Understanding the Microsoft EA True-Up Process

By Dan Brewster

Director of Client Services, Microsoft, NPI

September 26, 2018

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The Microsoft EA true-up process may seem straightforward, but – like many things pertaining to Microsoft – there’s room for confusion (and overspending) if not expertly navigated. Here’s an overview of how the Microsoft EA true-up process works and key elements.

Microsoft’s EA program is designed for firms that are making large commitments to Microsoft products. There are three types of products one may purchase under the Enterprise Agreement: Enterprise Products, Additional Products and Online Services.

The “Enterprise Product” is what makes an Enterprise Agreement, well, “enterprise.” There are several products that are classified as enterprise-level – Office Professional, the Windows Operating System, the Core or Enterprise Client Access License, and some Office 365 subscriptions. A customer must elect to purchase an “enterprise” product for all of its Qualified Users or Qualified Devices. You wouldn’t be able to say, for example, we have 10,000 devices but let’s sign an EA for 5,000 devices. The “Additional Product” covers most other products – Visio, Project, Windows Server, Exchange Server, etc. – and these products may be purchased on an à la carte basis.

You will receive perpetual use rights for Enterprise and Additional Products at the conclusion of the Enterprise Agreement. Online Services, however, are those products for which you will receive temporary use rights only during the term of the agreement. You never receive perpetual licenses for an Online Services product. Microsoft is, of course, moving to a subscription model for many of its products, especially the Microsoft 365 products.

One of the benefits of the EA program is that you are only required to count the perpetual deployed licenses once a year. Said another way, once you have added a perpetual license to the agreement, you are permitted to deploy as many instances as you wish throughout the year. However, you are required to count the number of incremental licenses deployed and submit payment to Microsoft at the end of the year. The Online Services products are typically licensed on a monthly basis, yet Microsoft does permit you to place a reservation (essentially placing an order) in the month in which you begin to use the incremental Online Services and defer payment under the end of the year.

So, how do you count the number of deployed instances of Microsoft products? Some clients utilize sophisticated asset management systems that enable them to scan their environment and create deployment reports on the fly. Others keep careful records of incremental deployments throughout the year. The larger the organization, the more complex the process. Ultimately, though, at the end of the year, you are required to submit a true-up report to Microsoft and pay for any incremental usage.

Timing Considerations For Your Next Microsoft EA True-up

When is the true-up due to Microsoft? The latest Enterprise Enrollment states the following:

(vi) True-up order Period.  The true-up order or update statement must be received by Microsoft between 60 and 30 days prior to each Enrollment anniversary date.  The third-year true-up order or update statement is due within 30 days prior to the Expiration Date, and any license reservations within this 30-day period will not be accepted.  Enrolled Affiliate may submit true-up orders more often to account for increases in Product usage, but an annual true-up order or update statement must still be submitted during the annual order period.

This seems clear, indicating that for the first two years of your agreement the true-up is due at least 30 days prior to the agreement anniversary. The third year true-up? Within 30 days prior to the expiration date. Note use of the word “within” 30 days prior to expiration date versus “by.” Microsoft often (mistakenly) uses the latter interpretation and will inform customers this statement means the report is due 30 days before the agreement expires. While it is reasonable for Microsoft to understand the final year growth in order to prepare a Customer Price Sheet for the renewal agreement, your obligation is to simply submit before the agreement expires.

Remember: Microsoft EA true-ups shouldn’t be conducted on autopilot. Like any Microsoft purchase or renewal, there’s opportunity for optimization.