Microsoft MCA Pitfalls to Avoid
The Microsoft Customer Agreement (MCA) for Azure offers flexibility and an easy signup process; however, organizations often stumble into costly pitfalls when managing Azure under an MCA.
This article highlights the most common mistakes, from overcommitting cloud spend to lax governance, and provides guidance on how to avoid them.
CIOs, procurement leaders, and IT Asset Management (ITAM) professionals in the US and EMEA should take note of these lessons to ensure their Azure investments deliver value without unwelcome surprises.
Overcommitting to Azure Spend Without Proper Controls
Many companies overcommit to Azure consumption under an MCA or similar deal, lured by discounts or optimistic growth plans.
In an Enterprise Agreement (EA), Azure requires a monetary commitment (e.g., a 3-year spend target), and any unused funds at the end of the term are forfeited—essentially, a wasted budget.
The MCA allows for pay-as-you-go flexibility, but enterprises can still negotiate custom Azure commitments under the MCA (often with shorter terms or smaller commitments than those under EA).
The pitfall: committing more than you can use.
- Example: A company commits to spending $ 500,000 per year on Azure but only consumes $ 400,000, leaving $ 100,000 unused. Under an EA or custom MCA commit, that $100K is paid for but not utilized—a direct hit to the IT budget. It’s truly “use it or lose it” with Azure monetary commitments.
- Why it happens: Inaccurate forecasting or pressure from Microsoft to lock in a larger deal can lead to overallocation. Once committed, you’re locked in for that amount regardless of actual usage. Organizations may also chase discounts,e.g., committing to a higher spend tier to get a few percentage points off unit prices, without a realistic consumption plan.
- Impact: Overcommitting ties up capital in unused cloud services, undermining discount benefits. Unused commitment = wasted budget. Additionally, if usage falls short, you might scramble with end-of-term “use it up” projects or risk paying for the shortfall without any value in return.
- Mitigation: Commit conservatively and base it on data. It’s often safer to slightly under-commit and incur a small overage than to over-commit and waste funds. Leverage past consumption trends and upcoming project plans to set a realistic commitment level. As one guide advises, “negotiate the lowest reasonable commitment aligned with your forecasted cloud usage – you don’t want to over-commit and pay for unused capacity”. If Microsoft proposes a high figure, counter with internal data and consider a phased or yearly ramp-up commitment instead of a large upfront number. Ensure any commitment comes with flexibility (e.g., ability to carry over unused funds or adjust annually), though such concessions are not standard and must be hard-won in negotiations.
Poor or Inaccurate Cloud Forecasting
Poor forecasting of cloud usage is a primary cause of many overcommitments.
Predicting three to five years of Azure growth is a challenging task.
Common mistakes include relying on over-optimistic deployment schedules or underestimating the efficiency gains from cloud optimizations.
- Why it happens: Cloud architects (internal or external) often provide estimates during the pre-sales process. Microsoft’s sales teams may provide rosy consumption projections to justify a larger commitment, or sometimes unrealistically low estimates to appear cost-competitive. In either case, the variance is high – actual production workloads and cloud maturity evolve, making year 1–2 usage estimates difficult to predict.
- Impact: Overestimation leads to overcommitment (as discussed), and underestimation can result in budget surprises later (e.g., you commit too low, then pay significantly more at pay-as-you-go rates beyond the initial commitment). If you intentionally undershoot, you may miss out on discounts or face internal backlash when actual costs exceed forecasts. In sum, inaccurate forecasts lead to financial risk, such as cloud overspending or underutilized commitments.
- Mitigation: Use a data-driven approach. Analyze historical usage growth, application pipelines, and cloud migration roadmaps. Account for planned optimizations (such as rightsizing, Azure Hybrid Benefit, and reserved instances) in the forecast, as these can significantly reduce spend if properly implemented. It can be wise to forecast a range (best case, likely, worst case) and commit near the lower bound of the likely range. Also, consider shortening the commitment term if uncertain – a one-year commitment that can be renewed or extended is lower risk than a three-year commitment in a fast-changing environment.
- Don’t forget pricing changes: Under an EA, your Azure rates are price-protected for 3 years, but under an MCA, Azure pricing can change with market rates. Especially in the EMEA regions, Microsoft has been aligning local currency prices to the USD, resulting in periodic price increases. If you forecast spend based on today’s prices and those prices climb next year, your budget may fall short. Plan for some buffer or negotiate price caps if possible. If price stability is crucial, note that “price protection doesn’t exist in Azure through MCA,” as in an EA – a potential pitfall for long-term cost planning.
Read Optimizing Azure Spend Under an MCA.
Lack of Centralized Governance and License Visibility
Moving to a modern Azure agreement can introduce governance blind spots.
Under a traditional EA, organizations often had an Enterprise Portal and true-up processes to review usage on an annual basis.
With MCA’s continuous consumption model, some companies fail to implement equivalent governance, leading to sprawl and visibility gaps.
- Symptom: Different departments or projects spin up Azure subscriptions without a central view. There’s no single “license statement” that combines all cloud services, and if you have also procured other Microsoft products separately, it’s hard to see the full picture. Moreover, companies with heavily customized EAs (those featuring special terms or linked agreements) may find the MCA portal lacking these integrations. The new MCA structure does not yet support the tailored reports or combined license overviews that many large enterprises use.
- Impact: Poor governance can lead to overspending (e.g., unused resources running unnoticed), compliance issues (e.g., using services in ways not covered because custom terms are gone), and internal confusion about cloud costs. A lack of license visibility makes it difficult for ITAM to ensure compliance and cost efficiency. For instance, if you have on-premises licenses with Software Assurance that provide hybrid benefits, you need visibility into cloud versus on-premises usage to avoid mis-licensing—something that can slip through the cracks without central oversight.
- Mitigation: Establish strong cloud governance and FinOps practices. Microsoft’s guidance and experts recommend forming a cloud cost management function that tracks Azure spend across the organization. Use Azure Cost Management + Billing (available in the Azure portal for MCA customers) to get a unified view of consumption. Set budgets and alerts for each team or subscription (e.g., at 80% of the budget). Regularly review resource use, and consider third-party cloud management tools if you need more granular chargeback or multi-cloud views.
- Implement governance policies in Azure (such as Azure Policy and role-based access control) to enforce tagging, resource limits, and other guardrails. Additionally, ensure that someone (e.g., a Cloud FinOps manager or ITAM analyst) is assigned to aggregate license and usage data. If Microsoft has internal tools to combine views across programs (as rumored), ask your account team about getting access or reports. In short, treat MCA not as a “set and forget” utility bill, but as an active contract to manage – your team should provide the oversight that the EA’s structure used to enforce via formal true-ups.
Read When to Move from Microsoft EA to MCA.
Failure to Monitor Consumption Against Commitments
Another frequent mistake is signing an Azure commitment (in EA or via an MCA-based deal) without actively tracking usage.
Without ongoing monitoring, you may discover too late that you’re either under-consuming (and forfeiting money) or over-consuming (and incurring unexpected overage costs).
- Why it happens: Unlike fixed license counts, cloud usage is dynamic. It’s easy to assume things are on track until a true-up or end-of-year reckoning. An MCA has no automatic annual true-up ritual – an evergreen agreement – so if you’re not careful, overages or shortfalls won’t be flagged automatically. Many organizations lack automated alerts or regular reviews of their Azure consumption versus any commitments they’ve agreed to.
- Impact: If you only realize in the last quarter that you’ve used, say, 70% of your committed funds with the term ending soon, you may rush to spend the remainder on less-needed services (wasteful) or simply eat the loss. Conversely, if you exceed your commitment early, you may experience sticker shock at the next invoice for the excess usage beyond the pre-discounted commitment. In both cases, the value of the commitment deal is diminished.
- Mitigation: Continuously monitor and adjust. Establish a regular cadence (monthly or quarterly) to review Azure consumption against commitment targets. Azure Cost Management reports can show your usage against the commitment (for MCA, the Azure portal has views for remaining commitment). We recommend using the Azure portal’s cost analysis and configuring alerts at key spend thresholds (e.g., 50%, 75%, 90% of the committed amount used). This serves as a warning to course-correct as needed.
If you are underconsuming, strategize how to increase utilization in a value-driving way: accelerate migrations, bring additional workloads to Azure, or make one-time purchases through the Azure Marketplace that count toward the commitment (e.g., certain third-party solutions or support can offset the commitment).
It’s better to get something for your money than to forfeit it.
On the other hand, if you’re over-consuming beyond the commitment, that’s a sign to negotiate a higher commitment (with better discounts) next time, use the overage evidence to get leverage for a bigger discount, or to show that your initial commitment was too low.
Finally, ensure governance is in place to manage consumption: implement resource tags for cost tracking, empower a FinOps team to flag anomalies, and require teams to stay within budgets unless approved.
This ties back to governance; you need tools and processes to keep cloud spend on the rails.
Loss of Software Assurance Benefits and License Misalignment
A subtler pitfall when switching to an MCA (particularly from an EA) is the loss of Software Assurance (SA) benefits or other licensing rights tied to traditional agreements.
Software Assurance for Microsoft products (Windows Server, SQL Server, Office, etc.) offers valuable benefits, including upgrade rights, license mobility, training vouchers, support benefits, and Azure Hybrid Benefit rights for cloud use.
- Where it matters: If your organization has an EA that covers not just Azure but also on-premises licenses with SA, moving to an Azure-only MCA could mean you drop SA on those on-premises products (unless you purchase them separately). Some companies assume they can let an EA expire and use cloud subscriptions, only to find they have lost certain privileges. For example, if you let your Windows/SQL Server SA account lapse, you technically lose the right to upgrade to newer versions on-premises. You may lose the ability to bring those licenses to Azure (Azure Hybrid Benefit) unless you maintain a valid license with SA or a subscription equivalent. Additionally, although phased out in recent years, SA benefits such as training days or support credits are not part of the MCA framework.
- Impact: Dropping SA can lead to higher costs or reduced entitlements in the long run. A 2024 analysis noted that transitioning to all-subscription can increase costs and “result in higher costs and the loss of enhanced product use rights” compared to maintaining SA. For instance, without SA, you may need to purchase new licenses or higher-cost subscriptions when a new server version is released. You may also lose license mobility rights to run certain software in Azure Dedicated environments.
- Mitigation: Before changing your agreements, audit your current SA benefits. Identify critical ones (e.g., dual-use rights, license mobility, training, support). Some benefits, like Azure Hybrid Benefit, persist if you have eligible licenses with SA or equivalent subscriptions. You might keep a minimal contract for those, or transition to a CSP or pay-as-you-go license model that includes similar rights. Also consider timing: you could renew certain licenses under a separate MPSA or CSP agreement to continue SA, or convert on-premises licenses to cloud subscriptions (e.g., Windows Server to an Azure-based subscription) to carry those rights over.
If you move to MCA and are primarily cloud-focused, ensure any replacement subscriptions cover your needs. For example, Office 365 subscriptions inherently include what SA used to (continuous updates, etc.).
Still, something like Windows Server in Azure may require you to maintain on-prem CALs or SA for hybrid scenarios.
In short, don’t drop SA without a plan. If in doubt, consult a licensing specialist to determine if continuing SA under a different program or maintaining a slim EA for on-premises use might save money compared to losing rights and paying more later.
Common Pitfalls, Impact, and Mitigations (Summary Table)
Below is a summary of the common Azure agreement pitfalls under an MCA (or similar consumption-based deals), their potential impact on your organization, and recommended mitigation strategies:
Pitfall | Impact on Organization | Mitigation Strategy |
---|---|---|
Overcommitting Azure spend beyond actual needs (e.g. committing to $X but using much less) | Wasted budget – you pay for unused capacity. Funds not consumed by end of term are forfeited. Reduces overall ROI of cloud spend. | Commit cautiously: Base commits on realistic forecasts; start lower and adjust if needed. Negotiate flexibility (carryover, ramp-up structure) to reduce risk. |
Poor cloud usage forecasting (overly optimistic or inaccurate estimates) | Overcommitment or budget shortfalls. Could lead to either unused spend or costly overage if usage exceeds plan. Also risks wrong sizing of contracts (too large or too small). | Use data-driven forecasts: Analyze past usage and upcoming projects. Include cloud optimization plans (e.g. use of Azure Hybrid Benefit, reserved instances) in estimates. Forecast conservatively and revisit often. |
No centralized governance or visibility into Azure usage and licenses (silos of cloud adoption) | Uncontrolled spend and “cloud sprawl.” Difficult to ensure compliance or optimize costs without a single view. Missed savings opportunities and potential compliance gaps if license use isn’t tracked. | Implement Cloud Governance & FinOps: Establish a cloud cost management team/process. Use Azure Cost Management tools for a unified view. Enforce tagging, budgets, and periodic cost reviews. Maintain an internal license registry including cloud and on-prem use. |
Failing to monitor consumption vs. commitment regularly | End-of-term surprises: find out you’re far under or over the commit too late. Under-use means wasted money; over-use means unexpected bills or no time to renegotiate. | Track usage continuously: Leverage Azure’s cost reports and set up alerts at key thresholds of commit utilization. Review quarterly at a minimum. If under-consuming, take action (move workloads, encourage use of pre-paid services) to utilize budget. If over, plan for budget impact and use it to negotiate future discounts. |
Losing Software Assurance benefits (or other licensing rights) during transition | Potential loss of rights (upgrade, hybrid use) and increased costs to regain them. Could negate some cloud cost savings (e.g. if you must pay for features that were previously included via SA). | Plan the license transition: Identify which SA benefits are critical and find ways to retain them (e.g. move to subscriptions that include similar rights, maintain minimal contracts for needed SA). Don’t let EA lapse without ensuring no critical benefit is lost. |
Assuming price stability under MCA (ignoring pricing and currency changes) | Budgeting difficulty – Azure prices can rise year to year and local currency fluctuations can effectively increase costs mid-stream. EA-style price locks are absent, so costs may exceed your plan if markets shift. | Budget with buffer: Anticipate some price increase (e.g. Microsoft’s cloud price hikes ~10-15% over 3 years historically). If possible, negotiate rate caps or consider Azure Savings Plans to lock rates for certain usage. Track Microsoft announcements on price changes, especially in EMEA where currency adjustments happen semi-annually. |
(Table: Key pitfalls in Azure MCA agreements, their impact, and how to mitigate them.)
Tips for Cost Tracking and Governance
To reinforce the mitigations above, here are additional best-practice tips for maintaining control over your Azure costs under an MCA or any consumption-based model:
- Establish Cloud Cost Ownership: Assign clear ownership for cloud cost management, such as a FinOps team or a cloud financial manager who regularly monitors spend and makes optimizations. This ensures accountability. They should report trends and anomalies to IT and finance leadership.
- Leverage Azure Cost Management Tools: Use Azure’s built-in Cost Management + Billing portal for real-time visibility. Set up budgets and alerts at the subscription/resource group levels so you are notified before a budget is exceeded. Azure Advisor can recommend cost optimizations (e.g., idle resources or sizing changes).
- Continuous Optimization: Treat cost optimization as an ongoing process, not a one-time project. Regularly hunt for idle or underutilized resources (e.g., VMs running at low CPU, unattached disks) and clean them up or downsize. Consider scheduling development and test environments to shut down during off-hours. These practices often yield double-digit percentage savings.
- Use Savings Offers Wisely: Utilize Azure Reserved Instances or Savings Plans for predictable workloads – they can significantly lower costs (up to ~30% or more) and count against your commitment, but note that they reduce pay-as-you-go spend rate, which could make it take longer to burn down a commitment. Plan accordingly. Additionally, consider applying Azure Hybrid Benefit (AHB) if you have eligible Windows or SQL Server licenses – AHB can reduce these specific costs by ~40-50%.
- Avoid Overcommit by Hybrid Approach: Consider a hybrid purchasing strategy for organizations with very variable demand. For example, commit to a base level that you’re confident in, and put extra experimental or spiky workloads in a separate pay-as-you-go subscription (even via CSP). This avoids locking the entire amount. You can always increase the commit later once usage stabilizes.
- Review and Re-Forecast Often: Make cloud forecasting a quarterly exercise. Adjust your projections based on actual growth and new project info. If an upcoming project is delayed or an architectural change reduces consumption, update your commit utilization outlook and inform stakeholders accordingly. Agile forecasting prevents surprises.
- Engage Experts if Needed: If your Azure environment or contracts are large and complex, consider bringing in a cloud cost optimization expert or licensing consultant. They can identify savings you might miss and ensure you’re in the best agreement structure. Similarly, when negotiating a significant commitment, involve someone experienced in Microsoft deal-making – many organizations find value in an external advisor to secure the best terms.
Frequently Asked Questions (FAQ)
1. What is the Microsoft Customer Agreement (MCA) for Azure?
Microsoft’s modern, evergreen contract for purchasing cloud services, such as Azure, is the MCA. Unlike an EA, it’s a rolling agreement with no fixed 3-year term. You accept a digital agreement that covers Azure (and other Microsoft cloud services, if added) and then pay for usage on a monthly basis (or as billed by your partner). It offers flexibility, no minimum spend required for Azure, and a consolidated bill for your cloud services. Essentially, it moves you to a consumption-based model that’s always up-to-date, rather than a big upfront commitment.
2. How is an MCA different from an Enterprise Agreement (EA)?
There are several key differences:
- Commitment: EAs typically involve a 3-year monetary commitment for Azure (you agree to spend $X per year), whereas an MCA generally has no mandatory commitment – you can purely pay-as-you-go or make shorter/smaller commitments if negotiated.
- Flexibility: MCA is a month-to-month consumption plan; you can scale down or up at any time. EA is a multi-year contract; you’re locked in for the term except for some adjustments at anniversaries.
- Pricing: Under EA, Azure unit prices can be discounted (~5–15%) and price-protected for 3 years. Under the MCA, pricing is typically at published rates (in USD globally) unless a custom discount arrangement is in place, and prices may change in response to Microsoft’s price updates or currency fluctuations.
- Scope: EAs often cover a broad suite (including Windows, Office, etc., as well as Azure). MCA initially focused on Azure and cloud subscriptions. As of late 2024, Microsoft has expanded MCA to include seat-based Microsoft 365 and other services for some customers. But MCA doesn’t yet support all the custom terms and product contingencies that EAs do.
- Partner vs. Direct: EAs are typically sold through a Licensing Solution Provider (LSP) reseller. MCA for enterprises (MCA-E) is a direct relationship with Microsoft for large customers. Smaller customers can only access MCA through a CSP partner (essentially the partner-led version of MCA). With MCA, you may not have a reseller managing your account – you’ll work directly with Microsoft or a CSP, depending on your size.
- Support and Services: Historically, EA customers had certain support benefits (e.g., a period of free Standard Azure support) included, and they worked with Microsoft account managers. MCA customers must purchase support plans separately now (after the 2023 changes). Also, deployment planning days (from SA) are not in an MCA, so the support model under MCA is more à la carte.
3. Why might a company switch from an EA to an MCA for Azure?
Common reasons include: cost flexibility (no upfront commit if you want to avoid risk of unused spend), lower usage (if your Azure spend is relatively small or unpredictable, an EA commit might not be worth it), and cloud-first strategy (if you’re mainly using cloud services, the older EA constructs for on-prem licenses may be unnecessary overhead). Additionally, starting in 2025, Microsoft is encouraging many customers to switch – in some regions, Azure-only EAs can no longer be renewed, prompting a transition to MCA or CSP for Azure. So some enterprises switch because they have to at renewal. Others do it to secure an evergreen contract that they can adjust continuously, rather than negotiating large renewals. If you value agility and the ability to scale down if needed, MCA is attractive (EA has little flexibility if usage drops – you still pay the commitment regardless).
4. When is it better to stay on an EA than move to MCA?
If your organization has large, stable Azure workloads and appreciates the discounted rates and price lock-in of an EA, you might stick with it for as long as Microsoft allows. EAs can be beneficial if you’re confident in high utilization, as the discounts could save money compared to pay-as-you-go pricing. Also, suppose you rely on custom-negotiated terms (such as special privacy clauses or a custom discount structure across a bundle of Microsoft products). In that case, the EA today might accommodate those better than the fairly standardized MCA. Some enterprises with complex setups choose to renew the EA one more cycle (if possible) to buy time and see how MCA evolves. In short, an EA can still be a good fit if you highly value price predictability and volume discounts and have no issue with the commitment (you’ll spend it).
5. What happens if our EA expires and Microsoft says we must move to MCA?
Microsoft has begun identifying certain customers (particularly in “direct” markets and those with Azure-only enrollments) that will not be eligible to renew their EA in 2025. If you’re in that boat, you essentially have two main paths: sign an MCA-E (enterprise) agreement directly with Microsoft or transition to a CSP partner arrangement if you’re not large enough for that. The best approach is to prepare early: engage your Microsoft account team at least 6–12 months before the EA end to understand your status. If moving to MCA, negotiate it much like an EA – you can seek discounts for a voluntary commitment, ensure your needed services are available under MCA, and arrange support. If moving to CSP, evaluate partners – find one with strong licensing expertise (as quality varies). In either case, internally align your stakeholders (IT, Finance, Procurement, and Legal) that the contract model change is coming, so everyone is aware that billing, support, and terms will differ. Transitioning can be smooth with planning, but don’t leave it until the last minute; otherwise, Microsoft might roll you into the new deal on their terms.
6. Does an MCA offer the same discounts as an EA?
Not automatically. By default, MCA is a pay-as-you-go model at list prices. However, for large enterprises, Microsoft can provide custom pricing or discounts in an MCA if you commit to certain spend levels (this is essentially a custom Azure Consumption Commitment under the MCA). In other words, you can negotiate discounts under MCA, but they typically require similar volume commitments as an EA to get EA-like rates. One source notes that you might need to spend more to match the discount levels of an EA. If you’re a smaller consumer, the rates under MCA via a partner might be the same or only slightly higher than EA Level A pricing. Still, large enterprises might lose some built-in volume discount when leaving an EA if they don’t negotiate it into the MCA. Always discuss pricing explicitly. Microsoft’s shift to MCA/CSP is also a shift toward more uniform pricing, so ensure you negotiate any discounts you had in EA into the new deal, rather than assuming they carry over.
7. How do support and services differ under MCA?
Under an EA, you likely had access to Microsoft’s support at a certain level – for example, until mid-2023, Microsoft included Azure Standard support for free with EA (and MCA-E) contracts, which gave 24/7 tech support for Azure issues. This promotional support ended in 2024. MCA customers (and EA customers alike) must purchase a support plan if they want more than the default Basic support. Under the MCA, ensure you budget for support – either Azure Standard (paid, approximately $100/month), Developer support, or a Unified Support agreement for comprehensive support. If you go via a CSP partner, that partner might provide support as part of their offering (some partners bundle a certain support level into their margin).
8. Is there any benefit to splitting our cloud spend between EA and MCA/CSP?
Some organizations employ a hybrid strategy, retaining an EA for core, predictable spend and utilizing an MCA/CSP for overflow or new projects. This can make sense if you want to maintain an EA for its discounts on a baseline of usage, but you’re experimenting with new workloads that might spike or not last – those you put on pay-as-you-go to avoid long commitments. The Redress Compliance advisory notes that some companies commit a base level under EA or MCA, and put unpredictable workloads on CSP for agility. Over time, if the new workloads become steady, you could then fold them into a larger commit. This approach can yield cost savings (discount on the base load, zero waste on the variable portion). The downside is complexity in management and billing (multiple agreements to juggle). Yes, it can be beneficial, but it requires effective governance.
9. Will moving to an MCA affect our ability to true-up or true-down licenses?
For Azure, the concept of “true-up” in the traditional sense (reconciling at year-end) isn’t applicable under MCA, as it operates on a continuous billing model. You simply pay for what you use each month. Suppose you have other licenses (M365, etc.) under the MCA. In that case, these are typically subscription-based – you can increase or reduce licenses with short-term commitments (such as monthly or annually) rather than being stuck with an annual true-up cycle. This provides more agility in adjusting licenses (true-downs are possible at renewal of a subscription term, which could be monthly or annually, depending on the product). However, note that if you drop a bunch of users under EA, you might be stuck until the anniversary/renewal to reduce costs.In contrast, under MCA, some subscriptions might be reduced more quickly (especially if month-to-month terms are used). The trade-off: MCA requires active management. The EA’s true-up provides a structured checkpoint; in MCA, you must continuously stay on top of adds and removes, or you may over-provision and forget to turn things off. Additionally, a Medium article noted that without the EA true-up event, companies might become lax in optimizing licenses, resulting in waste if they fail to impose their checkpoints
10. Can we switch back to an EA later if we choose MCA now (or vice versa)?
It depends on Microsoft’s policies at the time. Still, generally, if you qualify for an EA (usually 500+ users or a certain monetary commitment), you could potentially sign a new EA later. Microsoft isn’t completely sunsetting EAs overnight – they’re simply gradually steering toward MCA for cloud services. Some organizations have indeed moved from EA to CSP/MCA and then back to an EA once their spend grew enough to justify it. Microsoft’s guidance is that you’re not permanently locked in one path – “use the model that fits your current state, and be ready to pivot at renewal time if another option becomes more appealing”. So, yes, if you go with MCA and your Azure usage skyrockets, you could negotiate an EA or a large MCA commitment. Conversely, if you’re on EA and find it’s overkill, you might move to MCA at the next renewal. Keep an open dialogue with Microsoft (or partners) about the options. Over the next couple of years, we expect the lines to blur, especially as Microsoft brings more products into MCA – the EA might become less common. But for now, flexibility remains. Just coordinate any switch with timing so you don’t lapse coverage or double pay, and ensure that any benefits (like Azure credits or discounts) carry over in the new arrangement.
Recommendations for CIOs and IT Leaders
For organizations navigating Azure contracts, here are key recommendations to ensure success:
- Align Cloud Commitments with Strategy: Treat Azure commitments like portfolio investments, align the level and term of the commitment with your cloud strategy, and build confidence in usage. Don’t sign a multi-year, large commitment just because it’s offered; sign only if it truly aligns with your roadmap (and leave room for multi-cloud or changes, if that’s part of your strategy).
- Strengthen Cloud Financial Governance: If you transition to a more flexible contract, such as MCA, adjust your governance accordingly. Implement FinOps practices, get the right tooling, and cultivate a culture of cost awareness among engineering teams. The goal is to avoid the “nobody watching the meter” syndrome that leads to overruns or wastage.
- Negotiate for Flexibility and Protection: When dealing with Microsoft, request terms that enable you to adapt, such as the ability to adjust commits, caps on price increases, or even the right to revert to an EA if necessary. Microsoft won’t grant everything, but if you don’t ask, you won’t get it. For instance, some customers negotiated the ability to carry unused Azure credits into the next year or have currency protection; these are not standard. Still, enterprise customers who have leverage have obtained concessions.
- Consider Phased Transitions: If you’re unsure about making a full commitment to a new model, you can transition gradually. Perhaps renew an EA for on-prem and Microsoft 365 products, but move Azure to MCA. Or move a subset of subscriptions first. This can help reduce risk as you get accustomed to the new model.
- Monitor Microsoft’s Announcements: Keep an eye on Microsoft’s licensing announcements through 2025. They are rapidly evolving the commerce platform. New benefits or changes (including more MCA products or shifts in support offerings) could impact your decision. For example, selected direct customers will be required to use MCA/CSP at EA renewal from 2025 – find out if you’re one of them by checking with Microsoft early.
- Engage Stakeholders Early: Involve your finance and procurement teams when an EA is coming up for renewal. The transition from CAPEX-like upfront expenditures to OPEX monthly bills can impact budgeting. Legal should review the MCA terms too; some terms in MCA might differ from your EA amendments (liability, data protection, etc.), and if you need custom terms, you might have to negotiate separately since MCA itself isn’t very customizable.
By planning and adopting these practices, you can avoid the common pitfalls of Azure agreements and fully realize the benefits of cloud flexibility, whether under an MCA or any other model.