The End of the Enterprise Agreement?

Microsoft has recently announced a major shift in its licensing framework that could have a significant impact on organizations worldwide. Starting January 1, 2025, some cloud Enterprise Agreements (EA) in direct markets will no longer be eligible for renewal under the existing EA framework.

This change signals Microsoft's ongoing push toward subscription-based models, and it introduces the Microsoft Customer Agreement for Enterprise (MCA-E) as the primary framework for larger enterprise customers. For others, the Cloud Solution Provider (CSP) program will become the way forward.

Here’s what you need to know:

Key points to consider

?? Indirect agreements unaffected (for now): EA agreements through resellers remain unaffected for the time being. Additionally, current EA deals being negotiated will be exempt during the first quarter of 2025.

??MCA-E: A mandatory move: The MCA-E will replace the EA for many direct customers. This new agreement introduces significant changes:

• No partner operational support.
• Subscription-based licensing will replace perpetual licenses, shifting costs to an OPEX model.
• Previous investments in perpetual licenses will be lost in the transition to MCA-E as there is no Software Assurance option to renew licenses at discounted prices.
• A different pricing model with no price bands or "From SA" availability.
• Large organizations will lose guaranteed discounts under MCA-E and CSP, requiring ongoing negotiations with Microsoft, which may increase costs.

?? October 2024 changes as a precursor: As of October 1, 2024, customers can purchase software like SQL Server, Windows Server, and System Center on MCA-E as subscriptions. This signals Microsoft's intent to enforce the shift early in 2025 for customers without strong on-premises requirements.

?? Transparency challenges: The MCA-E model lacks partner involvement, making it harder to evaluate if the pricing offered is favorable. Without tools like price bands or tailored contract terms, negotiating under this model will be very different from EA renewals.

What should you do?

Microsoft has not been very clear yet on the full transition from the EA to MCA-E, with many customers uncertain about the impact on their cases, and while only EA customers in direct markets are affected now, the EA will eventually end for all. Make sure you are prepared!

1. Talk to your account team: Get clarity on whether you’re one of the customers affected by this change.
2. Understand MCA-E: Dive into the details of this new model, including its pricing and terms, to see how it compares with EA and CSP options.
3. Evaluate your options: For larger organizations with customized EA contracts, staying on EA for one more renewal cycle might be advantageous.
4. Keep an eye on promotions: Starting January 1, 2025, Microsoft is offering a 15% discount on Microsoft 365 E5 annual commitments for customers in CSP. This could make the transition less costly and potentially beneficial for certain organizations.

Why it matters

This change underscores Microsoft’s strategy to accelerate cloud adoption and standardize subscription-based models. While this may offer some pricing and operational benefits, it’s essential to weigh these against potential challenges, such as reduced flexibility and lack of partner support.

How LicenseQ can help

At LicenseQ, we’re committed to helping our clients make informed decisions, whether that means renewing your EA, transitioning to CSP, or exploring the MCA-E option.

If you want to better understand your options or need support preparing for this transition, reach out to us today!

Kind regards,

Floris Klaver - Co-founder & Licensing Expert

Schedule a call - [email protected]