What is Microsoft’s Enterprise Agreement (EA)?
Enterprise Agreement (EA) is a three-year committed agreement for Microsoft’s volume software licensing, designed for large enterprises with at least 500 devices (PCs) or users.
(In some cases, Microsoft may deviate and lower this amount).
Some organisations prefer EA since it provides a holistic approach to accessing products and services. The EA offers a structured agreement for stable budgeting and cost efficiency, especially for large organisations.
However, EA contracts require an upfront commitment, so you must use any credits purchased before the contract expires. For Azure, Microsoft estimates how much consumption a customer will likely need during the first year.
How does the Microsoft EA work?
The agreement has fixed pricing, so price increases will not affect your business. It also offers “programmatic” discounts depending on the number of users or devices you have:
| Discount level |
Number of users or devices |
| A |
500 - 2399 |
| B |
2400 - 5999 |
| C |
6000 - 14999 |
| D |
from 15000 |
For payments, you have the option of paying all upfront or spread. The agreement usually consists of three years. But Microsoft could also try to lock you in for two more years upfront to make you sign a 5-year contract.
Every year during the term, you’ve got the chance to add or get rid of:
- Devices
- Hardware
- Users with software
- Online services
*At least, if they are included in your agreement. This also goes by the name of “true-up”.
You also have an option to extend for another three years. However, it would be better to renew instead. Renewing and renegotiating a Microsoft Enterprise Agreement (EA) is often the best choice because if you don’t, you will likely miss out on new incentives, up-to-date benefits, etc. Besides, you can make contract changes at the renewal to align your new agreements with changing needs or future plans.
Characteristics of EA
- Three-year agreement (sometimes 5-year)
- Suitable for large organisations
- Minimum requirement of 500 users
- Comes with Microsoft products and services (and Microsoft cloud services like Azure and Microsoft 365)
- FLC and the M365 portal for licence management
- Structured, mature contract with Microsoft (with an option to amend)
- Direct support relationship with Microsoft (context and invoicing)
- Direct negotiations with Microsoft
- Fixed pricing (protected from increases)
- Programmatic discounts
- Upfront commitment
The Pros of Microsoft EAs
Committing to multi-year contracts can feel restrictive, but the Microsoft Enterprise can be worthwhile, especially for large organisations with substantial software needs. So what are all the benefits of Microsoft Enterprise Agreement (EA)?
- Cost savings (*only for large organisations): EAs often provide discounts for high-volume Microsoft licensing, making them attractive for big enterprises. They can lock in costs and close the door on Microsoft’s possible price increases. (Plus, it has tiered discounts based on user/device numbers).
- Simplified license management: Managing large volumes of software licences can be daunting, but EA simplifies this with a single agreement. This saves time and administrative costs.
- Predictable budgeting: Typical contracts span three years, allowing for predictable budgeting.
- Microsoft services and offerings: All Microsoft services and offerings are available within EA. So also Dev-Test pricing and Microsoft Consulting Services.
The EA model is especially interesting for large organisations, such as corporations with at least 3000 users. Organisations expecting extensive usage can also save significantly over time with the EA structure, thanks to multi-year savings.
Cons of Microsoft EAs
While the EA can appeal to large organisations and those with predictable IT needs, its drawbacks often outweigh the benefits for most businesses (especially dynamic and smaller ones). So, what are the disadvantages of Microsoft Enterprise Agreement (EA)?
- Support at own costs: You must have your own support contract (Premier Support) in an EA. The cost of this is up to you. Instead of providing proactive support in your environment, you may need to send requests or log a support ticket based on your challenges.
- Upfront commitment and costs: With EA contracts, organisations are locked into predetermined licences for three years for Microsoft cloud services. This makes it challenging to adapt to quickly changing IT needs (when your business grows or the opposite).
- Minimum requirement: An EA contract is only an option for those enterprises with 500 (or more) devices or users, which means small businesses often miss out.
- Scaling resources becomes problematic: Scaling becomes an issue with EA since you’ve already paid upfront, so cost-saving measures like automatic scaling won’t reduce your spending. (For Azure, you can "true-down" in the 2nd year, but not for other Microsoft products).
- Lack of flexibility: EA is not the most flexible option. Once signed, it becomes hard to change licences and user numbers can become limited.
What is the Microsoft Cloud Solution Provider (CSP) program?
Microsoft CSP (Cloud Solution Provider) Program is a modern and scalable Microsoft licensing agreement suitable for modern-day businesses that need more flexibility in purchasing and managing software licensing and services.
Instead of committing to three years (like with EA), you can pay every month. You can also increase or decrease licences and services, paying only what you really use. CSP include products and services such as Microsoft 365 and Microsoft Azure.
How does Microsoft CSP work?
In Microsoft CSP, the partner is the single point of contact for the whole agreement. They manage the whole deal; procurement, billing and technical support. They set up the licence and offer flexible payment options like monthly billing and bespoke solutions to fit your needs.
Partners like Intercept manage scaling and provisioning, so CSP is a hands-on, customer-focused model. The partner operates under a Microsoft-governed Service Level Agreement (SLA), meaning service availability, response times, and support standards meet Microsoft’s requirements. The right partner can help you get the most out of Azure.
Characteristics of CSP
- Paying per month instead of annually
- Only pay for what you use.
- Microsoft partner who oversees deployment, management, billing, and support
- Pricing is based on the value-added services provided by the CSP
- Always up-to-date services (no need for Software Assurance)
- No minimum user requirement or upfront capital costs
- Ideal for businesses with changing needs (easily scale up or down resources)
- Often the best choice for organisations up to 2,500 users
- Partner portal (Intercept Customer Portal) alongside the M365 portal
Pros of CSPs
The CSP program offers various benefits for businesses seeking more flexibility:
- Low barriers to entry: No minimum user requirement (like with EA).
- Lower initial costs: Pay monthly based on usage without upfront costs.
- Flexibility and Scalability: With the ability to add or remove licences and pay monthly, you can adjust usage based on current demands.
- Cost savings: Businesses can scale their usage and expenses according to actual consumption, which we can call “pay for what you use”. Also, you can get discounts through CSP, whereas with EA you pay the price list.
- Proactive and personalised support: Expert-partners like Intercept actively monitor and support your environment, optimise performance and address issues before they become problems.
- In-depth partner knowledge: With detailed knowledge of your setup and insights from other clients, your CSP partner brings recommendations to help your business thrive.
- Simplified license management: CSPs often handle administrative tasks, allowing businesses to focus on core activities.
- Operational efficiency: Partners streamline technical and operational tasks under one provider, freeing your team to focus on core business goals.
Cons of CSPs
Even CSP is not flawless and has its limitations, particularly for larger organisations:
- Pricing: Large enterprises that qualify for level C or D discounts under EA often find CSP pricing less advantageous.
- Price protection and budget certainty: EA locks in pricing for three years, offering budget certainty and price protection. CSP lacks this level of predictability, though it includes features like annual billing and Azure reserved instances.
- Custom terms: Larger organisations with complex needs often rely on custom amendments in their EA contracts. CSP lacks this level of flexibility.
Challenges with traditional licensing models
Traditional licensing models like the Microsoft Enterprise Agreement (EA), just don’t work well with how companies license software today. The Microsoft EA is rigid and doesn’t flex well with how companies grow (or shrink). The biggest problem is over-licensing.
When you sign a Microsoft EA, you commit to a certain licence count for 3 years. If your company is not growing, you are stuck with a licence count that is too high.
While you get an opportunity to true-up your licences annually, adding licences is much easier than removing them. The true-up process is designed to help you add licences for new users or devices, not remove them. It’s just too easy to over-license with Microsoft.
The Cloud Solution Provider (CSP) model is just much more flexible and often offers a better price option.
Microsoft CSP vs EA: A Comparison
Both Microsoft EA and CSP provide different avenues for accessing Microsoft's extensive range of software and services.
Differences Microsoft EA vs CSP
| Billing method |
Enterprise Agreement (EA) |
Cloud Solution Provider (CSP) |
| Contract Length |
3 Years |
Determined in CSP partner contract |
| Discount |
Yes |
Yes |
| Commit |
Yes |
No |
| Minimum Seats |
500+ users |
No minimum |
| Transacted by |
Microsoft or LSP |
Partner |
| Payment |
Annually or upfront |
Monthly |
| Price protection |
End of term |
End of subscription |
| Support |
Own |
Partner - personalised and proactive |
| Microsoft Programs |
Yes |
Yes |
| Portals |
FLC and M365 portals for license management |
Partner portals alongside M365 |
| Availability |
Virtually everything |
Cloud services |
| Change Users |
Increase anytime; decrease manually with 30 days’ notice |
Increase and decrease anytime |
| Programmatic |
Level A to D |
None |
| True-up Billing |
Annually |
None |
Which one is better?
CSP offers flexibility and competitive pricing, perfect for short-term or more minor dynamic organisations. Here, you only pay for what you use. Scale up when demand grows, scale down when it doesn’t — no more commitments.
Besides, with Microsoft CSP, you can adjust your subscriptions to match your budget and get advanced technical support. The CSP model is better if you want more flexibility in licensing and purchasing Microsoft’s products and services.
However, the flexibility in CSP’s pricing can also be a drawback. Microsoft can adjust CSP prices monthly, while EA locks in fixed pricing for three years, offering greater budget stability.
In EA, you agree to consume a certain amount, which you must make up for. You must ‘predict’ your upcoming annual or 3-year commitment to receive a high discount. If you overperform on that commitment, you will pay the list price. If you under-commit, your left credits will expire. And for many, it’s often a very hard prediction to get right.
Also, EA has volume discounts for large organisations, but these come with long-term commitments and big upfront costs. CSPs can also offer a discount, depending on your spending. (without upfront commitment).
Both models allow Azure Reserved Instances (Reservations). In CSP and EA, these models will lower your cost on Compute by committing to them for 1 – 3 years.
So, which one is better? It depends on which one is right for you. Let’s take a look at which one suits your business.
Which one is right for you?
You should think twice about flexibility, commitment, and total Microsoft spending when you decide between EA and CSP.
It comes down to understanding your needs: CSP is about adaptability and agility, while EA focuses on structure and predictability. Also, consider your organisation's size and structure when deciding between EA and CSP.
Here’s the deal: EA is great if you’re big, stable, and desire predictability. Fixed pricing, volume discounts, and structured contracts make sense for enterprises with steady needs. But it typically costs more and works best for those confident they won’t need to change licence numbers over the 3-year term.
With long-term commitments and upfront costs, you must be 100% sure you can get the most out of it.
CSP is a more modern, agile option. It's well-suited for companies with fluctuating demands or proliferating. You only pay for what you use, scale as needed, and let your CSP partner handle the hard stuff. And it’s possibly cheaper as well.
- If you want structure and predictability, EA might be for you.
- CSP is the way to go if flexibility, agility and partner-driven support sound more like your company’s needs.
