In the last decade, many vendors have championed their licensing model to create agreements that encompass all software licenses used by their clients. These are commonly known as Enterprise Agreements. The front-runners of these types of contracts have been Microsoft, Oracle, and VMware. Resellers with specific requirements were able to offer these and typically included a long-term commitment, one to three years, and a bundle or suite of products with a minimum payment in annual basis to qualify and take advantage of the discounts and benefits.
You may have one or a few Enterprise Agreements today. This post intends to provide some insights of what I have observed in the licensing management and decisions over the last four years. Now with a wide range of different industry experiences and having collected experience from a good number of cases is time to put forward some ideas that may help you on your decision to either retain or end your Enterprise Agreement (EA).
I chose the title thinking on the reality I face most of the time, many organizations are decided to “end” their EA but are unsure of how to approach it or the unforeseen consequences to doing so. Most of the reasons to end an EA come from a change in how IT budgets are allocated especially as more and more Software as a Service (SaaS) options are available and widespread use.
Ending your EA may provide immediate budget release.
It is true; you may save a significant cost for our IT expenditures immediately. Sometimes the savings are very compelling, especially when choosing different technologies or moving software to be of Cloud-based consumption. Be aware that you may lose the renewal discounts and additional benefits. Resellers and vendors like to use “scare” tactics, but the reality is that their Cloud subscription offerings are antagonizing with their EA licensing model.
Ending your EA can affect legacy software updates. It is true if you require to maintain old versions of software understand that new licensing models may not include support to the versions you are interested in using.
Ending your EA will negatively affect my services rates from my resellers and Systems integrator provider; this may be true; however the low margins on reselling licenses make that transaction not a hard line to continue obtaining the rates you want for services.
Ending your EA can cost more to maintain licensing information than keeping it. Not true, in fact, many resources are dedicated to controlling EA media access, licensing inventory reports for True Ups and renewals. By having everyday administration skills and especially enjoying a “pay for what you use” subscription model you can decrease the cost of maintaining and administering software licenses.
Ending my EA will make my Cloud subscriptions more expensive; this may not be true, depending on the vendor. However, in the last two years, I have not encountered a situation were a volume Cloud deal was not discounted with same or even better pricing that keeping subscriptions advantages because you maintained your EA. In many occasions, vendors are asking large sums for “bridge” licenses with Cloud that make no sense financially or even legally.
Ending my EA will trigger an audit. Not true, the reason why I say is not true is because you will have to go through an audit anyways at the end of your EA, so its right way to do a bright start on your new way to consume licenses instead of maintaining the EA.
I have a Cloud EA and is it the same as a regular EA? Actually it is almost the same thing, and I would say that EAs for Cloud also have a minimum consumption model, you will be surprised to know that Infrastructure as a Service (IaaS) EAs are not very popular anymore as the competition for IaaS is fierce and the EA is actually more expensive than just consuming in many scenarios.
Analyze the savings of ending your EA versus consuming the same software in a subscription model.
Do not limit to your current reseller the ability to provide you with subscription licensing, in fact, today, for example, Microsoft Cloud Service Providers (CSP) partners can offer same if not better pricing and services options than traditional resellers.
Think about how long you are planning to use the most recent versions you are entitled to.
Prepare for an audit at the end of your EA.
Negotiate transitions and other smaller agreement options for legacy licenses moving forward, like on-premise server licensing.
Do not trust Cloud EA, think carefully about the commitments.
EA, in my opinion, is not an optimal licensing model, it is better to enjoy subscription licensing and other options. A company that no longer has an EA has probably more options ahead than the ones that have EA. And for any additional question, you can always contact me for further analysis.