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Top 10 things to know about Microsoft Enterprise Agreement - YouTube
Channel: SAMexpert TV – Microsoft Licensing and Cloud
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What is a Microsoft Enterprise Agreement? Let's
talk about it. You may be a procurement manager
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in the software category, and you were given
Microsoft to manage as a vendor. And you would
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like to know, "what is it I have to deal with?"
What is all this lingo: renewals, true ups,
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commitments? So let me start with the very basics
of what an Enterprise Agreement is, and we'll keep
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this video very simple. But we will ramp up the
complexity and the details in the next videos
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in this series. And we'll start from the core
question: “What is an Enterprise Agreement?” An
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Enterprise Agreement is one of the available ways
for an organisation to procure Microsoft licenses.
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There are multiple ways available, and Enterprise
Agreement is perhaps the most popular one.
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It was introduced quite long ago. I think, it
was about 2003 if I’m not mistaken. There's a
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barrier of entry. If your organisation is below
500 employees, you just simply don't qualify for
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an Enterprise Agreement. And mid-2021 the
community is expecting Microsoft to raise
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that bar to a thousand seats. Amongst various
ways to buy Microsoft licenses, amongst various
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types of agreements available, Enterprise
Agreement provides the most comprehensive
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choice from the Microsoft price list of your
traditional licenses, support and maintenance,
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and cloud services including Microsoft Office 365
and Azure. It's a “term” agreement. If you sign it
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today, it's going to last for three years.
It may be extended but generally speaking,
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it is usually a three-year-long agreement. There
are three very basic and core commercial features
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of an Enterprise Agreement. There are many more,
but these are the main ones. The first one is,
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the cost of the license that you buy in the very
beginning, when you sign it, is split into three
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annual payments. Whatever you add later, you pay
[for it] straight away. But those licenses that
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you buy in the very beginning, are paid in three
annual instalments. Each year, you pay one-third
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plus interest. The second feature is, when you
order a product, its price is fixed until the end
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of the Enterprise Agreement. Microsoft usually
have annual increases on the price list. As
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long as you order licenses on your Enterprise
Agreement, your price is fixed until the end.
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You're protected from those price increases until
the end of the term. And the third feature is,
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of course, there are volume discounts. The bigger
your commitment is, the bigger your purchase is,
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the bigger is the discount. There are, of course,
details and nuances that I will cover in the next
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videos in this series. There are also various
licensing features and conditions of an Enterprise
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Agreement, of course. And in today's video I’d
like to draw your attention to the next three. The
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first one is, to sign an Enterprise Agreement you
have to commit to something. You have to commit
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to something to be purchased, licensed, enterprise
wide. Another name, a slang for that “something”,
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is “a platform product”. The best example
would be, and that will apply to 99% of all the
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Enterprise Agreements, for your user base, for
your desktop base, for your end-user computing
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base, you have to commit to buy a license for
every user or every computer depending on the type
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of the “platform product” that you select. You
get all the benefits of an Enterprise Agreement in
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exchange for that commitment to license everyone
or everything with a certain platform product
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or a set of platform products. Without some form
of a commitment there's no Enterprise Agreement.
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That's its core licensing condition, its core
principle. If you are not ready to commit to
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that then Enterprise Agreement is not for you. The
second feature is maintenance. Software Assurance
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is the name for maintenance in the Microsoft
world. It is compulsory. All the licenses
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that you purchase in an Enterprise Agreement have
maintenance as a compulsory feature. If you need a
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license without maintenance, if you need a license
without Software Assurance, you have to buy it
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somehow else, through other available channels.
And the third licensing feature is “True-Ups”. On
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platform licenses, you only need to count your
users and your devices in the end of a year.
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And if there's any growth, you have to report
it to Microsoft. So, on your platform product,
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if a user base grows during the year, you
don't have to rush and buy new licenses.
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You buy them in the end of the year, which is,
well, let's agree, it's a convenient feature.
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There are two types of an Enterprise
Agreement. Namely, an Enterprise Agreement,
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which is for perpetual licenses plus maintenance,
and there's an Enterprise Subscription Agreement,
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which is essentially for subscriptions. What's
the difference? In the non-subscription type,
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you just pay for licenses and maintenance
in three annual payments. And in the end,
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you're left with perpetual licenses. Your
maintenance stops. Your Software Assurance stops.
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But you're left with perpetual licenses. They're
yours. Forever. In a subscription agreement,
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you just pay your subscription fee every year. And
obviously, if a subscription agreement ends you're
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left with nothing. But you have a “buyout” option
so you can buy those licenses out if you want to,
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in the end. Or, you can renew. And renewal
applies to both a subscription agreement or a
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non-subscription agreement. Why would you renew?
Well, on a subscription agreement it's obvious.
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If you want to continue using the products, you
have to re-subscribe. Simple. But why would you
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be renewing a non-subscription one if in the
end you're left with licenses? Well, here's
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the catch. When you sign your Enterprise Agreement
for the first time, and you buy perpetual licenses
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with Software Assurance, Software Assurance
(maintenance) has certain licensing rights,
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certain features built in. And if you're a large
organisation, I give you 99% of probability,
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you're going to be using those licensing features
that you get only with maintenance. And in the end
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of the Enterprise Agreement term, three-year term,
you are left with perpetual licenses. The licenses
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belong to you (as an organisation). But if you
do not renew your Software Assurance, you lose
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those rights that come with Software Assurance and
for every, well, 99% of the modern organisations,
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those benefits that come with Software Assurance
are vital. How do you keep them? You renew it.
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But you don't buy new licenses. You renew
Software Assurance for the next three years.
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So in a very simple example, in the first
three years you pay for perpetual licenses
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and maintenance in three annual instalments.
Then when you renew it for the next three years,
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you're just going to pay for maintenance to
continue using the licensing benefits of Software
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Assurance. For those of you who will watch this
series until the end, there will be a video
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talking specifically of what you're going to
lose if you don't renew your Software Assurance.
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Importantly, a renewal is effectively signing of a
new agreement. You're not extending your existing
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agreement. The key three letters there are N. E.
W. It's a new agreement. There'll be a new price
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list. You're not protected from any price rises
anymore, you start from scratch, from the price
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list at the date of the renewal. There'll be a new
language, perhaps, of the Enterprise Agreement,
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if Microsoft decides to update the language of
the Enterprise Agreement. There'll be new product
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packages. There'll be new Product Terms. But it's
also an opportunity to negotiate, for both sides.
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And if you had something fancy in your previous
term, you're not guaranteed that that discount
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or that feature will be carried over to the new
term. It is an entirely new agreement. And this
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is why we recommend starting preparations
half a year, a year prior to the renewal.
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Because it's a very important event. And it's
not wise to approach it unprepared. There are,
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of course, strings attached. An Enterprise
Agreement may not be for you. Firstly, it's
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that “commitment”. If you commit to license every
single user in an organisation, any growth – you
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have to true up every year. If you merge
another company or you acquire another business,
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you need to figure out a way together, how
to license everyone now in the merged big
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company. Or if your number of users goes
down, there are very limited ways to reduce
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subscription licenses and there are absolutely no
ways to reduce your perpetual license quantity.
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In that regard, a platform commitment may not
be for you. And if your organisation shrinks
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significantly, you may end up with lots of shelf
ware. The other string attached here is Software
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Assurance. It is compulsory. You can't
buy a license without Software Assurance
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in an Enterprise Agreement. But there's an easy
solution to that. You can buy a license outside
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of an Enterprise Agreement. There are a few
things to watch out for when you do that,
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which i'll cover in the next videos in this series
as well. If you'd like to learn a bit more about
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Software Assurance please watch this video and
for this particular series about the Enterprise
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Agreement, please leave a comment, connect to
me on LinkedIn and send me a direct message,
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and let me know, which topics would you like
me to expand upon. And please subscribe to my
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channel on YouTube so you get notified when I
upload new chapters to this series. Thank you
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very much. And I hope you'll be less confused
when you think about Enterprise Agreement now.
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