Challenge: An industrial manufacturing firm based in Michigan engaged Redress Compliance to assist in renewing its Microsoft Enterprise Agreement.
The company operates multiple production plants and offices, with about 10,000 employees using a mix of on-premises and cloud-based Microsoft technologies.
As the EA renewal approached, the manufacturer was under pressure to control costs amid fluctuating demand in the industrial sector.
An internal audit had revealed that many Microsoft 365 and server licenses were not fully utilized, indicating potential inefficiencies.
The firm’s goals for the renewal were to:
- Perform in-depth usage analysis: Gather detailed data on actual usage of Microsoft products (Office 365 apps, Power BI, Azure services, etc.) across engineering, production, and administrative teams to identify underutilization.
- Optimize and right-size licenses: Align licensing with current needs—for instance, remove or reassign licenses for users who have left or moved to non-IT roles, and downgrade certain user licenses if advanced features are not being used.
- Avoid unnecessary spending on renewals: Use the usage data to avoid renewing subscriptions or support for software the company wasn’t actively using, thereby preventing “auto-renew” waste.
- Negotiate a substantial cost reduction: Armed with data, push for a significant discount on the EA renewal. The target was to reduce the overall cost by around 25–30% from Microsoft’s initial proposal. The company also wanted flexible terms for future workforce changes or technology shifts.
- Plan for future adoption: Ensure the new EA can accommodate planned initiatives, such as migrating certain factory management applications to Azure, without incurring prohibitive new costs.
In summary, the manufacturer needed a strategy to leverage its detailed usage insights to slash the EA costs while still positioning the company for modernization and growth.
The Process: Redress Compliance partnered with the firm’s IT asset management and finance teams to execute a data-driven renewal strategy:
- Comprehensive Usage Data Collection: Redress initiated a thorough license usage audit. They tapped into Microsoft 365 admin portals, Azure usage reports, and on-premises license trackers to compile a clear picture of how each software license was used. This revealed, for example, that many of the users assigned expensive Office 365 E5 licenses were only using email and Office apps – features that cheaper E3 or F3 licenses could serve. Similarly, certain Azure services under the EA were running well below capacity, and some Visual Studio subscriptions were assigned to former developers who were no longer with the company.
- License Rightsizing & Cleanup: Redress identified specific opportunities to right-size the licensing footprint using the audit findings. They recommended reclaiming or eliminating over 1,000 unused or underused licenses across various products. In practice, this meant downgrading many users to more appropriate license levels, canceling redundant subscriptions (for example, extra Power BI Pro licenses that weren’t being used), and consolidating workloads on fewer, more cost-effective Azure resources. These optimizations were carefully planned to ensure no disruption to any employee’s ability to do their job – the changes removed only excess, not needed capabilities.
- Baseline and Demand Planning: The team worked with department heads to project realistic future demand for Microsoft services. For instance, if the manufacturing operations planned to introduce more automation and IoT sensors in plants, they anticipated increased Azure usage but perhaps not a proportional increase in Office 365 users. This exercise helped establish a reliable baseline for the renewal – a lower, more accurate license count that reflected the true needs of the business (after the cleanup) rather than the inflated counts from the previous EA. It also prepared the firm to communicate its anticipated growth or changes to Microsoft during negotiations, with justification for each adjustment.
- Benchmarking & Pricing Analysis: Redress provided the manufacturer with benchmarking data on typical discounts and pricing similar to those of industrial companies achieved in recent Microsoft EA renewals. This context made it clear that Microsoft’s initial renewal quote (which assumed the higher, pre-optimization license count and standard discount) was not competitive. By highlighting that the firm was aware of market rates and had viable alternatives (like shifting certain workloads to competitive platforms or delaying deployments), the team built a compelling case for a deeper discount.
- Negotiation and Discount Strategy: Armed with the usage analysis and benchmarks, the manufacturer entered negotiations confidently. Redress formulated a negotiation playbook detailing which points to press, for example, citing the low utilization rates of certain products as a reason to either remove them from the renewal or demand a price cut. The data-driven approach paid off: Microsoft’s sales team, presented with facts and the risk of the customer scaling back, was amenable to offering more aggressive pricing. Ultimately, the firm secured an average 28% discount across its EA line items. This included increased discounts on Microsoft 365 licenses and Azure consumption commitments, and securing some bonus benefits (such as training credits and extended support) at no extra cost. The negotiated agreement also incorporated flexible true-up/down terms, allowing the company to adjust license quantities annually if business needs changed (crucial in the volatile manufacturing sector).
Results: By leveraging usage analysis to guide its EA renewal, the Michigan manufacturing firm achieved remarkable savings and a leaner licensing posture:
- Cost Savings: The most striking outcome was the 28% reduction in the overall Microsoft EA cost compared to the status quo. In financial terms, the company slashed its projected spend by several million dollars over the three-year term. For example, by not renewing unnecessary licenses and obtaining steeper discounts on the rest, the firm saved an estimated $4.2 million versus Microsoft’s initial proposal. These savings went straight to the bottom line, freeing up budget for other investments.
- Efficiency Gains: The license optimization saved money and improved operational efficiency. The firm now only pays for software, ensuring a high ROI on each license. They achieved this while fully compliant with Microsoft’s licensing rules, avoiding any compliance risks. The IT department also implemented new processes (and tooling) to continually monitor software usage. This means the organization can prevent creep of underutilized licenses in the future – a cultural shift towards ongoing optimization rather than a one-off exercise.
- Enhanced Flexibility: With the newly negotiated EA terms, the manufacturer has greater flexibility in responding to change. If a production line is added or a new team requires Microsoft tools, they can scale up knowing the unit pricing is locked in favorably. Conversely, if the company needs to downsize or pause certain projects, the agreement allows license counts to be scaled down at the annual checkpoint, avoiding wasted spending. This flexibility directly resulted from Redress pushing for usage-based terms in the contract. It effectively future-proofed the agreement against the ups and downs of the manufacturing business cycle.
- Strategic Readiness: The outcome of the renewal set the stage for innovation. The IT leadership gained breathing room (and executive buy-in) to pursue modern initiatives by trimming excess fat from the software budget. For instance, part of the savings is being reallocated into an Azure pilot for IoT-enabled machinery data analytics – a project the company had been interested in, but was budget-constrained. The EA’s discounted Azure rates and included support hours make this exploration more feasible. In short, the company is now better positioned to adopt new Microsoft technologies when needed, using the efficient licensing model established through this negotiation.
Quote from the CIO: “We knew we had to get smart about our Microsoft usage before renewing our Enterprise Agreement, but the depth of insight that Redress Compliance brought was beyond our expectations. Analyzing how we were using the licenses helped us strip out over-provisioning and negotiate from a position of strength. The result – a 28% cost reduction – is tremendous. We’re saving money, yes, but we also gained peace of mind that we’re only paying for what we need. Redress turned what could have been a routine (and expensive) renewal into a strategic win for us.”
Key Results:
- Savings Achieved: 28% cost reduction on the Microsoft EA, translating to multi-million dollar savings (approx. $4.2M over three years) for the firm.
- Licensing Efficiency: The company’s Microsoft licensing is now highly optimized, with no significant unused licenses; every dollar spent is tied to genuine business usage.
- Business Agility: The new EA provides the manufacturer with the flexibility to adjust licenses in sync with workforce changes and technology adoption, avoiding lock-in to unnecessary spending.
- Future Alignment: The negotiated agreement and ongoing usage monitoring ensure that as the company moves into new areas (cloud services, IoT, etc.), it can do so cost-effectively and strategically, with a clear view of value gained from each Microsoft investment.
Through this case, the Michigan manufacturing firm demonstrated how data-driven usage analysis can be a game-changer in enterprise software negotiations. With Redress Compliance’s guidance, the company secured a hefty discount from Microsoft. It fostered a culture of proactive license management, ensuring long-term savings and a technology environment aligned perfectly with actual business needs.
