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Analyst: Save millions, don't renew Microsoft Enterprise Agreements

Tim Greene | Jan. 8, 2014
Renewing Microsoft enterprise agreements – the contracts businesses sign for bulk licensing of Microsoft products – may be an unnecessary ritual that costs businesses millions of dollars for products and services they likely won't need before the contracts run out, according to an expert who helps customers negotiate the agreements.

According to Microsoft the new structure is based on three key elements:

  • A simplified agreement structure consisting of a Microsoft Products and Service Agreement, a foundational licensing agreement, and Purchasing Accounts.
  • One agreement for both on-premises software and online services.
  • New and upgraded systems and tools to managing Microsoft licenses and services.

Carrying out these principles are two concrete mechanisms, the Products and Services agreement and the Purchasing Account.

The Product and Services agreement consolidates common terms and conditions from current Microsoft Business and Services agreement, the Microsoft Select Plus Agreement and Microsoft Online Services purchasing terms and conditions contracts into "a single, nonexpiring agreement for all organizations," Microsoft says.

"By consolidating licensing in a single agreement, organizations can streamline the overall contracting process and integrate transactional purchases for on-premises software and Online Services. Combining these purchases together provides the best volume discount, per pool and account type, across your organization," Microsoft says.

The Purchasing Account is a buying entity within an enterprise customer's organization, such as a particular department.

The administrator of the overall Product and Services agreement can view all the Purchasing Accounts. "For instance, you can view and manage purchases by individual Purchasing Accounts, legal entities, account types, or by the entire organization," Microsoft says. "Because you are now managing "accounts" rather than agreements, you have one buying relationship with Microsoft and one agreement with an organizational view."

So far Microsoft's description of the initiative is too vague to draw many conclusions, DeGroot says. For instance some of the old licensing options called for mandatory Software Assurance maintenance contracts and some didn't. It's not clear how many of those options will carry over, he says.

He says it's likely the details will reveal a system that encourages buying software-services on a continuing subscription basis rather than software itself that customers own forever.

"They're trying to build a volume program that will send customers in the right direction as a far as Microsoft is concerned," DeGroot says. "That means using Microsoft software for every part of the enterprise at the highest prices over the longest period of time. They're not much different from other vendors."


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