Microsoft True-Up Process
The Microsoft True-Up process is an annual reconciliation under the Enterprise Agreement (EA) that ensures you license any growth in usage. This article explains what a True-Up involves and outlines how to manage it effectively.
Key insights include clarifying your True-Up report, preparing early to minimize cost exposure, and using best practices to avoid overpaying for unneeded licenses.
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Understanding the True-Up Process
The True-Up is Microsoft’s annual reconciliation step in an EA. Each year, you report any usage growth beyond your initial licensed counts and purchase licenses to cover that growth. If nothing changes, you simply confirm that there has been no change.
This process ensures compliance while giving you flexibility: You can deploy new software throughout the year and only settle the licensing at the anniversary (using your pre-agreed EA pricing).
All types of licenses in the EA are included. Enterprise Products (licensed enterprise-wide, like Windows or Office) require additional licenses for every new employee or device added during the year.
Additional Products (optional software like Project or server licenses) can be added in any quantity needed; you true up whatever increase in deployment occurred.
Online Services (cloud subscriptions under the EA) are added via the portal during the year and reconciled at True-Up for any new users added. On-premises licenses generally cannot be reduced during the term – you only report upward changes.
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Structuring an Effective True-Up Report
Your True-Up report should clearly document the changes in license counts. The best approach is to present a table or list each product with three key figures: the originally licensed quantity, the current deployed quantity, and the increase to be added.
This layout makes verifying what new licenses you need to purchase easy.
For example:
| Product / SKU | Initially Licensed | Current Deployed | Increase (to True-Up) |
|---|---|---|---|
| Office 365 E3 (User SL) | 1,000 users | 1,100 users | 100 users |
| Windows 10 Enterprise | 1,000 devices | 1,100 devices | 100 devices |
| SQL Server Standard (Core) | 40 cores | 44 cores | 4 cores |
In this sample, the company added 100 users during the year, so all enterprise-wide products (Office 365, Windows) increased by 100 in lockstep. The SQL Server row (a server product) shows a growth of 4 cores beyond the initial 40.
The True-Up order would consist of those 100 additional user licenses for each core product and four more core licenses for SQL Server. Organizing data this way provides transparency and reduces back-and-forth with Microsoft over what changed.
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Minimizing Cost Exposure
To prevent a True-Up from causing budget surprises, take proactive steps to keep costs down:
- Track and reclaim: Maintain a continuous inventory of license usage. Reassign or remove licenses when employees leave or projects end, so you don’t pay for obsolete or idle licenses.
- Plan around the True-Up date: Schedule significant deployments or hires right after your anniversary. This maximizes the time before paying for those additions (nearly a full year). Conversely, complete any planned retirements or user off-boarding before the True-Up snapshot to avoid paying for users/devices that will be gone.
- Avoid redundant licensing: Check your entitlements for overlap. Ensure new deployments require new licenses, for example, you might have spare licenses from downsized teams or features covered by existing suites. Use what you have first.
- Leverage flexible licensing where appropriate: If a needed increase is temporary or uncertain, consider short-term subscriptions (like a Cloud Solution Provider monthly license) instead of committing via the EA. This way, you pay only for the time needed and can drop it before the next True-Up.
Recommendations
- Maintain an accurate license inventory year-round. This way, True-Up data gathering is quick and reliable, not a hunting expedition.
- Start preparation early (at least 2–3 months before True-Up) to allow time for internal audits, data validation, and management approvals.
- Re-harvest and reuse licenses before buying new. If an employee or system no longer needs a license, free it up for someone else to minimize new purchases.
- Schedule large deployments or hires strategically around True-Up. Adding users right after an anniversary defers costs, while removing unused licenses before the anniversary avoids unnecessary spend.
- Use Microsoft’s license reservation feature for cloud services to add users during the year without immediate charges – you’ll pay at True-Up, which helps cash flow and keeps purchases at EA discounts.
- Never miss the True-Up deadline. Mark it on your calendar and coordinate with your reseller so the order is submitted on time every year.
- Scrutinize the True-Up invoice against your own report. Ensure the quantities and prices match what was agreed, including proper prorating for partial-year licenses.
FAQ
Q1: What’s the biggest mistake enterprises make in the True-Up process?
A: Waiting until the last minute. Rushing the True-Up leads to inaccurate counts and surprise costs – it should be a continuous, year-round process.
Q2: Can we reduce our license count during True-Up if our usage went down?
A: In a standard EA, no True-Up is only for increases; you generally cannot remove licenses mid-term (unless you have a subscription-based EA that explicitly allows annual reductions for certain services).
Q3: How are True-Up costs calculated for mid-year additions?
A: You pay the EA-agreed price for each new license, usually prorated for the portion of the year it was in use. For example, a license added halfway through the year would cost about 50% of the full-year price at True-Up.
Q4: What if we miss the True-Up reporting deadline?
A: It puts you out of compliance and risks triggering a Microsoft audit. Always submit on time. If a delay is unavoidable, communicate with Microsoft in advance to mitigate the impact.
Q5: Who should be in charge of the True-Up internally?
A: Typically, a licensing/SAM manager leads the process, coordinating with IT (to gather usage data) and procurement/finance (for budgeting and purchase orders). A single owner ensures nothing falls through the cracks.
Q6: Does the True-Up process cover cloud services like Microsoft 365 and Azure?
A: Yes, for user-based cloud services (e.g., Microsoft 365) – you True-Up any additional subscriptions added. Azure is handled differently (by consumption payments, not a license true-up), so you don’t count Azure usage in the True-Up report.
Q7: Can True-Up costs be negotiated or discounted?
A: Not during the EA term. Your contract fixes True-Up pricing, so you can’t negotiate new discounts mid-term (that leverage comes at EA renewal time).
Q8: What tools can help streamline the True-Up?
A: Track license deployments using software inventory/SAM tools and Microsoft’s admin portals. Automated tracking ensures accurate data, making the True-Up report much easier to compile and verify.
Q9: Will Microsoft audit or verify our True-Up submissions?
A: Microsoft mostly trusts your self-reported True-Up. They can audit if something looks off (the EA agreement allows it), but routine audits are uncommon as long as you report accurately.
Q10: If we True-Up licenses, do we own those licenses going forward?
A: In a perpetual EA, yes – any added licenses become permanent entitlements (you own them even after the EA ends). In a subscription EA, no, those licenses are essentially rented for the term, so if you don’t renew, they lapse.
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