Over the last 24 hours there has been a flurry of speculation after recent announcements came out from Microsoft. We asked Gareth Redshaw, Livingstone Senior Director of Microsoft Consulting to share his thoughts on what these announcements include and what they mean.
What are the Microsoft announcements?
Microsoft EAs not available for renewal
Microsoft has announced that a 'small number' of Enterprise agreements will not be available for renewal. Those affected will be contacted in January 2025.
Price harmonization
Starting on April 1, 2025, the monthly billing plans for annual term subscriptions across Buy Online, CSP, and MCA-E will be standardized with a price update of 5%. Products in scope include all annual subscriptions with monthly billing plans, including:
- Microsoft 365
- Office 365
- Enterprise Mobility + Security
- Windows 365
- Microsoft Dynamics 365 Services
- Microsoft Power Platform
- PLUS Other Online Services
Product pricing updates
From April 2025, prices will be going up on selected products to reflect ‘investment and product enhancements’. Affected products are:
- Teams phone +25%
- PowerBI Pro/Premium per user +40%
Read the Microsoft blog here.
Livingstone’s analysis of these changes
The EA changes don’t come as a shock. The only surprise is the lack of briefings to the Microsoft community on this announcement. Customers in the EA Level A space – organizations with 2,400 users or less - are already under an active strategy to migrate to CSP/MCA-E contracts. The only caveat is that no-one knows what a ‘small number’ of customers really means.
If Microsoft truly means a ‘small number’ of customers, we speculate that it will sweep up the remainder of the old ‘A1’ incentive band, those below 750 users. However, after monitoring trends of contract negotiations over the past nine to twelve months, there is a distinct steer already given to level A (sub-2,400 users) that they would be better migrating to CSP, which means a far larger number of organizations may be impacted.
There is an exception. If you are a customer in an interesting sector and are doing something ‘innovative’ such as leveraging Co-Pilot to deliver real business impact that is case study-worthy, your EA is unlikely to be impacted. We believe that the loose language in this announcement gives Microsoft sellers the ability to make a judgement call.
Finally, price harmonisation. For those who joined our Microsoft Optimization and Negotiation webinar last week, we provided a crystal ball moment, speculating that announcements of price increases should be expected. While we predicted it would be January and predominantly limited to premium M Plans, rather than April as per the Microsoft announcement, there is one certainty – just when you think you have a clear idea about your Microsoft investment, things will change!
A final thought: most contracts are optimized towards negotiated rates mitigating a need to be overly vigilant on defining users. In 2025, the discount expectations are far lower with many organizations focused on limiting discount erosion. Please take this prompt to get ahead of your renewal with a solid nine-to-fifteen-month runway and allow ‘optimization’ of spend to lead your strategy.
If you need help understanding these changes, get in touch by emailing info@livingstonetech.com
Learn more
Did you miss our webinar on Microsoft Optimization and Negotiation? Watch it on demand here
Or get the associated eBook, which explains step by step how to get a better deal with Microsoft, regardless of the changes they may make. Download.
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About the author:
Gareth Redshaw, Snr Director of Livingstone’s Business Consulting Services.
Gareth has been involved IT commercial negotiations for over 20 years and have pivoted from vendor-specific sales roles to developing and executing negotiations for some of the world’s most recognisable brands covering Global Banking, Retailors, Technology Giants, manufacturers, Energy and large public sector departments amongst others.
