Co-Terminating Microsoft Agreements: How to Align Your License Renewal Dates

Co-Terminating Microsoft Agreements

Why Co-Termination Matters in Microsoft Licensing

Enterprises often juggle multiple Microsoft agreements.

You might have an Enterprise Agreement (EA), CSP subscriptions, a Microsoft Customer Agreement (MCA), and some legacy contracts.

The problem is that each of these agreements likely has a different end date. Misaligned renewal dates create a continuous administrative burden and a weakened negotiation position for your organization.

When renewals are scattered throughout the year, your IT and procurement teams are constantly in “renewal mode.”

One quarter, you’re dealing with an EA renewal; the next, it’s a CSP subscription true-up, and so on. This cycle is time-consuming and increases the chance of oversight or missed deadlines.

It also prevents you from leveraging your full purchasing power. For an overview, Managing Microsoft Licenses Mid-Term: Co-Termination, True-Downs & Ramp-Up Strategies.

If each contract is renewed in isolation, you’re negotiating smaller deals every few months instead of one large deal, which dilutes your negotiation leverage.

Co-terminating your Microsoft agreements, aligning multiple contracts to renew on the same date, is a strategic solution to these issues.

Combining all renewals into one event strengthens your negotiating position.

Benefits of Aligning Microsoft Renewal Dates

Co-terming your Microsoft agreements offers several key benefits:

• One consolidated negotiation event: By aligning all agreements to co-terminate together, you face one major renewal instead of many small ones. This consolidation maximizes your buying power because Microsoft knows a large portion of your business is up for renewal at once. You can negotiate volume discounts or better terms by putting the full weight of your combined spend on the table.
• Less administrative effort: Fewer renewal events mean less frequent contract reviews, legal checks, and procurement processes. Instead of dealing with renewals year-round, your team can focus on one synchronized renewal cycle. This reduction in workload lowers the risk of an important contract slipping through the cracks and frees up time for more strategic activities.
• Clearer oversight of total spend: When all licenses renew on the same schedule, you gain a single snapshot of your entire Microsoft estate at renewal time. Seeing all products and costs in one place makes it easier to spot overlapping or unused licenses. This holistic view supports better budgeting and ensures you understand your full licensing mix when negotiating.

How to Co-Term Microsoft Agreements

Co-terminating agreements require planning and coordination with Microsoft. Here are tactics to effectively co-term your Microsoft contracts:

1. Negotiate pro-rated terms to sync dates: Adjust one contract’s term so it ends with another’s date. For example, extend a March-ending agreement by six months to align with one ending in September. Microsoft can approve such custom “bridge” terms if you have a strong business reason (like syncing with a parent company’s schedule).
2. Use interim agreements to bridge gaps: If you can’t align everything in one go, use a short-term contract as a bridge. For instance, if one deal expires a year before the others, negotiate a 1-year extension instead of the standard 3-year term to cover that gap. This interim fix ensures no lapse in service and sets the agreement to renew alongside the rest.
3. Consolidate CSP subscriptions into the EA cycle: Align any separate CSP subscriptions with your EA’s renewal date (or incorporate them into your EA at renewal time). This consolidation reduces the number of renewal events and brings more of your spend under one agreement. Just note that by moving everything into an EA, you give up some of CSP’s month-to-month flexibility.
4. Request a unified master schedule: Request one master renewal date for all contracts. Microsoft won’t do this by default, but if you insist, they can adjust terms or merge enrollments to make everything co-terminate. If you have multiple EAs, aim to combine them or at least align their end dates. Ensure the final agreement clearly specifies the single renewal date.

Co-Terming After Mergers and Acquisitions

Mergers and acquisitions often leave companies with a patchwork of Microsoft contracts.

You might inherit another organization’s EA or CSP deals, each on its own timeline. Co-terming becomes especially critical in this scenario to simplify your licensing and maximize your combined leverage.

Here’s how to approach license alignment post-M&A:

• Consolidate under one master agreement: Merge the acquired company’s Microsoft licenses into your main EA at the next opportunity (usually the next renewal). Microsoft lets you add affiliate organizations to an EA when you own them. Once combined, all licenses renew together. This simplifies management and consolidates usage into a single volume, which can potentially lead to higher discounts.
• Leverage the larger combined spend: Use the new, larger volume of licenses to push for better pricing. A bigger user count or subscription volume can qualify you for stronger discounts. It’s a win-win: Microsoft retains all your business, and you get improved terms in return.
• Plan alignment timing strategically: If the acquired company’s renewal dates don’t match yours, figure out how to realign them. Pick the unified renewal date (likely your current one) and decide what adjustments each contract needs. You might extend one contract or shorten another so they end together. Ask Microsoft about transitional licensing or grace periods to cover any gaps during the switch.

Read about Microsoft EAS true-downs, Microsoft True-Down Rights: How to Reduce Microsoft Licenses in an EAS.

Risks and Downsides of Co-Termination

While aligning all your Microsoft agreements to one date has many advantages, be aware of potential downsides:

• Short-term cost premiums: One-time adjustments to short-term contracts can carry extra costs. One-year or other odd-term renewals often come with smaller discounts, since Microsoft rewards longer commitments. Be prepared for a spike in costs during the transition.
• Microsoft’s leverage on timing: Custom alignment requests might come with strings attached. Microsoft could push you to buy extra products or use less favorable pricing in a bridge period. Push back on any unfair terms and get everything in writing to avoid surprises.
• Loss of staggered flexibility: When everything renews at once, you lose the ability to adjust or cancel individual components mid-term. If a big renewal negotiation goes poorly or budgets are tight, there’s no alternate timing to fall back on. If you do co-term everything, have a solid plan and backup options for that single renewal event.

Negotiation Tips for Co-Terming Agreements

When approaching Microsoft (or your partner) to co-term agreements, use the opportunity to improve your overall terms as well.

Keep these tips in mind:

• Leverage consolidation for better pricing: Use your larger combined deal size to demand better discounts and terms from Microsoft.
• Include alignment clauses in contracts: Write clauses that any new licenses or affiliates will share the same end date as your master agreement, keeping everything aligned.
• Document all terms in the unified contract: Ensure the new contract lists all included products and any special negotiated terms, so nothing is left ambiguous or verbal.

Practical Checklist for Co-Term Planning

Co-terming multiple Microsoft agreements is a project in itself. Use this checklist to guide your planning:

• Map all active agreements and dates: Inventory every active Microsoft licensing agreement (EA, CSP, MCA, etc.) with its end date. This includes EAs, CSP subscriptions, MCA contracts, and any legacy or support agreements. Having this master list provides a clear baseline, showing how far apart your renewal dates are.
• Choose a target renewal anniversary: Select a single date to be your unified renewal point. Many companies align this with their fiscal year-end. Pick a date that makes budgeting easier.
• Bridge gaps with prorated terms: Plan how to adjust each contract to reach the target date. Some may need short extensions or reduced terms to line up. Aim for every agreement to end together on the chosen date.
• Validate and finalize the unified contract: Before signing, review the consolidated agreement. Make sure the end date is consistent for all licenses and that all products from the old contracts are accounted for. Ensure any special terms (discounts, price protections, etc.) are written in. Have a legal or licensing advisor double-check the contract. After signing, update your records and inform stakeholders of the new single renewal date.

Five Recommendations for IT Procurement Leaders

Here are five recommendations for procurement leaders and CIOs looking to simplify Microsoft renewals through co-termination:

1. Audit all Microsoft agreements: Inventory every Microsoft contract and its renewal date. This audit reveals how many renewal events you have and highlights consolidation opportunities.
2. Pick a strategic renewal date: Choose an ideal renewal anniversary aligned with your budget cycle (for example, your fiscal year-end) and aim to consolidate contracts to that date.
3. Use pro-rated terms to align cycles: Use short extensions or custom-length renewals to adjust any outlier end dates. A few extra months on one contract can sync it with the others.
4. Consolidate after acquisitions: When you acquire a company, fold its Microsoft licenses into your main agreements at the next opportunity. Don’t let separate agreements linger in subsidiaries. Consolidating swiftly means the acquired spend boosts your volume for the next deal.
5. Leverage co-termination for better terms: Use the consolidation process to negotiate a more favorable contract. Push for higher discounts, caps on price increases, or other improvements as part of the co-term deal – ensure you get something in return.

Co-terminating contracts, done thoughtfully, puts you back in control of renewal timing and negotiations. It simplifies license management, concentrates your purchasing power, and ultimately helps you get more value and predictability from your Microsoft investments.

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