Understanding Microsoft EA Contract Duration and Renewal
Some of the biggest concerns of businesses when it comes to enterprise agreements (EA) with software giant Microsoft are contract duration and renewal. This is understandable since as an IT or procurement manager, you may want to know how long you should sign up for a Microsoft contract and what your return on investment will look like.
As you deal with Microsoft, you may also want to know what your responsibilities are during the contract duration, what your renewal options are and the renewal processes, including pricing and discount negotiation.
This write-up will help you explore these and more, so you can make informed decisions when entering a Microsoft EA or renewing one.
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The duration of Microsoft EA and some conditions
Microsoft contracts typically last for three years in a traditional EA model. However, if you prefer something shorter or longer, you can negotiate with Microsoft to refine your contract duration. During the contract duration, you can use all the software covered by that contract. You can upgrade, downgrade, or add new products as long as they’re part of the contract. However, you cannot remove products unless you’re replacing them with another product covered by the same contract.
Whatever decision you end up taking should meet compliance regulations to avoid legal issues. Are you aware LSP’s work for Microsoft on commission-basis and your interest is not entirely their priority? At every point, if there is the need to engage an expert’s opinion, our team with experience in this vein will support you.
This should inform the type of contract you choose
Several factors influence your preferred contract type and duration. This includes the current business situation, strategies, budget, and organization (license and software) roadmap. If you’re planning to upgrade or migrate your infrastructure in the near term, a shorter contract duration may work well for you. If you’re on a tight budget and need predictability in your software spend, consider the contract duration and plan adequately ahead. Whatever your preferred duration, ensure that it aligns with your business needs.
If you anticipate removing software or changing your usage patterns, consider introducing contract amendment negotiations at least eight to nine months before the end of your current contract. Contract amendments involve changing pricing or discounts, changing the number of licenses needed, or changing licensing metrics. You can then engage with Microsoft or your reseller to negotiate amendments to your current contract.
However, you may want to consult with a third-party for more scenarios leading to your final choice. This third-party should be an independent expert with years of experience who can point you to a large scope of areas in the IT space to consider. This expert should hence give you unbiased support, so you save on expenditure.
The renewal options available and negotiation
Renewal options are usually available to extend your contract duration. You can opt to renew with or without amendments. If you renew without changes, you continue to enjoy the same terms, pricing and discounts as your original contract.
However, if you choose to make changes, you will see changes in the terms as well. You could either gain or lose depending on how well you negotiate. You could lose your discounts and pricing if the software you use is no longer as popular or if you remove some of the products from your contract. You could gain if the changes you make are in line with Microsoft’s strategic direction. Currently Microsoft is pushing customers to adopt more cloud related products and services and with this comes heavy discounts.
The renewal processes between your organization and Microsoft
Renewal processes depend on whether you’re renewing with or without amendments. If it’s without changes, you can either accept the new contract or negotiate pricing and discounts based on your usage during the current contract duration. The renewal comes with various processes to achieve your intended results of which topmost may be to save on costs. Some things to do ahead of the renewal process includes an internal audit on how licenses are currently in use or not in your organization.
When it comes to initiating pricing and discount negotiation, you should first generate some information to include your usage history, software needs, and business strategies which will establish how to approach Microsoft. With this information, you can then engage with your Microsoft account manager or reseller and use your usage patterns to negotiate discounts or price protection in the renewal.
Future Consideration for an EA contract
You need a migration and transition plan with your Enterprise Agreement contract. With the ever-changing licensing landscape, a plan is critical to ensure your business or IT operations remain undisrupted. You should include migration paths, timelines, and budgets in your plan. You can consider knowing more on “Software Assurance,” which provides training, technical support, and assistance with version upgrades and migrations and how it can meet your future licensing needs.
Deciding to adjust, add, or upgrade your license terms should be in the interest of meeting the needs of your organization. The fact that there is a flexibility or discount window if you purchase more products and Cloud services should not mean you should take it. Ask yourself if your organization needs it?
Always be strategic in your dealings with Microsoft by knowing ahead of your negotiations what their strategic directions are. Tailor your needs to fit into this to optimize your renewal outcome.
You may deserve discounts based on probably how good your negotiation skills are, but it’s not a given. You need the right information and, in most cases, also the right support to achieve your desired results. An independent expert can point you in the right direction of success.
Contact our team.