Preparing for Microsoft EA Renewal (2025)
Introduction
Renewing a Microsoft Enterprise Agreement (EA) is a high-stakes moment for any large organization. The 2025 renewal landscape brings new twists – Microsoft is aggressively pushing cloud and AI additions like Azure spending commitments and Microsoft 365 Copilot.
Rushing into an EA renewal without thorough preparation can leave your company overcommitted, overpaying, and locked into unwanted services. Successful renewal outcomes hinge on early and strategic preparation. Read our Microsoft EA renewal checklist.
By planning well in advance, you gain the insight and leverage needed to cut costs, avoid vendor lock-in, and secure flexible terms that support your business.
In short, preparation is the only way to turn the EA renewal from a reactive paperwork exercise into a proactive opportunity to optimize your Microsoft investment.
Step 1: Assess Your Current Position
Start by taking a hard look at where you stand today with Microsoft licensing. This means conducting a comprehensive license inventory and usage audit across all software and cloud services in your EA. Identify exactly what you’re paying for and who’s using it.
In this process, be on the lookout for “shelfware” – licenses and subscriptions you purchased but aren’t actually using.
It’s common to find instances of unused Office 365 seats, Power BI Pro licenses assigned to inactive users, or workloads moved to the cloud while you’re still paying for on-premises licenses.
Flag these for elimination or downgrade at renewal; every unnecessary license is money that can be saved. Also, evaluate your current spend vs. value received: are there high-cost licenses (for example, premium Security or E5 features) being underutilized?
This audit phase should also include a compliance check – ensure your usage aligns with entitlements so that you’re not unknowingly under-licensed in any area.
Address any compliance gaps now (through true-ups or reharvesting licenses) to avoid surprises during Microsoft’s review. Finally, consider how well your current license deployment aligns with your business strategy.
If the company is moving aggressively to cloud services, or if there have been mergers, divestitures, or shifts in workforce, those factors will affect what licenses you actually need going forward.
The outcome of Step 1 is a clear, data-driven baseline: a lean list of what you use, what you don’t, and what might need adjusting – this will be the foundation for all further renewal planning.
Discover what to focus upon: Cost-Saving Opportunities in Microsoft EA Renewal.
Step 2: Forecast Future Needs
With your current baseline in hand, the next step is to forecast what your organization will need over the next EA term (typically three years). Model your future user count and usage trajectory: Is your workforce growing or shrinking? Plan for projected hiring, layoffs, or acquisitions that could change the number of seats required.
Evaluate any planned IT transformations – for example, moving on-premise server workloads to Azure cloud services, rolling out new collaboration tools, or adopting new security solutions. These initiatives can significantly shift your licensing needs (e.g., fewer on-prem server licenses but more Azure subscriptions).
Pay special attention to AI-driven licensing trends. Microsoft is introducing new AI-powered products, such as Microsoft 365 Copilot, and various security/analytics add-ons that come at a premium.
Consider whether these tools have a place in your roadmap. If, for instance, you expect to pilot Copilot for certain user groups, factor that into your plans (both in terms of budget and license quantity). However, remain objective – just because Microsoft touts an AI add-on doesn’t mean it’s necessary for you.
Forecasting needs to include potential downsizing or shifts as well: if there’s a chance you will reduce usage of certain products (say you plan to drop a software suite or move to a competitor’s solution), document that too.
By predicting needs (both expansions and contractions), you can shape an EA renewal that fits where you’re going, not just where you’ve been.
This forward-looking view ensures you’re not forced into paying for capacity you won’t use, and it positions you to negotiate for the right mix of licenses and terms that accommodate growth and give flexibility if your needs later change.
Step 3: Evaluate Renewal Alternatives
An EA renewal is not a one-size-fits-all proposition – especially in 2025, you have alternative licensing routes to consider.
Microsoft now offers multiple channels, primarily the traditional Enterprise Agreement (EA), the Cloud Solution Provider (CSP) program, and the newer Microsoft Customer Agreement for Enterprise (MCA-E).
It’s essential to evaluate these options and possibly use a mix (hybrid approach) to optimize costs and flexibility.
- Renewing the EA: Sticking with an EA can make sense for large enterprises. EAs offer volume discounts and lock-in pricing for three years, which provides budget predictability. They also bundle Software Assurance benefits and allow an annual true-up for added licenses. However, EAs require a firm commitment (usually a 3-year term and a minimum seat count), and you generally can’t reduce your license quantities mid-term. If you value price protection and have a stable or growing usage profile, an EA renewal with the right discounts might be your best choice. Just be mindful that Microsoft may try to make EAs “all-inclusive” with costly bundles (like forcing enterprise-wide E5 or Azure commitments); you should only renew what makes sense for your needs.
- CSP (Cloud Solution Provider): The CSP program is a pay-as-you-go monthly subscription model typically through a Microsoft partner. It offers far more flexibility – you can increase or decrease license counts month to month, and there’s no long-term contract locking you in. CSP can be attractive if you anticipate fluctuating needs or want to avoid large upfront commitments. It’s also the primary path Microsoft is pushing for mid-sized customers (and even some large ones for certain services). On the downside, per-unit costs under CSP can be slightly higher than EA prices, and you lack the multi-year price lock (prices can adjust, typically at annual subscription renewal points). You also might miss out on some volume-based discounts and Software Assurance benefits. Nonetheless, you should cost out CSP scenarios for your environment – in some cases, the flexibility and only paying for what you use can outweigh the loss of an EA discount. It’s even possible to adopt a hybrid approach: for example, keep core products under an EA for price stability, but use CSP for new or variable services (like a subset of Azure services or trialing Microsoft 365 Copilot) to minimize risk.
- MCA-E (Microsoft Customer Agreement – Enterprise): This is Microsoft’s newer direct agreement framework, replacing EAs for many mid-market organizations. It’s essentially an evergreen (no fixed end-date) contract you sign once, then you can add or remove subscriptions as needed. The MCA-E is optimized for cloud subscriptions and Azure consumption, offering a modern online portal and no minimum seat requirements. For enterprises heavily using Azure or looking for a more flexible, self-service model, MCA-E could be worth exploring. The trade-offs? You lose the traditional EA’s blanket volume discounts and price locks. Under an MCA-E, pricing is on a per-subscription term basis (e.g., you might get a 1-year price guarantee on a product, but after that year, it can change). Also, Software Assurance is not included (it focuses on subscription licensing only), and the contract terms are mostly standard (little room to negotiate custom clauses). In short, MCA-E gives agility and aligns with a cloud-first strategy. Still, you might pay a bit more per license and assume more responsibility for managing renewals and compliance continuously.
When evaluating these alternatives, compare the 3-year total cost and qualitative benefits of each option for your situation.
If you’re a very large enterprise, Microsoft may still offer the EA, and that could be the cheapest per unit. If you’re around the threshold where Microsoft is phasing out your EA, CSP, or MCA-E, it might be inevitable – so plan early for that transition to avoid a lapse in coverage.
Even if you intend to stick with an EA, having credible quotes or estimates for a CSP or MCA-E approach gives you leverage. Microsoft’s sales team will know that you have a Plan B (or Plan C) and might sharpen their pencil on EA pricing to keep your business.
The key is not to assume you must renew “as-is” – explore all licensing strategies (including mixed models) to find the combination that provides the best value and flexibility for your enterprise.
Step 4: Build Internal Alignment
Preparing for an EA renewal is not solely an IT task – it’s a cross-functional effort that needs strong internal alignment. Start at least a year (or more) in advance and bring all relevant stakeholders into the planning process.
Typically, you’ll want to include:
- Procurement and Sourcing: to drive cost analysis, negotiation strategy, and ensure that commercial terms meet company policies.
- IT and Department Leads: to provide insight into technology needs, usage patterns, and upcoming initiatives that affect licensing. They know what tools are essential and which can be phased out.
- Finance: to set budget expectations, approve funding for any expansions, and model how different renewal options impact the IT spend over the next few years.
- Legal (Contracts team): to review any contract terms or changes, ensuring compliance with corporate legal requirements and identifying any risky clauses. They’ll help define what terms are non-negotiable from a legal standpoint.
- Executives (CIO, CFO, CTO): to sponsor the initiative and align it with broader business strategy. Executive buy-in is crucial for major decisions, such as potentially changing licensing models or walking away from a deal.
Getting these parties on the same page early accomplishes several things.
First, it establishes clear objectives and “non-negotiables.” For example, procurement and finance might set a goal to reduce Microsoft costs by 15%, or IT might insist on retaining certain flexibility (like the right to reduce users at renewal if numbers fall).
Discuss and agree on these internal priorities ahead of negotiating with Microsoft. Second, a united front ensures you won’t be undermined during negotiations.
If Microsoft’s account team tries the classic divide-and-conquer – say, bypassing procurement to convince a department head about a shiny new product – your internal stakeholders will already be aligned and less likely to be swayed off-plan. Document your internal requirements, get management sign-off on the strategy, and make sure everyone knows the plan.
By the time you engage with Microsoft, your team should speak with one voice.
This internal solidarity is a key form of leverage: Microsoft will be facing a well-prepared customer who knows what they want and has leadership backing, rather than an uncoordinated group that can be pressured separately.
Step 5: Create a Negotiation Strategy
Walking into renewal talks without a strategy is a recipe for concessions and cost overruns. After assessing needs and aligning internally, formulate a detailed negotiation game plan.
This plan should define your key levers and fallback options in advance.
Consider leveraging the following tactics as part of your strategy:
- Enterprise-Wide Commitments: Decide if you are willing to standardize on certain Microsoft technologies across the whole organization – and use that as a bargaining chip. For example, Microsoft loves to see customers go “all-in” on an ecosystem (like moving everyone to Microsoft 365 E5, or shifting major workloads to Azure). You wouldn’t agree to such a broad commitment without significant benefit. If you are open to an enterprise-wide adoption of a product, demand commensurate discounts or incentives in return. On the flip side, if a certain upsell (like upgrading all users to E5 or adding a new AI tool for everyone) isn’t in your best interest, be prepared to firmly exclude it, even if Microsoft pushes hard. The power here is showing that you could expand in Microsoft’s favor – but only at the right price and terms.
- Software Assurance and Renewal Terms: Software Assurance (SA) benefits (like free upgrades, training credits, support benefits) are included in EAs for many products. Assess how valuable those have been for you. If they are important, use that to justify deeper discounts (“we invest in SA to stay current, we expect a better price”). If not, you may consider negotiating to drop certain SA components or opting for shorter subscription terms for greater flexibility. Also, clarify the true-up and true-down terms in negotiation. Push for the ability to reduce licenses at anniversaries or at least at renewal without penalty – this flexibility can save money if your user count drops. Make sure any special terms you had (from the last EA or agreements) carry into the new one; Microsoft won’t volunteer them unless you ask. Essentially, identify contract terms that matter (like price increase caps, flexibility to swap products, etc.) and put them on the table.
- Timing and Microsoft’s Fiscal Calendar: Leverage timing to improve your deal. Microsoft operates on a fiscal year that ends on June 30, and quarterly targets are set throughout the year (September, December, March, and June quarters). They are often more willing to concede on price or throw in extras if your renewal closes at a time that helps them hit a quota. If your EA expiry happens to line up with Microsoft’s end-of-quarter or year-end crunch, use it. Even if not, you can create a timing play – for instance, by showing willingness to delay a deal into their next quarter if needed, you subtly increase their anxiety to close sooner. Being aware of when Microsoft needs the deal gives you a competitive advantage in scheduling negotiations. Plan your negotiation milestones so that Microsoft’s team feels the pressure of a looming deadline on them, not just on you.
- Competitive Alternatives: One of your strongest negotiation levers is the existence of alternatives – or at least the credible perception of them. “Alternatives” can mean two things. One is the alternative licensing channels we discussed (CSP or MCA-E). The other option is to utilize alternative technologies altogether (e.g., migrating some workloads to Google Workspace, AWS, or other vendors instead of purchasing Microsoft’s top-tier offerings). You don’t necessarily need to make drastic vendor changes, but do your homework and be ready to present comparisons. For example, if Microsoft is proposing a large Azure consumption commitment, have estimates ready for what the same workload would cost on AWS or Google Cloud. If they pitch Microsoft 365 E5 with security and compliance, know what it would cost to license a lower Microsoft plan plus third-party security tools. By demonstrating that you have choices, you pressure Microsoft to sharpen its deal. They know that if they can’t meet your requirements, you have a Plan B (whether that’s switching some licenses to CSP, or even migrating a portion of users off Microsoft). This is often one of the few ways to get meaningful discounts or concessions, especially for products that Microsoft traditionally doesn’t discount heavily. In short, never let the Microsoft reps assume the renewal is “in the bag” – make it clear it’s an open competition for your business.
- Pre-Define Your Walkaway Terms: As part of your strategy, establish your walkaway point internally. This is the scenario (price or terms) at which you would refuse to sign and would genuinely pursue an alternative path. It might be a hard budget cap or an unacceptable contract clause. Having this defined (and approved by executives) is crucial. It gives your negotiators the confidence to hold the line. Suppose Microsoft won’t meet your minimum requirements. In that case, you must be ready to say “no deal” and execute your fallback (whether extending the existing agreement short-term, switching to CSP, or even removing certain products). Ironically, being willing to walk away often prevents you from having to do so – Microsoft, faced with a customer prepared to break from the status quo, will often improve its offer at the last minute. But you must be credible. So decide what your no-go boundaries are and gain leadership agreement on them ahead of time.
By crafting a negotiation strategy that uses these levers, you shift from being a passive buyer to a savvy negotiator. Remember that Microsoft’s sales teams are very experienced; they negotiate EAs every day.
But you know your organization best and, with thorough preparation, you’ll know the true market value of what you’re buying. Stick to your data and principles.
The strategy should also include a detailed checklist of items to negotiate – from obvious things like discount percentages to specific terms (e.g., the right to transfer licenses or substitute a new technology if it emerges). Going in with a clear playbook ensures you won’t forget any critical points when the pressure is on.
Ultimately, the goal is to arrive at an agreement where you get the necessary software and services at the best possible cost, with terms that let you adjust as your business evolves, rather than binding you to Microsoft’s rigid expectations.
Preparation Checklist – Are You Ready?
To ensure nothing important slips through the cracks, use the following checklist of must-do activities before signing your Microsoft EA renewal.
These are the preparation steps every enterprise should complete to set the stage for a successful negotiation and a right-sized agreement:
| Preparation Task | Completed? |
|---|---|
| License inventory updated – All current licenses and subscriptions are cataloged, with usage data. Unused licenses (shelfware) are identified for removal. | ☐ |
| Needs forecast modeled – Future user counts and project initiatives are forecasted (growth, reduction, cloud migrations, AI tool adoption like Copilot). | ☐ |
| Alternative scenarios evaluated – Costs and pros/cons of renewing EA vs. moving to CSP or MCA-E (or a mix) are analyzed, to establish options and leverage. | ☐ |
| Internal stakeholders aligned – Procurement, IT, finance, legal, and executives have reviewed the plan and agreed on objectives and limits. | ☐ |
| Negotiation strategy defined – Key negotiation levers (discount targets, contract terms, concessions to seek) and walkaway conditions are documented. | ☐ |
| Compliance and true-up reviewed – License compliance is verified, and any required true-ups or license reductions are planned prior to renewal. | ☐ |
Use this checklist as a guide. Completing all these preparation items will greatly increase your odds of an EA renewal that meets your business needs and avoids wasted spend.
Five Best Practices for EA Renewal Preparation
Keep these best practices in mind to guide your EA renewal preparation:
- Start early (12–18 months in advance): Enterprise Agreements last three years, so don’t wait until the last minute. Begin preparations at least a year (preferably 18 months) before your EA expiration. Early planning gives you time to gather data, explore alternatives, and weather Microsoft’s lengthy sales cycles. An early start also allows you to pilot new solutions (like testing a CSP subscription or a Copilot trial) before committing to a three-year deal.
- Treat shelfware as leverage: Any unused licenses or over-provisioned services are essentially dollars on the table. Plan to eliminate them at renewal and use that fact in negotiations – for instance, “We’re dropping 500 unused licenses, which saves us $X, but if you can offer a better discount on product Y, perhaps we’ll reallocate some budget there.” By showing you’re ready to cut waste, you pressure Microsoft to respond with a better offer to capture the remaining business.
- Don’t let Microsoft set the agenda (beware the E5/Copilot upsell): Microsoft will come to the table with a sales agenda – often pushing the latest and most expensive bundles like Microsoft 365 E5 or the new AI-powered Copilot add-ons for all your users. Stick to an agenda that reflects your priorities. If a certain upsell doesn’t align with your strategy or budget, you don’t have to accept it just because it’s “the thing” Microsoft is promoting. Evaluate new products on merit and ROI, and be prepared to say no or opt for a smaller deployment. Remember, it’s your renewal – it should be driven by your business needs, not just Microsoft’s sales goals.
- Use alternative licensing options to create competition: Even if you’re likely to stay with Microsoft in some form, create competitive tension in the negotiation. Solicit a quote from a CSP partner, explore the MCA-E route, or examine non-Microsoft solutions for certain workloads. When Microsoft knows you have other avenues, you gain power. They may, for example, offer a special discount to keep an important product in the EA rather than seeing you peel it off to a monthly CSP plan or a competitor. Options equal leverage – don’t go into a renewal without them.
- Align the renewal with your IT roadmap, not Microsoft’s timeline: Ideally, the structure and contents of your next EA should support your upcoming IT initiatives and business changes. That might mean scheduling the agreement term or refresh cycles to line up with planned tech rollouts, or ensuring flexibility for a potential divestiture or acquisition. Avoid signing up for anything that conflicts with your known plans (e.g., committing to more licenses than you’ll need if a division is being sold off). Also, try to arrange that the heavy negotiation happens at a time that’s advantageous for you. If your IT and procurement teams are swamped at Microsoft’s year-end, consider negotiating earlier to avoid pressure. The key is, the deal should serve your roadmap – don’t contort your plans just to fit Microsoft’s preferred timing or bundle.
By following these best practices, you establish a strong foundation for a renewal that not only saves money but also positions your organization for future success.
The EA renewal process will feel less like an imposed expense and more like a strategic realignment of your Microsoft partnership.
FAQs: Microsoft EA Renewal Preparation
Q: When should I start preparing for an EA renewal?
A: Ideally, begin preparations 12–18 months before your EA’s expiration date. Early planning gives you ample time to assess needs, explore options, and conduct a calm negotiation without deadline pressure.
Q: What’s the most important first step in the preparation process?
A: The first priority is to build an accurate license baseline. Inventory all your current Microsoft licenses and services, and verify how they’re being used. This baseline will highlight unused licenses (shelfware) and any gaps, forming the basis for your renewal strategy.
Q: Can I switch from an EA to a CSP agreement at renewal time?
A: Yes. Many organizations choose to move from an EA to the Cloud Solution Provider (CSP) model (or even an MCA-E) if it better suits their needs. It’s entirely possible to transition at renewal, just be sure to model the costs carefully. CSP’s month-to-month model can offer savings and flexibility, but you’ll want to compare the total cost over three years against an EA offer to make an informed decision.
Q: How should I handle Microsoft’s push to include Copilot (or other new AI services) in our renewal?
A: Cautiously and strategically. Don’t commit to broad adoption of Microsoft 365 Copilot (or any costly new service) without first validating its value for your business. It may be wise to run a pilot with a small group of users or take a phased approach. If Microsoft is pushing Copilot in the EA, consider negotiating so that you can add it later (at agreed-upon pricing) once it proves its ROI, rather than paying for it upfront for all users. In short, test the real business value before committing enterprise-wide.
Q: What if my user count drops or my needs decrease during the EA term? Will I be stuck paying for unused licenses?
A: This is a common concern. In a standard EA, you generally cannot reduce license counts mid-term, which is why negotiating flexibility upfront is vital. You should attempt to include terms that allow some adjustment (true-down) at anniversary or at least the right to drop licenses at renewal time. Additionally, if you anticipate a possible decline, consider not maxing out your initial order – you can always true-up if needed. Another approach is to leverage CSP for the uncertain portion of your users, as CSP allows you to scale down at will. The key is to address this in negotiations: build in provisions or strategies so you’re not paying for licenses you no longer need.
By addressing these FAQs and following a structured preparation approach, your Microsoft EA renewal can be transformed from a daunting task into a well-managed project. With the right prep work, you’ll enter negotiations confident, informed, and ready to secure the best possible deal for your organization. Good luck with your renewal – and remember, the effort you invest before signing will pay off in both savings and agility over the next EA term.
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