Microsoft Changes Enterprise Volume Licensing Program; Analyst Says Some Customers Could See Price Hike

Microsoft is making some changes to its Enterprise Agreement (EA) volume licensing program with a goal of getting more customers using two of its newer programs.

Starting July 1, Microsoft will be raising its minimum EA commitment for customers from 250 users or devices to 500 users or devices, Mark Nowlan, director of licensing marketing in Microsoft's Worldwide Licensing and Pricing unit, said in a recent interview.

The change applies to commercial customers that sign new Enterprise Enrollments or Enterprise Subscription Enrollments, he said.

Nowlan said Microsoft will be "guiding" customers with fewer than 500 users or devices to its Microsoft Product and Services Agreement (MPSA) and the Cloud Solutions Provider (CSP) licensing programs.

The MPSA, which debuted in 2014, lets customers buy on-premises software and cloud services together in a single agreement, while also picking and choosing only the products they need. Unlike the EA, the MPSA doesn't lock customers into a contract.

Microsoft's Cloud Solution Provider (CSP) program lets distributors, MSPs, ISVs and hosting providers directly provision cloud services and handle technical support for customers. In the CSP, partners maintain a direct billing relationship with customers.

"We've built these two programs to such a degree that their features and capabilities now fully meet the needs of most customers that fall under a certain number of users and devices," Nowlan told CRN.

Alex Dubec, Enterprise Agreement program manager, Worldwide Licensing and Pricing, said current EA customers that want to stay with the program will have the option of extending their contracts for 36 months once they expire.

Microsoft is essentially ending its EA program and replacing it with the MPSA and CSP programs, Jeff Muscarella, partner at NPI, an Atlanta-based firm that helps companies manage Microsoft licensing, told CRN.

"Microsoft’s justification makes sense -- as more customers transition to the cloud while still maintaining on-premise investments, they need a more simplified and flexible way to purchase Microsoft's products and services," Muscarella said.

However, some EA customers that move to the new programs will likely face a price hike, according to Muscarella. One example, he said, is former EA Level A customers maintaining perpetual licenses.

Muscarella said one advantage of the EA program is that customers receive an "enterprise" discount for on-premise products like Office Professional, Windows, and the Core or Enterprise CAL (client access license) Suites.

But according to Muscarella, a comparison of MPSA Level A pricing to EA Level A pricing shows that these products "will all be more expensive under the MPSA program."

What's more, MPSA is an indirect agreement, which means the Microsoft Licensing Solution Provider (LSP) provides the final pricing. But with EAs, Microsoft provides the final pricing, said Muscarella.

Muscarella said the Microsoft enterprise on-premise products will cost between 5 percent and 15 percent more, depending upon the product type, when customers buy License & Software Assurance or Software Assurance only.

Microsoft cloud offerings like Office 365 E1, E3, and the Enterprise Cloud Suite "appear to be priced approximately 10 percent less under the MPSA than under an EA," said Muscarella.

"This change is all about Microsoft's cloud imperative," said Muscarella. "While the MPSA agreement does offer perpetual license, the target market for this agreement is those that wish to purchase cloud products. The MPSA and CSP programs make it easier to buy cloud, and also at a lower price point; but on-premise purchases will cost more."