Summary
Key Takeaways about the MACC
Here are some key takeaways to understand the Microsoft Azure Consumption Commitment (MACC): |
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1. A MACC involves a customer agreeing to spend a specific amount on designated Microsoft Azure services ("Eligible Services and Offerings") over a defined timeframe ("Coverage Period"). This commitment is made within the context of another Microsoft agreement, such as Enterprise Agreement or Server and Cloud Enrolment. |
2. The primary way to fulfil the commitment is through the active consumption of the Eligible Services and Offerings. They include services like virtual machines, storage, and databases, as well as potentially eligible Azure Marketplace solutions. |
3. Organisations should be aware of which specific services are included as "Eligible Services and Offerings" in their agreement, as other Azure services might not contribute to meeting the commitment. |
4. Failure to meet the full commitment by the end of the Coverage Period may result in a "Shortfall Invoice" for the outstanding amount. |
5. Crucially, the amount of the Shortfall Invoice is often applied as an "Azure Prepayment" that the organisation can use for future consumption of Eligible Services and Offerings. |
6. However, the application of the shortfall as an Azure Prepayment is contingent on the status of the Enrolment. It is typically applied if the Enrolment is still active or is renewed. If the enrolment has expired and is not renewed, the shortfall may not be converted into a prepayment. |
7. As an incentive for making a MACC, Microsoft offers an "Azure Commitment Discount". This discount is applied to the price of Microsoft Azure Services consumed during a specific "Azure Commitment Discount Coverage Period". |
8. The Azure Commitment Discount is usually applied in the month the Azure services are used, reducing the immediate cost of consumption. |
9. It's important to note that an Azure Commitment Discount is typically a one-time offer, and Microsoft is not obligated to repeat it in the future. |
10. Organisations should monitor their Azure consumption throughout the Coverage Period to track their progress against the commitment, maximise the benefits of any Azure Commitment Discount and allow for proactive adjustments to their Azure strategy if needed. |
What is The Microsoft Azure Consumption Commitment (MACC)
The Microsoft Azure Consumption Commitment (MACC) represents a set of significant amendments to a Microsoft agreement or an enrolment, typically a Server and Cloud Enrolment.
The MACC is more than a simple agreement to use Microsoft Azure services; it establishes a substantial financial obligation on the customer regarding their consumption of specific Azure services over a defined period.
At its core, the MACC involves a firm commitment by the customer organisation to pay a total monetary amount for the consumption of designated Eligible Services and Offerings during a specified Coverage Period.
The Core Commitment: What You're Signing Up For
At the heart of the Microsoft Azure Consumption Commitment (MACC) lies the central concept of the Commitment. It is the total amount of money that the organisation explicitly agrees to pay to the Microsoft Sales Affiliate under the Enrolment for the consumption of Eligible Services and Offerings throughout a defined Coverage Period.
A MACC is a binding financial agreement, not just a forecast of Azure usage.
It is vital to recognise that this Commitment is a firm financial undertaking by the organisation. You must ensure that the consumption of these specified Azure services, potentially including any Azure Prepayment made, reaches the total Commitment amount by the end of the agreed Coverage Period.
The MACC is not simply a projection of anticipated Azure usage but a contractual agreement to spend a certain minimum amount on these services within the given timeframe.
🖐 Navigate complex MACC terms with expert support. Learn more: Microsoft Azure Contract Negotiation (MACC).
Defining What Counts: Eligible Services and Offerings
Within the structure of an agreement that includes a Microsoft Azure Consumption Commitment (MACC), a fundamental aspect is understanding precisely which services and offerings contribute towards fulfilling this commitment. This definition is critical as it determines which Microsoft Azure-related expenditures are included within the financial framework of the MACC.
Only designated Azure Marketplace listings count towards MACC consumption.
At its core, a Consumption Commitment represents a total monetary value that a customer agrees to spend on specified Microsoft Azure services and offerings over a defined Coverage Period. This commitment ensures a certain level of consumption and often unlocks benefits such as discounts or investment funding.
The definition of "Eligible Services and Offerings" is the cornerstone of a MACC. Typically, this category will encompass:
The core Microsoft Azure Services: This broadly includes the various infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS) offerings provided under the Microsoft Azure umbrella. Examples include virtual machines, storage accounts, databases, networking services, and analytics platforms.
Azure Reservations: When a customer commits to using a certain quantity of Azure resources (like virtual machine instances or database capacity) for a predefined term (usually one or three years), this commitment is formalised as a reservation. The financial outlay for these reservations generally counts towards the MACC.
Selected third-party software plans available through Azure: In some instances, the agreement may specify that certain software solutions from independent vendors, procured via the Azure platform, are also considered eligible for the consumption commitment.
Specific Azure Marketplace offerings: The Azure Marketplace provides a wide array of third-party applications and services. A MACC agreement will often specify that only those Marketplace listings that are explicitly designated (for example, through a particular pricing filter within the Azure portal) will contribute towards the consumption target.
Conversely, there will usually be specific exclusions from the definition of "Eligible Services and Offerings". Common exclusions might include:
Azure Support Plans: The fees associated with different tiers of technical support for the Azure environment are often treated separately and do not count towards the consumption commitment.
Certain types of Azure subscription plans: Specific subscription models, particularly those focused on user-based licensing or foundational infrastructure plans, may be excluded from contributing to the MACC.
Non-designated Azure Marketplace listings: It is important to note that not all third-party offerings available in the Azure Marketplace will be eligible. Only those explicitly identified within the MACC agreement will typically count.
The precise scope of "Eligible Services and Offerings" is paramount for several reasons. Firstly, it dictates how the organisation's Azure usage is measured against their committed spend. Secondly, it influences the calculation of any potential shortfall that may occur if the customer's consumption of eligible services does not reach the total commitment by the end of the Coverage Period.
In such cases, an invoice for the remaining amount, known as a Shortfall Invoice, may be issued. Often, the funds from this shortfall invoice are then applied as an Azure Prepayment for future consumption of eligible services.
Therefore, a clear and thorough understanding of what constitutes "Eligible Services and Offerings" is essential for customers operating under a Microsoft Azure Consumption Commitment. It enables effective budget management, accurate tracking of progress against the commitment, and a clear understanding of the financial implications of the agreement.
The Timeframe: Coverage Period
Coverage Period represents the specific duration during which the terms of the MACC are in effect and is the timeframe over which the customer's consumption of eligible services and offerings is measured against their committed spend.
The length of the Coverage Period is typically a fixed duration, often aligning with the term of an overarching agreement, such as a Server and Cloud Enrolment. A Coverage Period might span several years. This established timeframe provides a clear window for both the customer and Microsoft to track progress towards fulfilling the consumption commitment.
The Coverage Period is highly significant because it sets the boundaries for when the agreed-upon consumption must occur. It dictates the period during which the customer is expected to utilise the designated Microsoft Azure services and offerings to meet their financial commitment. Any consumption of eligible services outside of this defined timeframe generally does not count towards the MACC for that particular period.
At the end of the Coverage Period, several key actions typically take place:
Assessment of Consumption: Microsoft will assess the total amount the customer has been invoiced for the Eligible Services and Offerings during the entirety of the Coverage Period.
Comparison to Commitment: This total invoiced amount is then compared to the customer's initial Commitment value.
Potential Shortfall Invoice: If the total amount invoiced for eligible services is less than the agreed-upon Commitment, the customer may be issued a Shortfall Invoice for the outstanding balance. This invoice represents the difference between the Commitment and the actual consumption.
Application of Shortfall as Prepayment: In many cases, to facilitate future consumption, the amount of the Shortfall Invoice is then often applied as an Azure Prepayment. This prepayment can then be used by the customer to consume further eligible Microsoft Azure services within a specified subsequent period. This subsequent period might be linked to the remaining term of the overarching agreement or a defined timeframe following the end of the Coverage Period. However, it's important to note that if the overarching agreement has expired and no new agreement is in place, the shortfall may not be applied as a prepayment.
Knowing and carefully tracking the end date of the Coverage Period is vital for customers with a MACC. It allows for proactive management of Azure consumption, helps in forecasting expenditure, and provides clarity on the financial reconciliation process that occurs once the timeframe concludes.
Meeting the Target: Fulfilment of the Commitment
The core of a Microsoft Azure Consumption Commitment (MACC) lies in the customer's ability to meet the agreed-upon spending target on Eligible Services and Offerings within the stipulated Coverage Period. This chapter explores how a customer fulfils this commitment and the factors that influence this process.
The primary mechanism for meeting the commitment is the actual consumption of the defined Eligible Services and Offerings. As the customer utilises services like virtual machines, storage, databases, and other eligible Azure resources, the associated costs accrue and are typically invoiced by Microsoft. These invoiced amounts contribute directly towards the total Consumption Commitment.
Several elements play a crucial role in a customer's journey to fulfilling their MACC:
Strategic Azure Adoption: The customer's plans for migrating workloads, deploying new applications, and leveraging various Azure services will directly impact their consumption rate. A well-defined cloud strategy aligned with the MACC timeframe is essential.
Active Usage of Eligible Services: It is vital that the customer focuses their Azure usage on the services and offerings specifically included in the definition of "Eligible Services and Offerings" within their agreement. Usage of excluded services, such as support plans, will not count towards meeting the target.
Leveraging Azure Reservations: Committing to longer-term usage of specific Azure resources through Azure Reservations can be an effective way to contribute to the MACC. The upfront or periodic payments for these reservations typically count towards the commitment.
Utilising Eligible Marketplace Solutions: If the agreement includes specific third-party solutions from the Azure Marketplace as eligible, their consumption will also contribute to fulfilling the commitment. Customers need to be aware of which Marketplace listings are designated as such.
Throughout the coverage period, the organisation must monitor its Azure consumption against the amount committed. Careful monitoring and measurements allow for proactive adjustments to the organisation's Azure strategy to mitigate under or over-utilisation.
🖐 Achieve optimal Azure cost efficiency. Learn more: Microsoft Azure Cloud Cost Optimisation.
What happens if the target is not met?
If, at the end of the Coverage Period, the total amount invoiced for Eligible Services and Offerings is less than the agreed-upon Commitment, a Shortfall Invoice may be issued for the outstanding balance. Customers must pay the difference between their committed spend and their actual consumption.
However, the MACC often includes a mechanism to help the customer utilise these funds in the future. The amount of the Shortfall Invoice is frequently applied as an Azure Prepayment. This prepayment can then be used to consume further Eligible Services and Offerings over a subsequent period. This subsequent period may be tied to the remaining term of the overarching agreement or a specific timeframe following the end of the initial Coverage Period. It is important to note that the specific terms regarding the application of a shortfall as prepayment will be detailed in the agreement. In some cases, if the main agreement has expired, the shortfall might not be converted into a prepayment.
Meeting the MACC target requires active and strategic consumption of the designated Eligible Services and Offerings within the defined Coverage Period. While falling short of the commitment may result in a Shortfall Invoice, the associated funds are often made available as a prepayment for future Azure consumption, providing continued value to the customer.
What Happens if You Fall Short: The Shortfall Invoice
A central aspect of the Microsoft Azure Consumption Commitment (MACC) model is the agreed-upon financial commitment for Eligible Services and Offerings over a specified Coverage Period. While the aim is for customers to fully utilise their committed spend through active consumption, situations may arise where the total invoiced amount for these eligible services falls short of the initial commitment by the end of the Coverage Period. In such instances, Microsoft typically issues a Shortfall Invoice.
Shortfall amounts are often turned into Azure Prepayments—but only with an active or renewed Enrolment.
The Shortfall Invoice represents the outstanding balance, calculated as the difference between the total Commitment value and the total amount the customer has been invoiced for Eligible Services and Offerings during the entire Coverage Period. Essentially, it is a bill for the portion of the committed spend that was not realised through actual consumption.
However, the MACC framework often includes a mechanism to ensure that the value of this shortfall is not entirely lost to the customer. In many cases, Microsoft Sales Affiliate will apply the amount of the Shortfall Invoice as an Azure Prepayment. This means that the customer receives a credit equivalent to the shortfall amount, which can then be used to consume further Eligible Services and Offerings in the future.
The terms governing the application and usage of this Azure Prepayment are important to understand:
Active Enrolment: Provided the overarching Enrolment agreement is still active at the expiration of the Coverage Period, the Shortfall Invoice is typically applied as an Azure Prepayment. This prepayment then becomes available for the customer to use for the lesser of:
The remaining term of the Enrolment.
Twelve (12) months from the end of the Coverage Period.
Expired Enrolment with Renewal: If the Enrolment has expired at the end of the Coverage Period, but the customer enters into a new Enrolment or renews the existing one, the Shortfall Invoice will still be applied as an Azure Prepayment. In this scenario, the prepayment is usually available for consumption for twelve (12) months from the end of the original Coverage Period.
Expired Enrolment without Renewal: Critically, if the customer's Enrolment has expired and they do not enter into a new Enrolment with Microsoft, the Shortfall Invoice will not be applied as an Azure Prepayment. In this case, the customer is still obligated to pay the shortfall amount, but they will not receive a corresponding credit for future consumption under the terms of the expired agreement.
Therefore, while falling short of the MACC target may lead to a Shortfall Invoice, the mechanism of converting this into an Azure Prepayment often allows customers to continue leveraging Microsoft Azure services for the value of their commitment. However, it is crucial for customers to be aware of the conditions, particularly regarding the active status or renewal of their Enrolment, that determine whether this prepayment will be applied .... Effective planning and monitoring of Azure consumption throughout the Coverage Period can help minimise the likelihood of a significant shortfall and ensure the full value of the commitment is realised.
Discount Incentive: Azure Commitment Discount
To further incentivise customers to make a Microsoft Azure Consumption Commitment (MACC), Microsoft may offer an Azure Commitment Discount. This discount serves as a direct benefit to the customer in recognition of their agreed-upon spending level for Microsoft Azure services.
The Azure Commitment Discount is defined as the discount that Microsoft Sales Affiliate will apply to Microsoft Azure Services in the current month's EA price list, specifically in the month the services are used. This means that as the customer consumes eligible Azure services within the designated timeframe, they will receive a price reduction on those services
Key aspects of the Azure Commitment Discount include:
Acknowledgement of Commitment: The discount is provided by Microsoft Sales Affiliate directly because the customer has made a commitment to consume a specific amount of Microsoft Azure.
Application at Consumption: The discount is applied in the month that the Azure services are actually used and will be reflected in the customer's monthly billing based on the Enterprise Agreement (EA) price list.
Defined Coverage Period: Similar to the overall MACC, the Azure Commitment Discount has its own Azure Commitment Discount Coverage Period. This is the specific timeframe during which the discount will be applied to the consumption rates for Microsoft Azure Services. The discount will be active from a specified Begin Date through to an End Date, as outlined in the agreement.
Specific to Microsoft Azure Services: The Azure Commitment Discount typically applies to Microsoft Azure Services. Customers should refer to their specific agreement to understand exactly which services are eligible for the discount.
Non-Recurring Offer: It is important to note that Microsoft Sales Affiliate is generally under no obligation to repeat the offer of an Azure Commitment Discount in subsequent enrolment periods or agreements. Each instance of a discount is specific to the agreed terms and timeframe.
In essence, the Azure Commitment Discount acts as an immediate and tangible reward for a customer's commitment to Microsoft Azure. Reducing the cost of consumed services during the Azure Commitment Discount Coverage Period helps maximise the value derived from the MACC and encourages active utilisation of the platform.
Customers should carefully note the Begin Date and End Date of their discount period to ensure they benefit fully from this incentive.