can pit them against each other to some degree (for pricing, services offered, etc.).

Microsoft’s rules often fix the software price, but partners can adjust their margins on services or offer incentives, so a bit of competition there can help.

Read Microsoft EA vs CSP: Which Microsoft Licensing Model Fits Your Organization?.

Negotiate the Renewal Contract

With your usage analysis and a clear vision of what you need (and don’t need), you can now enter detailed negotiations with Microsoft (and/or your reseller).

Negotiation is where you secure the financial and contractual terms for the next EA:

• Pricing and Discounts: Present your desired bill of materials (the quantity of each license type) and push for the best pricing. Use any benchmarks you gathered (what similar companies pay, or prior deals) to justify a discount. If Microsoft initially proposes a price over your budget or higher than expected, provide counter-arguments: “We’ve removed X licenses and are growing Azure usage, we need better pricing on the remaining items,” or highlight any loyalty (years as a customer) and competitive context.
• Concessions and Incentives: Microsoft might offer incentives to close the deal, such as a one-time credit, extended payment terms, or free use of certain products for a period. Evaluate these critically; some incentives (like free months of a service) can reduce effective cost. Don’t hesitate to ask for sweeteners, especially if you are increasing cloud spend or agreeing to adopt new Microsoft technologies (such as their security stack or Power Platform).
• Contract Flexibility: Negotiate terms that give you flexibility. For example, if your strategy changes, include a cap on annual price increases for renewals or a clause allowing swapping one product for another of equivalent value. Ensure the true-up terms are clear. Ideally, you want the same discount level to apply to any added licenses. If you anticipate needing to reduce licenses mid-term, explore if anything can be built in (usually not in a standard EA, but perhaps via blended approaches or shorter subscriptions for certain components).
• Verify Everything in Writing: Carefully review the paperwork once you agree. Check that all the discounts, special terms, and future pricing protections you negotiated are explicitly documented in the EA amendment or renewal documents. If anything is missing or vaguely worded, now is the time to fix it. It’s much harder to address issues after signing.
• Finalize Approval: Loop back with your executive sponsors (CIO, CFO, etc.) on the final negotiated package. Ensure it meets the business goals set out. The last thing you want is an executive veto at the eleventh hour due to a surprise cost.

By the end of the negotiation, you should feel confident that the renewed EA aligns with your organization’s needs for the next three years and that you’re not leaving easy savings on the table.

Recommendations

• Begin Preparations Early: Kick off the renewal planning at least 9–12 months before your EA expires. Early planning gives you time to uncover optimization opportunities and avoids last-minute pressure.
• Audit Your Current Usage: Perform a detailed license audit to identify unused licenses and over-provisioned users. Use this data to decide what to cut or change; don’t simply renew “as is” without validation.
• Align Licenses with Needs: Only renew what you truly need for the future. Eliminate or downsize any shelfware. Plan license counts based on realistic forecasts, not outdated assumptions.
• Engage All Stakeholders: Include IT, procurement, finance, and business leaders in the renewal process. A collaborative approach ensures the renewed EA covers business requirements and has buy-in across the organization.
• Optimize Before You Negotiate: True-down unused licenses and right-size editions before going to Microsoft. Cleaning house internally strengthens your position – you can clearly explain reductions and avoid paying for surplus.
• Leverage Negotiation Timing: Approach Microsoft well in advance and be mindful of their fiscal calendar. Suppliers are often more flexible when deals close before the end of the quarter or year. Use this to your advantage when scheduling negotiations.
• Explore Alternative Options: Evaluate if a full EA renewal fits best. Check pricing for CSP or other Microsoft licensing programs for parts of your needs. Use viable alternatives as a negotiation lever or even mix models if advantageous.
• Set a Clear Negotiation Strategy: Define your target outcome (cost savings, new products included, etc.) and your walk-away points. Communicate these to your negotiation team so everyone stays on message when interfacing with Microsoft.
• Secure Flexible Terms: Where possible, negotiate terms that add flexibility, such as the ability to swap certain licenses or add a new product at a fixed discount later. Ensure any special terms or discount guarantees are documented in the contract.
• Review and Communicate: Once the renewal agreement is signed, communicate the changes to relevant teams. Update your internal asset records with the new entitlements and ensure everyone knows about any new tools or license restrictions to maximize the value from day one.

FAQ

Q1: What’s the biggest mistake enterprises make when approaching a Microsoft EA renewal?
A1: The biggest mistake is starting too late. Many companies procrastinate and scramble in the final month, simply renewing the same contract without optimization or negotiation. This often means missed savings and being stuck with terms that don’t fit current needs. Starting early and treating the renewal as a strategic project helps avoid this pitfall.

Q2: How far in advance should we begin the EA renewal process?
A2: Ideally, begin 8 to 12 months before your EA expiration. Starting even earlier (12–18 months out) can benefit very large enterprises or complex environments. This timeframe allows for thorough analysis, internal consensus-building, and multiple rounds of negotiation with Microsoft. At an absolute minimum, 6 months is recommended; anything less and you may find yourself rushed or lacking leverage.

Q3: Who should be involved in the renewal planning?
A3: Bring together a cross-functional team. Typically, this includes the IT department (or IT asset management) to provide data on current usage and technical requirements, Procurement/Sourcing to handle vendor communications and deal strategy, Finance to set budget parameters and ensure the spend aligns with financial plans, and potentially Legal for contract review. It’s also wise to involve key business unit leaders or application owners, especially if any are heavy Microsoft software users – their input ensures the renewed agreement meets operational needs. Having all these stakeholders engaged early prevents surprises and builds a united front for negotiation.

Q4: How do we decide which licenses to cut or keep for renewal?
A4: Base this on data and business justification. After auditing usage, list out unassigned or under-utilized licenses – these are prime candidates to cut. For each product, ask: “Do we still need this? If yes, for how many users or servers?” Involve the actual users or owners of the software, maybe a certain department no longer needs a tool. Also consider plans: if a product is strategic in the future, you keep or expand it; if it’s being phased out, you might remove it at renewal. Essentially, you want to renew licenses with clear business use and trim those without. If unsure about certain borderline cases, you can opt for a smaller quantity or a shorter-term alternative (like a CSP subscription for a year) rather than a full 3-year commitment in the EA.

Q5: What if we need more licenses during the new EA term?
A5: You will use the true-up process for any increases during the term. At each anniversary, you report additional licenses/users added and pay the prorated cost for those. A well-negotiated EA will have provisions that any new licenses you add will be at the same discount or unit price as the initial ones, protecting you from price gouging. Including extra licenses in your initial order is possible if you anticipate growth, effectively pre-paying for some growth at a known price. If you expect a lot of growth, communicate that to Microsoft – they may offer a better rate knowing your license count will increase substantially (they sometimes call this “price for growth”). Conversely, if you expect potential decreases, consider a subscription EA so you won’t be stuck paying for licenses you no longer need. Planning for expansion or contraction is part of the renewal strategy.

Q6: Should we consider switching from an EA to Microsoft’s CSP program at renewal?
A6: It depends on your organization’s size and flexibility needs. An EA is great for large, stable environments where you can commit to many licenses for three years and enjoy volume discounts. CSP is more flexible – you can add or remove licenses month-to-month – but the per-unit cost can be higher and typically managed through a partner. If your user count drops below the EA minimum or you need the agility to scale up and down frequently, moving to CSP (or a hybrid approach) could make sense. Some companies use a hybrid licensing model: renew an EA for core products at a baseline level and use CSP for fluctuating or small-scale needs. As part of renewal prep, have your procurement team get CSP quotes for equivalent licenses and compare the total 3-year costs and benefits. This will inform your decision and give you leverage either way.

Q7: How can we improve our chances of getting a bigger discount during renewal negotiations?
A7: Preparation and leverage are key. First, do your homework: know your current spending, what you truly need, and what that should cost (use benchmarks if available). Second, create competition or the impression of it – if Microsoft senses that you might switch some services to another provider or are seriously evaluating CSP/other resellers, they often become more flexible. Engage your Microsoft account team early to inform them that cost is a major concern and that you’re exploring all options. Additionally, aligning your negotiation to Microsoft’s fiscal year-end can help; sales teams are often hungry to close deals by the end of Q4 (June) or the end of the quarter. Another tactic is to bundle in new services Microsoft is pushing (for example, if they have a new product like security or AI features, expressing openness to adopt it might get you a bigger discount on the whole deal). Lastly, don’t be afraid to ask, “We need a x% cost reduction to make this work,” and back it up with reasons. Microsoft won’t offer more discounts unless you push for it and have data or alternatives to support your case.

Q8: What if our organization is not ready by the renewal deadline?
A8: Missing the renewal date can be risky. If an EA lapses, technically, you lose the right to add new licenses or renew Software Assurance, and any new purchases might revert to full price. In practice, Microsoft usually works with customers to avoid a lapse (it’s in their interest to keep you under contract). If you can’t finalize in time, talk to Microsoft about a possible short-term extension of the existing EA or a bridging agreement. They have been known to extend an EA by a few months to allow negotiations to complete, but this isn’t guaranteed and may require higher-up approvals. The better approach is to avoid a last-minute crunch: if you start early, you should be ready to sign on time. In the worst-case scenario where time runs out, continue discussions with Microsoft – as long as both sides are engaged, they typically find a way to keep coverage in place (even if it’s a temporary purchase order) so you’re not non-compliant. Still, this situation weakens your negotiation leverage, so it’s best to plan well and stick to the timeline.

Q9: If we choose an Enterprise Subscription Agreement (EAS) at renewal, how do we handle true-downs or reductions?
A9: In an Enterprise Subscription (the subscription-based EA), you can reduce license counts at each anniversary. To do so, you’d perform an annual reconciliation similar to a true-up, but instead it’s a “true-down.” You inform Microsoft that you want to decrease certain licenses for the coming year. Your next annual payment would then be adjusted downward accordingly. This is very useful if you anticipate layoffs, divestitures, or moves to other platforms. Remember, there may be some limitations – for example, you generally can’t go below the program minimum (500 users), and some reductions might need to be communicated a bit before the anniversary. Also, the initial pricing was based on your starting quantity, so if you drop a lot of licenses, sometimes the discount level could change (less volume could mean a slightly higher unit price). Clarify in the contract how price levels are handled if quantities decrease. Overall, EAS offers more flexibility; you just have a yearly process to evaluate if you should adjust counts down (or up) based on current needs.

Q10: After renewing the EA, how can we manage it better over the next term?
A10: Post-renewal, you should shift into proactive management to avoid last-minute scrambles next time. Maintain a living inventory of licenses and track usage throughout the three years. Regularly (say quarterly or biannually) review if you have excess licenses or new needs – this way, true-ups and the next renewal won’t be a shock. It’s also wise to document any special terms or discounts from your EA and set reminders to revisit them; for instance, if you negotiated a special price for an add-on, ensure you plan for its expiration or renewal. Engaging with your Microsoft rep periodically is good – they can update you on product changes or opportunities for optimization. Many organizations also invest in Software Asset Management (SAM) tools to continuously monitor license compliance and utilization. By staying on top of these factors and keeping stakeholders informed, you’ll be in a strong position when the next renewal cycle arrives. Essentially, license management should be treated as an ongoing process, not a one-time event, every three years.

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