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By | Paul Kunert 26th January 2016 09:32

Microsoft hammers first nails into Enterprise Agreements' coffins

Remember licensing contracts, Mr SME IT Man? Grab a pic of yours for posterity

Microsoft is to prevent SMEs from buying software via an Enterprise Agreement, a move some industry figures interpreted as the first of a death-by-a-thousand-cuts fate for the volume licensing programme.

From the start of July, Microsoft will raise the minimum commitment on EAs from 250 users/ devices to 500, channel partners confirmed.

“This is unquestionably the most significant announcement thus far in 2016,” said Neil Lomax, exec veep for worldwide sales strategy at Microsoft licensing solutions partner SoftwareOne.

This is a fair assessment given the current January date, although changes to EAs were actually first hinted at by Microsoft when it took the covers off the Microsoft Products and Services Agreement (MPSA) and Cloud Solution Provider (CSP) tools more suited to a hybrid IT world.

MPSA lets punters buy a perpetual license covering software and online services under one master agreement. It can be paid for upfront, with annual true-ups. CSP includes cloud-only services for customers looking to outsource service management. It is paid for on a monthly basis.

Lomax said existing EA customers approaching renewal with fewer than 500 users/ devices will be allowed to extend current enrolments for 36 months but at the next expiry date will be expected to move off it. Government customers will be unaffected, he added.

Geographies that haven’t yet introduced MPSA (such as China) will still be able to buy an EA for 250 seats and above until the new methods are launched.

Very few customers, if any, will mourn the passing of Eas – and why would they? Software licensing remains a dark art for Microsoft, Oracle et al, so much so that an entire ecosystem of asset managers emerged on the back of these complexities.

Some channel partners reckon the restructure signals the beginning of the end for EAs and one told us he’ll be glad to see the back of them.

“An EA is a complex 35-page contract. MPSA is a ten-page agreement that lets the customer buy other Microsoft products and services including Surface,” said one Microsoft enterprise accredited integrator.

Another top tier Microsoft channelite said the “direction of travel” is that all Microsoft software will be consumed on a subscription through Azure and Office.

“That negates the need for an EA which effectively consolidates licenses for three years, but I think EAs will evolve, not necessarily die,” he said.

The fees channel partners get paid on EAs have shrivelled in recent years as Microsoft established a list of global accounts it sells to directly. Partners were asked to sell to small and mid-sized organisations or make next to nothing on sales to large corporate and public sector entities.

Martin Thompson, Campaign for Clear Licensing sent us this statement:

"Just when you thought you had mastered Microsoft licensing they start fiddling again. It's like the lonely grandmother awaiting her children to visit - if Microsoft didn't constantly tweak it's licensing - what would it talk to its channel about this quarter?

"I doubt it would be innovation and it certainly wouldn't be profit".

Microsoft refused to comment. ®

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