When to Exit the EA: Is a Microsoft EA Right for You
Introduction: Why Some Organizations Consider Leaving EA
Microsoft’s Enterprise Agreement (EA) has long been the default licensing model for large organizations. However, it isn’t always the best fit in today’s cloud-driven, cost-conscious environment.
Many CIOs and CFOs are questioning the automatic renewal of their Microsoft EA and considering alternatives. Read our overview, Microsoft EA vs Alternatives (CSP, MCA, etc.): Which Path Is Right for You?.
Shifts in business conditions, such as reduced headcount, a push toward cloud services, or pressure to cut costs, can make options like CSP (Cloud Solution Provider) or the Microsoft Customer Agreement (MCA) more attractive.
In short, leaving or not renewing the EA is no longer a radical move; it’s a strategic decision many organizations are actively evaluating.
1. Signs an EA May Not Fit Your Organization
Are you still sure if your EA makes sense? Below are some signs that your Microsoft EA may not be a good fit for your organization’s needs.
If several of these scenarios sound familiar, it may be time to rethink the status quo instead of automatically renewing your EA:
- Significantly Reduced Headcount: If you now have far fewer than the EA minimum (typically 500 users/devices), an EA is overkill. Small and mid-sized organizations often pay for more licenses than they need under an EA.
- Cloud-First Adoption: You’ve shifted heavily to Azure and Microsoft 365 cloud services. In a cloud-first strategy, purchasing through a CSP or MCA can offer more agility and monthly scaling that a 3-year EA can’t match.
- Need for Month-to-Month Flexibility: Your license counts fluctuate due to project-based staff, seasonal workers, or acquisitions/divestitures. If you need to adjust licenses on a month-to-month basis, the rigid annual true-up structure of an EA will be a hindrance.
- High Percentage of Unused Licenses (“Shelfware”): You’ve discovered many licenses paid for under the EA aren’t being used. This shelfware means you’re paying for capacity you don’t need, a strong sign that the one-size EA commitment is too much.
- Limited IT Administration Bandwidth: Managing an EA involves significant administrative tasks – tracking usage, preparing annual true-up reports, and handling complex terms. If your IT team is stretched thin, a simpler month-to-month subscription model could ease the burden.
- Focus on Cost Savings Over Volume Discounts: If your finance team is more concerned about eliminating waste and trimming budgets than chasing volume discounts, a pay-as-you-go model (CSP/MCA) might align better with your goals.
Any one of these factors might not justify leaving an EA on its own. But if you’re nodding yes to multiple points, it’s a clear warning that renewing your EA without reconsideration could lock you into an outdated deal.
Microsoft’s sales teams often push EAs as the “safe” choice, but it’s critical to examine whether it’s the right choice for your current situation.
2. Cost Analysis: EA vs. Alternatives (CSP, MCA, OEM)
Cost is usually the first factor in deciding whether to stick with an EA or switch to an alternative. Microsoft EAs can offer lower pricing per license due to volume discounts; however, they also come with commitments and often include Software Assurance fees and other overhead that may not be cost-effective.
Alternatives like CSP or the Microsoft Customer Agreement may have higher per-unit prices, yet their flexibility can reduce your total cost of ownership by cutting waste.
And for some needs (like Windows OS licenses), using OEM licenses that come with new hardware might be the cheapest route.
The table below compares the EA with CSP, MCA, and OEM across key dimensions of cost, flexibility, and risk:
| Aspect | Microsoft EA (Enterprise Agreement) | CSP (Cloud Solution Provider) | MCA (Microsoft Customer Agreement) | OEM (Original Equipment Manufacturer) |
|---|---|---|---|---|
| Cost Structure | Locked-in 3-year pricing with volume discounts. Pay annually (or upfront) for a bundle of licenses. Per-license cost is lower due to discounts, but you pay for a full commitment (including Software Assurance). | Pay-as-you-go pricing, often at Microsoft MSRP or partner-set rates. Per-license cost can be slightly higher than EA’s discounted rate. However, you only pay for what you need each month or year, avoiding spend on unused licenses. | Direct purchase pricing from Microsoft with no tiered volume discounts. Similar to CSP in cost per unit. You might negotiate some price concessions for large cloud commitments, but generally pricing is closer to list. | One-time cost included with hardware (for Windows OS or Office pre-installed on a new PC). Usually the lowest unit cost for an OS license since it’s bundled. However, costs are tied to buying new devices; you can’t true-up without purchasing hardware. |
| Flexibility | Low flexibility: commit for 3 years. License quantities can usually only increase during the term (via annual true-up). Reductions are limited and only allowed at anniversary if at all (and never below the contract minimum). Changing products mid-term is difficult. | High flexibility: no long-term contract. Add or remove subscriptions on a monthly or annual basis. You can scale down at the next billing cycle for monthly terms, or at renewal for annual terms. This model adapts quickly to business changes or staff turnover. | High flexibility: the MCA is an evergreen agreement with no expiration. You can increase or decrease services as needed, similar to CSP. Subscriptions under an MCA can be monthly or annual, allowing adjustments without a multi-year lock-in. | Moderate flexibility: Tied to hardware purchase cycles. You get the license (e.g. Windows Pro) when you buy a device. Upgrades or changes require buying new licenses or devices. Not suitable for rapid scaling needs, but no contract obligations beyond the purchase. |
| Support & Services | No support included by default. Enterprise support or Premier/Unified Support costs extra. Software Assurance in an EA offers some benefits (training days, planning services) but those are often underutilized. Any additional services (migration, advisory) add to the EA cost. | Support is provided by the CSP partner (varies by partner; many offer basic support included in their margin). You rely on the partner for customer service and billing. Additional services can be bundled by the partner, often simplifying overall support. | No support included by default from Microsoft for subscriptions; support must be purchased separately (or you rely on forums/self-service). It’s a direct relationship with Microsoft, so no reseller to assist – though you can still use a partner for a support add-on if needed. | Support for OEM software typically comes from the device manufacturer for OEM Windows issues. Microsoft doesn’t directly support OEM licenses without a separate support contract. For upgrades or issues beyond the device, you’re on your own or need to purchase support. |
| Contract Terms | 3-year formal contract with Microsoft (usually via a Licensing Solution Provider). Legal terms are comprehensive. Price protection for the term (no price increases on agreed products). Early termination is not allowed except by buying out the remainder. At renewal, terms can change. | No fixed-term contract with Microsoft; you agree to the partner’s subscription terms. The agreement is evergreen, and you can exit simply by not renewing subscriptions. New Commerce subscriptions under CSP can be monthly or annual commitments, but those are much shorter obligations than an EA. | A non-expiring agreement with Microsoft. You accept a digital contract that stays in place as long as you purchase services. There’s no formal renewal cycle for the agreement itself – you just keep buying what you need. You have the freedom to stop or reduce purchases at any time (subject to any specific subscription’s billing term). | No contract needed beyond the standard license terms that come with the product. Essentially, you own the license on that device outright. There’s no renewal – the license is perpetual for that machine. However, you are also locked to that hardware (the license usually isn’t transferable), and there’s no consolidated contract managing multiple OEM licenses. |
| Risks & Trade-offs | Risk of over-commitment: if your needs shrink, you still pay for the full term. “Shelfware” is common, meaning wasted spend on unused licenses. Compliance is a managed process (annual true-ups) which can catch you off-guard with unexpected costs if usage grew. You’re also betting that the volume discount outweighs the cost of any unused capacity. | Risks include variable pricing (if Microsoft raises cloud subscription prices, your cost can increase after your current subscription term ends) and reliance on a third-party partner for support and billing. However, there’s little risk of paying for shelfware since you can adjust down. Ensure the CSP partner is reputable, as switching partners or dealing with a poor partner could be a hassle. | The pricing discounts are limited under MCA (you might pay closer to retail rates). Microsoft may push direct customers to commit to certain spend levels for better pricing, so watch for soft pressure to sign multi-year cloud commitments even under this “flexible” model. Also, since the MCA is newer, some kinks in Microsoft’s direct billing or portal management could pose challenges. | The OEM route is limited in scope – it mainly applies to Windows OS and maybe Office on new PCs. The risk is you might not have access to enterprise-grade features (e.g., Windows Enterprise or long-term support) unless you add separate upgrades or subscriptions. Also, managing many individual OEM licenses (one per device) can be cumbersome for IT asset tracking. |
Key takeaways from the cost analysis: An EA can be cost-effective for a stable, large enterprise that fully utilizes the licenses and values predictable pricing. However, the moment your usage pattern deviates (declining headcount, shifting to cloud services, etc.), the EA’s inflexibility becomes a cost liability.
CSP and MCA alternatives may charge you closer to list prices, but they let you pay only for what you actually use, often resulting in lower effective costs if you’ve been carrying excess under an EA.
And while OEM licensing isn’t a complete alternative, it’s part of the puzzle – for example, you might rely on OEM licenses for Windows and move your Office and server software to cloud subscriptions outside the EA.
The bottom line: when evaluating cost, consider not just the sticker price per license, but the overall spend over time, including unused licenses and administrative overhead.
How to gain leverage in your negotiations, Leveraging CSP and MCA in EA Negotiations.
3. Using Alternatives as a Negotiation Tactic
Even if your end goal is to renew your Microsoft EA, exploring CSP and MCA alternatives can be a powerful negotiation tactic. Why? It establishes your “walk-away” baseline.
By modeling your costs under CSP or an MCA (and even obtaining actual quotes from a Cloud Solution Provider), you arm yourself with data. This data signals to Microsoft that you have a viable plan B and are prepared to leave the EA if the deal isn’t right.
Microsoft’s sales teams pay close attention when a customer is seriously evaluating alternatives. If they know you could switch to month-to-month subscriptions via CSP or purchase only what you need under an MCA, they’ll be more inclined to sharpen their pencil on the EA renewal offer.
For example, some organizations have presented Microsoft with a CSP quote that meets their needs at a lower total 3-year cost than the initial EA proposal.
In response, Microsoft might counter with deeper discounts, a more favorable payment structure, or offer add-ons (such as extra support hours or advisory services) to persuade you to stay with the EA.
Using this tactic requires credible evidence and resolve. It’s not enough to bluff – Microsoft will expect to see that you’ve done the homework. Come prepared with calculations of costs and a clear list of which products you’d move to which program.
Be upfront that you will choose the alternative if the EA renewal can’t match your requirements.
By demonstrating that you know your options, you shift the negotiation dynamic: instead of you scrambling for a discount, Microsoft works to convince you that the EA is still your best option.
At the very least, you’ll either get a much better EA offer or confirm that exiting the EA is the right move. It’s a win-win on your side of the table.
4. How to Exit the EA Gracefully
If you’ve decided not to renew your Enterprise Agreement, a smooth transition is crucial. A “Graceful exit” means avoiding surprises – such as lapses in licensing coverage, downtime for users, or double payments for licenses.
Here’s how to execute a well-orchestrated exit from your Microsoft EA:
- Line Up Replacement Licenses Early: Don’t wait until the last week of your EA to scramble for new licenses. Several months before the EA expiration, begin provisioning the alternative licensing. Whether it’s setting up with a CSP partner or purchasing via the Microsoft Customer Agreement, get those agreements in place early. This way, you can run trials or pilot migrations for services like Office 365, Azure subscriptions, or Dynamics under the new model while still under EA, ensuring they work as expected.
- Map Products to New Sources: Conduct an inventory of all products currently licensed under the EA. For each item, determine where it will come from after the EA. For example, Office 365 E3 might be purchased through a CSP on an annual subscription, Windows Server licenses might be acquired via a cloud subscription or a separate volume license, and Windows 11 Enterprise might be covered by Microsoft 365 subscriptions or simply left at the OEM Windows Pro that comes with your PCs. No product should be left without a home when the EA ends.
- Clarify Your Post-EA Rights: One common concern is, “What do we keep after the EA ends?” The good news is that any perpetual licenses you acquired under the EA (and paid in full) are yours to keep indefinitely. For instance, if you have Office or Windows licenses with active Software Assurance through the EA, you generally retain the right to the latest version available at the end of the contract. Document these entitlements. Get a formal list from your Microsoft licensing portal or reseller of all perpetual licenses and versions you own. This protects you from accidentally repurchasing something you already have a right to use.
- Timing and Overlap: Plan the timing of your switch carefully to avoid either a coverage gap or double-billing. Ideally, you want new subscriptions to kick in the day after your EA expires. In some cases, you may intentionally overlap by a few days or weeks (for example, starting some critical cloud subscriptions under CSP slightly before the EA ends) to ensure that all systems and users are fully transitioned. If you do overlap, coordinate to minimize extra costs – perhaps by having the CSP term begin just as an EA annual period ends so you’re not paying twice for the same users in a single period.
- Communicate with Stakeholders: Inform your Microsoft representative ahead of time that you’re considering not renewing. You don’t need to broadcast your final decision too early (to avoid aggressive sales tactics too soon), but giving a heads-up that “we are evaluating other options” can set the stage. Also, inform your internal stakeholders (procurement, IT support teams, department heads) of the plan to exit the EA. There will be internal process changes – for example, license requests might go through a new portal or partner. Everyone should know where to go once the EA is gone.
Exiting an EA is entirely doable with proper planning. Many organizations have done it successfully. The key is to avoid last-minute surprises: everything that was running under the EA continues to run under a new arrangement without interruption.
If you manage that, most end-users and business units won’t even notice the change, while the organization benefits from a more suitable licensing model and potentially significant cost savings.
You can choose a mix, Mixing and Matching: EA + CSP Hybrid Licensing Strategies.
5. Microsoft’s Reaction if You Leave the EA
You should anticipate a reaction from Microsoft when you choose to leave the EA. From Microsoft’s perspective, an EA represents a predictable revenue stream and a measure of customer commitment, so they have a vested interest in retaining it.
Here’s what to expect and how to handle it:
- Intensified Sales Attention: As your EA renewal date approaches, if Microsoft suspects you might not renew, they will likely escalate the account. You might see higher-level Microsoft executives or specialized “retention” reps getting involved. They will want to understand why you’re leaving and what they can do to change your mind. Don’t interpret this as harassment – it’s business. Be prepared to reiterate your reasons calmly and stick to the facts from your cost analysis.
- Last-Minute Deals and Discounts: Often, Microsoft’s first offer during EA renewal discussions isn’t its best. Suppose they realize you’re truly ready to walk away. In that case, they may come back with a sweetened deal, such as extra discount percentages, a larger Azure credit, or a more favorable payment plan. This is where your negotiation prep pays off. You can evaluate these offers against your “walk-away” baseline. Are they now meeting or beating the alternative’s cost? If yes, it might be worth reconsidering the EA (provided the flexibility trade-off is acceptable). If not, don’t be swayed by a slightly better-but-still-not-great deal.
- FUD Tactics: Expect a bit of FUD – Fear, Uncertainty, and Doubt. Microsoft reps might warn of the risks of not having an EA: “Your costs could skyrocket under month-to-month pricing” or “Without an EA, you’ll lose free training benefits and advanced support.” Some of these points may be valid, but they are often exaggerated. Remember, many organizations operate happily without an EA. Most of the benefits Microsoft will tout can be obtained through other means (sometimes at a slightly higher cost, sometimes by forfeiting a nice-to-have perk that you weren’t using anyway). Evaluate each claimed risk objectively.
- Professionalism and Future Relationships: If you do exit the EA, do so in a professional manner. Thank Microsoft for their proposals, and make it clear that the decision is based on business fit. Microsoft will continue to be your vendor through CSP or direct purchases, so it’s essential to maintain a good relationship. In many cases, if the door is left open, Microsoft will revisit the situation in a year or two to see if circumstances have changed and if you’d consider an EA again. They might even offer a “trial EA” or shorter-term agreement in the future to win back your business. Maintaining respectful negotiations sets a positive tone for all future dealings.
Ultimately, Microsoft’s reaction will test your resolve. If your analysis shows that the EA no longer aligns with your needs, stand by that conclusion. Leverage any improved offers if they truly make a difference, but don’t be afraid to politely decline and proceed with your new licensing strategy.
The months after leaving the EA will prove out your decision – as long as your organization is running smoothly and saving money or gaining flexibility, you’ll know you made the right call. Microsoft may not be thrilled, but they will respect a decision driven by clear-eyed business logic.
5 Actionable Next Steps
If you’re evaluating whether to renew or exit your Microsoft EA, here are five concrete steps to take now.
These actions will provide you with the data and confidence to make the best decision and, if necessary, execute a successful change.
- Run Cost Models: Compare a three-year forecast under your current EA versus the same period using CSP or MCA subscriptions. Include everything – license costs, support contracts, potential growth or reductions. This model will reveal your true Total Cost of Ownership (TCO) for each scenario and help identify break-even points. It’s the foundation for an informed decision (and for any negotiation with Microsoft).
- Audit Your “Shelfware”: Do a thorough audit of your license usage. Identify unused or underused licenses (e.g., that batch of 100 Visio licenses nobody actually claimed, or 200 Office seats purchased for a project that ended). Shelfware is sunk cost under an EA. By quantifying it, you can illustrate how much money could be saved by a more flexible model, where you wouldn’t have to pay for those excess seats. Sometimes, this analysis alone builds a compelling case for adjusting your licensing approach.
- Check Your Perpetual Rights: Review which licenses and versions you own outright as a result of past Microsoft purchases. For example, if you’ve had an EA for years, you likely have perpetual rights to older versions of Windows, Office, or server products through the Software Assurance benefits you paid for. Document these. When leaving the EA, these perpetual licenses can be a safety net – you won’t suddenly be without software for critical systems. Ensure you know what you can legally continue to use without any EA or subscription in place (and at what versions). This step prevents unnecessary re-purchases and helps in planning the future state.
- Get CSP/MCA Quotes Early: Don’t wait until your EA is about to expire to discuss alternative licensing options with partners or Microsoft. Engage a credible Microsoft Cloud Solution Provider partner well in advance. Have them provide quotes for equivalent licenses for your users and workloads. Also, explore Microsoft’s direct offerings under the MCA. Early quotes serve two purposes: they give you concrete pricing for your alternative plan, and they can be used in discussions with Microsoft to validate that you have competitive offers on hand. Starting this process early ensures you have ample time to evaluate contracts, test the new licensing in a pilot, and iron out any kinks in procurement.
- Define Your Walk-Away Point: Set a clear threshold for what an acceptable EA renewal looks like – and what would make you walk away. This should be a combination of cost and terms. For example, “If Microsoft can match our CSP alternative cost within 5% and allow a 10% reduction in licenses with a refund at the anniversary, we’ll renew. Otherwise, we move to CSP.” Write it down and get executive alignment on this walk-away point. By defining this upfront (based on your cost modeling and business needs), you empower your negotiation team. It prevents getting swayed by last-minute sales pitches or marginal concessions. You’ll know exactly what “good enough to stay” looks like, and anything short of that means you confidently execute the plan to exit the EA.
By taking these steps, you’ll transform what can be a daunting decision into a strategic evaluation.
Whether you ultimately stay with a right-sized EA or switch to a more flexible licensing model, you’ll do so based on data and preparation – not sales pressure or inertia.
In the rapidly changing world of software licensing and cloud services, proactivity is your best asset. Good luck!
Read about our Microsoft EA Negotiation Service.
