Microsoft Changes the Rules of its Enterprise Agreement

Microsoft Changes the Rules of its Enterprise Agreement

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It ups minimum user/device quantity, but does this mean SMEs are losing out?

Microsoft Changes the Rules of its Enterprise Agreement

Microsoft has moved to stop small business from purchasing software via an Enterprise Agreement. The outcome could spell the end for Microsoft’s volume licensing, as we know it.

Possibly the biggest change to the program since it was created back in 2001, is that from this July, the minimum commitment on EAs increases from 250 users/devices to 500. This means those organisations with less than 500 users/devices will be under pressure to find an alternative solution for their Microsoft technology licensing.

A turning point

Microsoft says the new structure aligns with customer buying patterns. At 500 users (or thereabouts) organisations traverse a turning point in terms of system complexity. The new offering exists to split customers at this point to simplify the buying experience and cut sales costs. Also, the 250-user/device point was first set up in the mid-nineties when having 250 computers in your organisation was a big deal. Now, most employees have the use of a desktop, laptop, smartphone and or tablet device proliferation has accelerated beyond anything that was anticipated in 2001.

It appears that existing EA customers (those with fewer than 500 users/devices) will be permitted to extend current enrolments for another 36 months but by the end of the next expiry date will be required to move to alternative forms of licensing solution.

The move, however, doesn’t affect government customers or those enrolled in the Server and Cloud Enrolment (SCE). Nor does it appear to affect regions where MPSA hasn’t been introduced (i.e. China and India to name two).

If you look back, perhaps the clues to this present change were there all along. The firm hinted at it as far back as December 2013, when it first unveiled its Microsoft Products and Services Agreement (MPSA) and Cloud Solution Provider (CSP) tools in a bid to stay relevant in a hybrid IT world. The former replaced Microsoft Select Plus.

These two programs are Microsoft’s preferred agreements for smaller businesses.

Perpetual licenses

MPSA allows customers to buy perpetual licenses for software and online services under one overarching agreement. Customers can pay upfront to license the exact amount of users/devices they need, with annual true-ups. It also has the flexibility of adding or subtracting licenses, as business needs change. There’s neither an annual commitment nor any minimum purchasing requirements with the MPSA. Customers also have access to Microsoft Azure and can pay as they go. This cuts out the guesswork involved in an annual commitment.

CSP incorporates cloud-only services for customers wishing to outsource service management to a third party and this is paid month-by-month. All of this is done via one simplified agreement.

Would the end of the Enterprise Agreement be lamented? There will be very few attending this funeral, and only perhaps to make sure it has gone and been well and truly buried. An EA is 35 pages long and quite complex, while the MPSA weighs in at a sprightlier 10 pages and lets customers purchase other Microsoft products and services.

So what is the plan for customers? Those wanting to migrate fully to the cloud and online services (Office 365 and Azure) could go down the CSP route. If the customer has a more hybrid IT infrastructure, then MPSA is a better fit. Those with a more traditional IT environment (and there are still lots of them) should benefit from the Open Value or Open Value Subscription Program (OVS).

The switchover is just five months away, so organisations will have to investigate the impact of the changes and make a number of important decisions about software licensing. It will certainly pay to consult with experts in software licensing in order to ensure your organisation isn’t left out of pocket or with a compliance problem.

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I am the Group Chief Marketing Officer at Crayon. My team are focused on driving enhanced lead generation campaigns and nurturing for our sales organisations across multiple geographies though the utilisation and coordination of all online and offline communication channels. We are driving increased brand awareness in the business's core competency areas of Software Asset Management (SAM), cloud and volume licensing solutions and associated consultancy services. I have over 20 years of senior business leadership experience within direct marketing/direct sales and mass distribution businesses, in both the B2B and B2C markets serving on the boards of both private and public multinational corporations.