Microsoft Enterprise Agreement (EA), what you need to know!

What is an Enterprise Agreement (EA)

For businesses that want to license Microsoft software and/or cloud services for a three-year term and have more than 500 users or devices, there is a contract called the Microsoft Enterprise Agreement.

How it works

The Enterprise Agreement is designed for organizations that want to license software and cloud services for a minimum three-year period.

The Enterprise Agreement offers built-in savings up to 45 percent. The Agreement uses spread annual payments instead of one up-front payment. This helps reduce initial costs and helps you forecast annual software budget requirements up to three years in advance.

The Enterprise Agreement also has a rental variant, the Enterprise Agreement Subscription (EAS) that reduces initial licensing costs because you subscribe to the rights to use, rather than own, Microsoft products and services. This variant allows you to increase or decrease the number of subscriptions annually..

True-up

During the term of your Enterprise Agreement, you can add users, devices, products, and services at any time without having to place separate purchase orders. At the end of each contract year, you add licenses to the contract for additional software or services that you used during the year. This is called a True Up.

You cannot adjust license numbers for software products, such as Office or Windows Server, downwards during the contract term. Licenses for cloud services, such as Microsoft 365, can be adjusted downwards annually.

In an Enterprise Agreement Subscription, you can adjust licenses for both software products and cloud services downwards annually.

Renewing your Enterprise Agreement

When it is time to renew your Enterprise Agreement, you will have the opportunity to make adjustments to ensure that your new agreement aligns with your current and future needs.

Microsoft Enterprise Agreement Enrollments

Signing only an Enterprise Agreement is not enough to acquire licenses. A Microsoft Enterprise Agreement is only complete and valid when there is at least one kind of Enrollment under it.

Currently, there are two types of Enrollments:

• Microsoft Enterprise Enrollment (variation: Enterprise Subscription Enrollment),
• Server and Cloud Enrollment (SCE)

Microsoft Enterprise Enrollment (Indirect and Direct)

The most used type of Enrollment in the Enterprise Agreement program is the Microsoft Enterprise Enrollment. You can include all Microsoft business products and services in this enrollment.

Microsoft applies minimum conditions to join an EA or EAS. You must purchase a minimum of 500 Enterprise cloud licenses or you must purchase company-wide (with a minimum of 500) licenses for Office ProPlus, Windows Enterprise and/or the Core CAL Suite or Enterprise CAL Suite. For government and non-profit organizations, minimums of 250 licenses apply.

Enterprise cloud licenses are Office 365 E1/E3/E5, EMS (Enterprise Mobility & Security) E3/E5 and Microsoft 365 E3/E5.Server and Cloud Enrollment

The Microsoft Enterprise Agreement's Server and Cloud Enrollment (SCE) is a specific type of enrollment that enables you to standardize on one or more of the Microsoft server and cloud technologies listed below:

• Core Infrastructure Suite of server operating systems and management software: Windows Server + System Center.
• Application servers: SQL Server (database), BizTalk Server, SharePoint Server. You can only add BizTalk and SharePoint if SQL is included in the SCE.
• Development platform: Visual Studio Enterprise, MSDN Platforms
• Microsoft Azure used to be one of the four core technologies to start a new SCE but not anymore. If you already have had Azure in a previous SCE, you may still have an option to renew it, but new Microsoft EA clients are not able to sign an Azure-only SCE.

For these products, you must include licenses with Software Assurance (SA) or rental licenses in the SCE for all installations. For example, you cannot pay for part of the SQL licenses in an Enterprise Enrollment or another licensing program. If you choose to include SQL in the SCE, licenses for all SQL installations must be included in the SCE. There are some exceptions however, e.g. SQL installations covered by Visual Studio/MSDN licenses.

The SCE therefore has somewhat stricter requirements for paying your licenses, but there are also more favorable conditions, such as an extra discount on the license prices.

In an SCE you can choose between hire-purchase licenses (as in the EA Enrollment) and rental licenses (as in the EAS Enrollment)

Enterprise Agreements come in 2 types

There are two types of EA. An Enterprise Agreement (EA), which is for perpetual licenses plus maintenance, and an Enterprise Subscription Agreement (EAS or ESA), which is for subscription licenses.

You may order online service subscriptions in either EA or EAS.

What is the difference between EA and EAS?

EA, the standard (non-subscription) agreement: you pay for licenses and maintenance in three annual payments. At the end of the term:

• You retain perpetual licenses - they are yours forever,
• Your maintenance stops ("Software Assurance expires"). You have the option to renew Software Assurance for another three years.

EAS, the subscription agreement: you pay a subscription fee every year. At the end of the term, you are left with nothing. If you want to retain the licenses, you have a "buyout" option.

You can, of course, renew the agreement for another three-year term. Please read this article further for the Microsoft EA renewal guidance.

Pricing of Enterprise Agreements

The cost of a product or service that you order is a fixed price until the end of the Enterprise Agreement. Price changes by Microsoft during the contract term do not affect the products and services included in the agreement. Only when you renew the agreement after three years, any changed prices will apply to the following three years. The quantity of licenses used determines the discounts.

There are so-called "programmatic" discounts from Microsoft EA. The discount increases in size when you order additional licenses.

Based on the number of licensed users or devices, there are predetermined levels from A through D:

Extra discounts are optional. They may be, for instance:

• Given to a government as part of a transaction that applies to the entire region; or
• Individually negotiated by or on behalf of your company.

More Microsoft Agreements types

Microsoft SPLA Agreement

The Microsoft SPLA (Services Provider License Agreement) program provides licenses for service providers manufacturers. It enables them to license Microsoft software for application hosting and delivery.

The provider rents the necessary licenses from Microsoft and charges them to the end users. License numbers can be adjusted up and down every month.

Microsoft Open Value and Microsoft Open Value Subscription

The OV and OVS agreements are designed for businesses with 5 to 499 people or devices who want to license Microsoft cloud services and on-premises software.

Non-organization-wide Open Value is a transactional agreement where you buy licenses in the desired number via a hire-purchase construction. Software Assurance is included and required..

Organization-wide Open Value and Open Value Subscription are commitment-based agreements in which you agree to license specific items for your entire organization. Software Assurance is both included and required.

These Agreements have a lot in common with EA and EAS, but are aimed at smaller customers.

Microsoft Product and Services Agreement (MPSA)

The Microsoft Products and Services Agreement (MPSA) is a transactional licensing contract for businesses with 250 or more users or devices. If you want to license Microsoft on-premises software, cloud services, or both as needed with no organization-wide commitment under a single, non-expiring agreement, MPSA is the way to go. Software Assurance is optional.

Microsoft Customer Agreement (MCA)

The Microsoft CSP program makes use of  the MCA agreement. The Cloud Solution Provider program allows you to license the cloud services you require in conjunction with the value-added services provided by your systems integrator, hosting partner, or reseller partner, all while receiving support from a single point of contact.

MCA is a transactional licensing agreement for enterprises with one or more users/devices looking to:

• acquire cloud services through self-service purchases or
• outsource cloud service management to a Cloud Solution Provider program partner.

A limited number of on-premises software licenses are also available without Software Assurance.