Phasing out Enterprise Agreements

In the first days of November 2024, unconfirmed rumours were circulating concerning the complete phasing out of Microsoft Enterprise Agreements from January 2025.

Fortunately, and as our experts expected, the rumours were exaggerated.

However, Microsoft announced a gradual, controlled move away from the Enterprise Agreement towards CSP for small and medium businesses and MCA-E for enterprises.

Unfortunately, the announcement clarified very little. Here's a direct quote:

"Beginning January 1, 2025, a small percentage of cloud Enterprise Agreements (EA) in direct markets will no longer be eligible for renewal under the existing EA framework.

"In January 2025, we will begin notifying these affected customers that renewal on the EA is no longer possible.

"For enterprise customers, the Microsoft Customer Agreement for enterprise (MCA-E, the digital evolution of the traditional EA), will provide the optimal, streamlined solution.

"For SMC customers, the recommended options are CSP or MCA-E."

What is happening?

Some Microsoft clients will be blocked from renewing their Enterprise Agreement.?

Are you affected?

Here is what we know from the announcement:

• "A small percentage" - no further details,
• Direct markets only - i.e. countries where Microsoft can sign direct agreements,?
• Both enterprises and small and medium organisations are affected.?

If you are in a direct market, it is impossible to tell whether you are on the target list.

If you are in an "indirect market", you're safe. For now.

Is only a specific type of an EA affected?

When the initial dust settled, Microsoft partners "in the close loop" speculated that only the so-called "cloud-only" EA would be discontinued.?

The announcement, however, mentions "Cloud Enterprise Agreements", which may mean absolutely anything in the Microsoft ecosystem, any EA, EAS or SCE.

What should you do to prepare?

If you have one, we suggest proactively contacting your CSP, LAR, or Microsoft account manager and ask them to clarify it ASAP.?

You need to know upfront whether you will be forced to migrate to CSP or MCA-E.

If you're unsure how to approach it, contact us, we'll help.

Beware of misleading messaging from Microsoft

We wish there were a more polite way to say it, but the claim that MCA-E is "the digital evolution of the traditional EA" is... inaccurate.

MCA-E is not an evolution of EA in any regard.?

• It's an entirely different agreement with different financials.?
• There are no programmatic discounts based on your size. You'll have to negotiate from the RRP regardless of your enterprise's size.
• It is is OPEX-dominant. Most licences and services are subscription-only.?
• There is no renewal of Software Assurance so you'll lose your investment in EA licenses and will have to resubscribe anew.
• It has different licensing rules, some of which may be critical.

A direct transition will undoubtedly have a significant cost increase and require operational changes.

We'll publish more thoughts on this matter and our advice on reducing the impact and smoothing the transition to MCA-E and CSP in the coming weeks.

If you don't want to wait and get familiar with the basic differences, we have an article we published a while ago. Most of it is still relevant today.

5% price increase on the entire CSP

If you pay monthly for your annual CSP subscriptions, expect a 5% price increase across the entire price list. The alternative is to pay for the entire year upfront.

This is definitely a bitter pill. But, well, they need the cash to sustain their AI investments.

Got more questions??

We help organisations reduce and optimise Microsoft costs. As we don't sell their licences and cloud services, our advice is not affected by Microsoft's agenda.

Email us at [email protected] or visit our website.