Summary
"Microsoft will discontinue its Enterprise Agreement in January 2025."
This rumour, which surfaced on November 11, stunned Microsoft partners and Enterprise Agreement clients alike.
A day later, Microsoft published a blog post addressing the matter. Did they confirm the rumour? Yes and no.
If you have an Enterprise Agreement, there are reasons to be worried.
What We Know from Microsoft's Announcement
The blog post confirmed that the Microsoft Enterprise Agreement will indeed be discontinued in January 2025, but not for every customer. However, the announcement was notably ambiguous.
Here's what we know so far, quoting the blog:
"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."
Are You Affected by the EA Discontinuation?
There's one thing we know for sure. The announced change will only affect "direct markets" – countries and territories where Microsoft operates directly.
If you are in a direct market, Microsoft may or may not "notify" you in January. There are no published lists or clear criteria to determine if you'll be affected.
If your organisation is in an "indirect" country, you are safe... for now.
Why "for now"? Microsoft has repeatedly expressed the intent to discontinue legacy contracts, including Enterprise Agreements, and replace them with a single one – Microsoft Customer Agreement (MCA) – across all industries and organisation sizes.
In fact, this has been their goal for over 10 years, but every time, one thing or another would get in the way. Now, they are more determined than ever.
The announcement was only a big surprise for those outside the Microsoft ecosystem. Microsoft has already begun switching some enterprise clients from Enterprise Agreements to the MCA-E channel. It started over a year ago. Their blog post simply confirmed this move to a broader audience.
Is it "Cloud" Enterprise Agreements Only?
Some Microsoft licensing experts noted the words "Cloud Enterprise Agreements", which made them believe that the discontinuation will initially target only the so-called "cloud-only" Enterprise Agreements.
While they may be right, Microsoft's frequent use of the word "cloud", just like they now slap the "AI" label left and right, whether it makes sense or not, makes it unclear if they refer to "cloud-only" Enterprise Agreements.
Strictly speaking, there are no "cloud-only" Enterprise Agreements anymore since Microsoft ended the Azure-only Server and Cloud Enrollments. In a broader sense, they could mean the EAs containing only Microsoft online services like Microsoft 365 and Azure.
It would only be logical if Microsoft limited the initial batch of discontinued Enterprise Agreements to the most simple ones, predominantly including online services.
And here's why.
"Digital evolution of the traditional EA"?
Here's what the announcement said about the replacement agreements:
"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."
To say the claim of "the digital evolution of the traditional EA" is inaccurate would be an understatement.
Microsoft Customer Agreement is not "a digital evolution of the traditional Enterprise Agreement." Here are just a few reasons why.
Perpetual Licenses: Enterprise Agreement allows you to buy perpetual licenses (CAPEX) with an attached compulsory Software Assurance subscription. Every three years, you can renew Software Assurance at a fraction of the cost of a new license. Subscription licences are only mandatory for online services. For other products, they are optional.
In MCA-E and CSP, which are both based on the same Microsoft Customer Agreement, all the enterprise-grade licences are subscription licences. There is no Software Assurance renewal. If you cannot renew your Enterprise Agreement, you have to re-subscribe for all the licences anew and forfeit your previous capital investment.
FromSA: If you're using heavily discounted FromSA subscriptions, you'll have to switch to full-price ones in MCA-E, which does not offer the FromSA option.
Microsoft 365 Subscriptions with Teams: Renewing legacy Microsoft 365 subscriptions with Teams in MCA-E or CSP may be impossible, forcing you to purchase Teams separately and increasing the subscription cost.
Azure Stack HCI: Azure Hybrid Use Benefit for Azure Stack HCI is unavailable in MCA-E.
Azure: There are also differences in Azure implementation, Azure dev/test subscriptions, and Azure Savings Plans between Enterprise Agreements and MCA.
Losing Enterprise Agreement Discounts
The biggest concern for large organisations is not the licensing differences. It is the loss of the guaranteed pricelist discounts.
Large organisations (over 2400 employees) with Enterprise Agreements benefit from predefined discounts (Levels B, C, and D) ingrained in the price list.
CSP and MCA-E don't have such programmatic discounts. You'll have to negotiate discounts from the unified Recommended Retail Price, with no guarantee of the same discount upon the next renewal.
Prepare Now for the Inevitable End of EA
Regardless of your organisation's size or location, now is the time to begin preparations for the end of the Microsoft Enterprise Agreement. It may not happen to your organisation in 2025, but considering current developments, it could happen sooner than you may expect.
Please use the form below to discuss your organisation's circumstances and how to approach the upcoming EA discontinuation as best as possible. We at SAMexpert don't sell Microsoft licences, agreements, or online services. Our advice is intentionally independent.