Microsoft Contracts: Incoming Cost Increase for EA Replacement

Who Should Be Concerned and Why  

The criteria for identifying affected customers have not been publicly disclosed. It can be speculated that this change will primarily impact Tier A organizations, which generally include those with up to 2,400 users and operate in direct markets.  

If you are in a direct market like Italy—where Microsoft has made significant investments in infrastructure and cloud regions, you might receive a notification as early as January. The cost of transitioning to the MCA could increase by 10% in the first year and up to 30% over the next two years due to several factors:  

• Loss of Programmed Discount Levels 
  The MCA does not include structured discount levels based on license or service volume (such as the EA’s Tier A, B, C, D categories). Discounts will need to be directly negotiated with Microsoft or through partners, losing the predictability of programmed discountsand the ability to plan for concrete price reductions. As stated in this MS document, the levels are based on the number of qualified computers in the company: 1) Level A: 250–2,399 computers; 2) Level B: 2,400–5,999 computers; 3) Level C: 6,000–14,999 computers; 4) Level D: 15,000 or more computers.   

• Lack of Price Protection for Azure and Currency Risks 
  Under the EA, customers could lock in Azure prices for up to three years also for 3 years ensuring pricing, equal to or lower than what was specified in the Customer Price Sheet (CPS) The MCA offers no comparable price protection coverage of their Azure purchase. The MCA does not provide price protection comparable to that of the EA. Additionally, under the MCA, Azure prices are generally expressed in U.S. (USD) globally and the customer must and the customer must or obtain an exception for billing in USD. 

• Transition to a Subscription Model: Phasing Out Perpetual Licenses “From SA” 
  Under the EA, it was possible to combine perpetual licenses (on-premises) for products such as Windows Server and SQL Server and SQL Serverwith “From SA” (From Software Assurance) offersand SQL Serverwith “From SA” (From Software Assurance) These provided free updates and discounted Microsoft 365 subscriptions (E1/E3/E5) by up to 15%. 
  With the MCA, managing perpetual licenses has become more complex as SA can no longer be renewed for these licenses As of February 2024 , Microsoft has already retired "From SA" offers for Microsoft 365 and Dynamics 365. Microsoft is actively shifting toward a subscription and cloud-based licensing model phasing out the hybrid approach of combining on-premises and cloud solutions.

  As a result, customers have two options: migrate to more expensive subscriptions without “From SA” pricing, with significant financial and operational impacts or continue using perpetual licenses without supportposing considerable security risks.  

• Simplified Purchase Agreement Challenges 

  To simplify contract management, Microsoft has made MCA-E an “evergreen” agreement with no fixed expiration. , automatically updating as new products are added. However, this lack of planned renewal periods reduces reduces opportunities to renegotiate terms or evaluate alternative solutions, potentially increasing non-compliance risks without regular SAM (Software Asset Management) reviews or true-up processes.