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Negotiation envelope for Microsoft Agreement renewal

When negotiating an Enterprise Agreement renewal, finding common ground between yourself and Microsoft is essential if both sides are to reach an agreement. 

Zone of Possible Agreement


A mutual agreement can only be achieved where there is an overlap in the zones of possible agreement (ZOPA). This is the bargaining range in which parties must find common ground to reach an agreement. If both sides are outside of it, they are in a negative bargaining zone and reaching a satisfactory outcome is very challenging. 

Best Alternative To a Negotiated Agreement

Additionally, you should have a BATNA (Best Alternative To a Negotiated Agreement). It gives you power during the negotiation process as it builds confidence that comes from having an alternative option. 

It could be in the form of having multiple profiles for Microsoft 365, such as Microsoft 365 E3 + F3 + EMS, as an alternative to Microsoft 365 E5 for the entire organisation.

Remember, BATNA is not a redline but an alternative option for a specific negotiation.

Most Desirable and Least Desirable Outcome

You need to consider two more significant points: your MDO (Most Desirable Outcome) and LDO (Least Desirable Outcome). 

Your MDO is your ultimate goal for your EA renewal. It could be the total annual cost or a specific discount you want to reach. Remember, a good MDO is 

  1. based on facts, 

  2. defendable, 

  3. challenging you and the other side, 

  4. bold and assertive, and 

  5. covers what you really want. 

You usually will have multiple MDOs covering different aspects of your contract: 

  • discounts, 

  • profiles, 

  • payment terms, 

  • Azure pricing, 

  • service credits and more.

On the other side of the negotiation envelope, you have your LDO (Least Desirable Outcome), being 

  1. the minimum you can accept,

  2. the outside parameter of your negotiation envelope. 

Remember, the aim is to close the negotiation between your LDO and MDO. LDO is not a red line.

When setting your MDO and LDO goals, keep in mind that any outcome should address mutual interests and should be: 

  1. Definable, 

  2. Attainable, 

  3. Aligned externally, 

  4. Measurable, and 

  5. Shared internally.

Become a resilient negotiator

When it comes to negotiations, the attitude of being a resilient negotiator is critical. You increase your chances of achieving your goals substantially when you enter a negotiation room with confidence and a confident demeanour. 

It's essential to prepare for the negotiation by building self-confidence, knowing that you have done your research and rehearsing mentally before entering. Additionally, taking several deep breaths before engaging can help to relax and refocus. 

Awareness of people's emotions is also crucial. Try to develop emotional awareness and empathise with the other side rather than agree with them automatically. The EPIO Model (Emotions, People, Interests and Options) is often used in business-related negotiations. It serves as a reminder that people are involved in any interaction and, therefore, must be taken into account when considering the facts and situation at hand.