Microsoft Increases Device and User Minimum for Enterprise Agreements (EA)

By Jeff Muscarella

Partner, IT and Telecommunications, NPI

February 11, 2016

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Artwork Courtesy of McComber

At the beginning of February, Microsoft announced that it will increase the minimum EA commitment for commercial customers from 250 users or devices to 500. Effective July 1, 2016, the change applies to customers signing new Enterprise Enrollments or Enterprise Subscription Enrollments. Those commercial customers within the 250 to 499 user/device range will be guided to Microsoft’s newer volume licensing programs: the Microsoft Product and Services Agreement (MPSA) and the Cloud Solutions Provider (CSP).

Here’s a link to the full text of Microsoft’s announcement.

By default, most enterprise customers won’t be impacted by this change – but that doesn’t mean they shouldn’t pay attention. To the contrary, actually. Microsoft is slowly, but surely, doing away with its EA program and replacing it with its MPSA and CSP programs. The 250-499 group is just the first to be impacted.

Microsoft is justifying this change by saying customers need a more simplified and flexible way to purchase its on-premise and cloud offerings – and that’s true for customers of all sizes. Few of Microsoft’s customers are in “cloud only” territory. Most are managing a combination of cloud/on-premise investments, and that’s challenging.

But “easier” will come with a price.

Our analysis indicates that former EA Level A customers that maintain perpetual licenses will experience a price increase. A comparison of MPSA Level A pricing vs. EA Level A pricing for enterprise on-premise products (e.g. Office Professional, the Windows Operating System, and the Core or Enterprise CAL Suites) shows products will be more expensive under the MPSA program. This jump ranges from 5 to 15 percent depending upon the product and SA option.

Additionally, the MPSA is an indirect agreement – meaning the reseller provides the final pricing whereas Microsoft provides the final pricing on an EA. It’s important to keep this in mind when comparing pricing, especially in product categories where pricing is the same under MPSA or EA. In those instances, published pricing doesn’t reflect the reseller’s margin (once added in, the pricing could be several percentage points higher).

A bright spot in this story is cloud pricing. Some cloud offerings (including Office 365 E1, E3, and the Enterprise Cloud Suite) appear to be priced approximately 10 percent less under the MPSA. Microsoft is obviously motivated to move customers to the cloud and the MPSA and CSP programs will help them achieve that goal. Inversely, on-premise purchases will cost more.

Volume licensing at Microsoft is undergoing a significant transition. Enterprise customers need to keep their eyes on the trajectory of the EA program – regardless of whether they’re directly or immediately impacted. These changes are telling for how Microsoft will transition its enterprise customer base to the next generation of licensing/subscription programs.