Microsoft EA Renewals for CIOs: Balancing Cost vs Value Trade-offs

Microsoft EA Renewals for CIOs: Balancing Cost vs. Value Trade-offs

In today’s environment, CIOs face a tricky equation in Microsoft EA renewals: how to achieve cost savings while maximizing business value.

It’s not enough to simply negotiate a lower price; you must ensure that every service and license in the EA genuinely earns its keep. For an overview, read the CIO Strategic Guide to Microsoft EA Renewal.

This guide provides a strategic framework to evaluate the ROI of key Microsoft offerings (Microsoft 365, Azure, Dynamics 365, etc.) against their costs.

By focusing on measurable outcomes and avoiding common pitfalls (such as paying for unused “shelfware”), CIOs can approach EA renewals with confidence — knowing that every dollar spent is justified by real business impact.

Why CIOs Can’t Treat EA as Just a Cost Exercise

Renewing a Microsoft Enterprise Agreement (EA) is far more than a routine purchasing task. It’s a strategic decision point that can shape an organization’s technology capabilities for years to come.

CIOs who approach an EA renewal as merely a cost negotiation risk missing the bigger picture.

While controlling costs is critical, focusing solely on price tags and discounts can lead to unintended consequences – such as cutting off valuable innovations or, conversely, paying for “shelfware” (licenses and features that go unused).

An EA encompasses a wide range of Microsoft technologies (from Microsoft 365 and Azure to Dynamics 365 and more), effectively serving as a platform investment for the business. Treating it purely as a cost exercise would be like buying the cheapest machinery for a factory without considering the output and quality those machines deliver.

The CIO’s role is to strike a balance between financial discipline and digital enablement. Every dollar saved or spent should be evaluated in light of how it drives business outcomes.

If you prioritize solely the deepest discounts but end up deprioritizing tools that enhance security, productivity, or innovation, the short-term savings could ultimately undermine long-term strategic goals.

Moreover, Microsoft often structures EAs to encourage broad adoption of its ecosystem. If a CIO focuses solely on cost, they may overlook the value side of the equation – for instance, failing to deploy a paid-for feature that could automate a workflow or enhance compliance. The result?

The organization might boast a “great deal” on paper (say, a high discount percentage), but in reality, it is funding a lot of unused capability.

The real victory for a CIO isn’t just negotiating a lower price, but ensuring that what is purchased is leveraged to its full potential to drive value. In short, an EA renewal should be viewed as an opportunity to align IT investments with business strategy, rather than simply trimming budgets.

Read how CIOs can succeed in Microsoft EA negotiations – Debunking Microsoft Sales Myths for EA Negotiations.

Framing EA Renewal Around ROI, Not Just Price

Instead of asking “How much can we cut from our Microsoft bill?”, CIOs should be asking “Where will our Microsoft investments yield the best return?” In an era where every IT dollar is expected to demonstrate impact, return on investment (ROI) is the lens through which EA decisions must be made.

This means evaluating each component of the EA in terms of business value delivered per dollar spent, not just the sticker price or discount rate.

One way to do this is by categorizing ROI into key areas such as productivity gains, security enhancements, cloud agility, and compliance improvements.

For example, Microsoft 365 can drive collaboration and employee productivity; Azure services can enable greater agility and faster time-to-market for new applications; advanced security add-ons can reduce the risk and cost of data breaches; and compliance features can streamline the effort required to meet regulatory requirements.

By framing renewal discussions around these value categories, a CIO can more effectively articulate which Microsoft technologies are truly worth the investment.

It’s also crucial to measure or estimate business outcomes per dollar for each area. If a certain product in the EA costs $100,000 but can be tied to $300,000 in efficiency gains or cost avoidance, that’s a strong ROI case. On the other hand, if a shiny new application platform is expensive and the benefits are uncertain, its ROI is questionable.

For instance, consider the decision between Microsoft’s top-tier Microsoft 365 E5 suite versus the standard E3 suite with a couple of add-ons. E5 includes advanced security, analytics, and voice capabilities. If your enterprise uses those advanced features to prevent security incidents or replace other paid tools, E5’s higher price can be justified.

But if those features overlap with third-party solutions you already have, or remain largely unused, then E5 could be a high-cost, low-value proposition.

In such a case, an E3 license with selective add-ons might deliver the same outcomes at a lower cost.

Below is a framework for thinking about common EA components and the value they can deliver versus the risk if they’re misaligned with your needs:

Each component of your EA should have a clear business value story to justify it.

For example, if you’re renewing Microsoft 365 E5 licenses, you should be able to point to specific security incidents prevented or analytics insights gained because of those E5 features.

If you’re committing to a large Azure spend, there should be concrete projects or growth demands that require it (and you’ve run the numbers comparing it to keeping those workloads on-premises or on another platform).

If you can’t tell a convincing value story for a part of the EA, that component might need to be scaled back or cut, regardless of the discount offered.

For a strategic view – Microsoft EA Renewals for CIOs: Managing Risk and Compliance

Evaluating Microsoft 365 ROI

Microsoft 365 is often the largest line item in an EA, encompassing Office applications, email, collaboration tools, and security features for each user. Within M365, the decision that most affects ROI is the choice of license tier – primarily E3 vs. E5 (with F3 for frontline workers as another option).

The cost premium of M365 E5 over E3 is substantial – roughly 50–70% more per user. For example, an E5 license might cost around $57/user/month, compared to about $36 for an E3 license.

That $20+ difference per user adds up quickly: for 1,000 users, that’s roughly $ 20,000 extra per year. The question is, are you getting at least $240,000 per year in incremental value from those E5 features?

Which features justify E5?

Organizations typically opt for E5 to get advanced capabilities like the Microsoft Defender security suite (advanced threat protection for email, endpoints, cloud apps), Azure Active Directory Premium P2 (for identity governance), advanced compliance tools (e.g. eDiscovery, insider risk management), Power BI Pro analytics, and maybe Teams Phone system for enterprise voice.

These can drive real value – for instance, if E5’s security tools enable you to eliminate other third-party security subscriptions, or if company-wide Power BI access facilitates better decision-making.

The key is mapping these features to actual needs. If your company is at high risk of cyberattacks, E5’s advanced security might be worth considering (it’s more cost-effective in a bundle than purchasing multiple separate tools). If data analytics is a strategic priority, giving everyone Power BI could foster a data-driven culture.

However, if you find many E5 features overlap with tools you already own (and plan to keep), or users simply aren’t taking advantage of them, then the ROI of E5 diminishes. Overlap examples include: you already have a robust third-party security platform that covers what E5 offers, or an existing telephony system, while E5 adds Teams Phone, or a separate BI tool in use while also paying for Power BI. Each overlap means you’re essentially paying twice for the same capability – a clear ROI red flag.

A practical approach is to segment your users by their needs. Perhaps 15–20% of your workforce are “power users” who truly benefit from E5 (IT security staff using advanced threat hunting, data analysts using Power BI, executives needing advanced analytics and compliance reports). The rest might be perfectly fine with E3.

By giving E5 only to those who gain clear value from it, you avoid overpaying for premium features that others don’t use. For example, one enterprise discovered that about 40% of its E5-licensed employees never used any E5-specific functionality.

They downgraded those users to E3, resulting in roughly a 15% savings on Microsoft 365 licensing with no impact on productivity or security. Those users didn’t even notice the change because their day-to-day tools remained the same.

To evaluate Microsoft 365 ROI in your org, conduct a thorough usage and overlap audit:

• Feature Adoption: Utilize Microsoft 365 admin reports or analytics tools to identify who is utilizing E5-exclusive features (e.g., the number of users actively using Power BI or running advanced eDiscovery). Low usage numbers may indicate E5 features that aren’t delivering value.
• Third-Party Redundancies: List the capabilities E5 provides and check if you’re also paying for third-party solutions in those areas (security, telephony, analytics). Decide whether to replace the third-party tool or if you’d be better off not paying for that portion of E5.
• User Feedback: Consult with business units and IT administrators to determine the specific needs of various roles. Many users may not even be aware of a fancy E5 feature, which is a sign that it’s not critical for them. Align license levels with job requirements; for instance, your cybersecurity team might need E5, whereas back-office staff might not.
• Pilot Before Upgrading Everyone: If you’re considering migrating a significant number of users from E3 to E5, pilot it with a small group first. Measure any improvements (did security incident response improve? Are people using the new analytics tools?). Only expand if the pilot demonstrates real benefits.

In many cases, a mix-and-match licensing strategy yields the best ROI: a core group on E5 where it counts, the majority on E3, and maybe even some on simpler plans like F3 for users with light needs.

The bottom line: don’t pay for the “Cadillac” package for everyone if many people would get equal value from the standard model.

Evaluating Azure ROI

Azure cloud services are another major component of many EAs, especially as companies migrate more workloads to the cloud.

The central ROI question for Azure is: Are we using what we’re paying for, and is it delivering value equal to or greater than its cost? Azure’s promise is clear – on-demand scalability, global reach, and a wealth of managed services – but those benefits only translate to ROI if managed wisely. It’s easy to overspend or overcommit in the cloud without careful planning.

One key factor is how you structure your Azure agreement. Many EAs include an Azure monetary commitment – a contracted amount of Azure spend you agree to over the term, often in exchange for discounts.

If you overestimate and overcommit, you might end up scrambling to “use up” Azure credits on non-essential workloads so that they don’t go to waste. If you underestimate or exceed your commitment, you may unexpectedly incur higher pay-as-you-go rates.

The goal is to rightsize your Azure commitment to closely match your realistic usage. Look at current consumption and upcoming project forecasts: commit to what you’re confident you’ll use, and leave a buffer for flexibility.

Another consideration is reserved instances or reserved capacity in Azure – committing to specific resources (such as VM types or database capacity) for one or three years in exchange for significant discounts.

When do reserved instances deliver ROI? Generally, when you have a steady workload that will run 24/7 for a long period. In those cases, reservations can save 30% or more, boosting ROI.

But if your usage might change or you’re not 100% sure, reserving too much can backfire – any reserved capacity you don’t use is money spent with zero return. For example, if you reserved 100 virtual machines for a year but on average only run 70, the cost of those extra 30 instances is wasted budget.

CIOs should also weigh the benefits of maintaining a multi-cloud or hybrid cloud strategy for flexibility. Microsoft may encourage you to put everything into Azure (often via incentives for a larger commitment), but from a value perspective, it can be beneficial to keep your options open.

Maybe certain workloads run more efficiently in AWS or on-prem, or you want negotiation leverage by not being 100% tied to one vendor. The point is, avoid an “all or nothing” bet.

Commit to Azure what makes sense – core workloads where you’re sure of the ROI – and consider using a Cloud Solution Provider (CSP) or other channels for more variable needs.

A CSP allows you to pay monthly for Azure services without a long-term commitment, which may result in a slightly higher unit cost but can prevent long-term waste on projects that start and stop.

For example, a company initially committed $10 million per year to Azure in its EA, expecting to migrate a large number of systems. Halfway through, after some optimizations and delays, they were only consuming about $8.8 million annually.

In their renewal, the CIO trimmed the Azure commitment by about 12%, aligning it closer to actual use (around $9M/year) and avoiding that $1.2M of overcommitment. They also shifted their non-production workloads (like development/test environments) to a more flexible monthly plan via a CSP, so when those resources aren’t needed, they’re not incurring costs.

This adjustment saved money (~12% of Azure spend) while still ensuring the business had the Azure capacity it truly required. In effect, every Azure dollar in the new EA was tied to a specific use case, making cloud spending far more efficient.

To maximize Azure ROI, consider these steps:

• Utilize Azure cost management tools to monitor usage and identify underutilized resources before renewal. Clean up or right-size those resources so you’re not committing capacity for nothing.
• Forecast thoughtfully by collaborating with application owners and architects. Don’t just take last year’s spend and add a growth percentage – dig into which new projects are coming to Azure, which might retire, and model best-case and worst-case consumption.
• Leverage Azure Hybrid Benefits by using existing Windows Server/SQL Server licenses on Azure if you have them with Software Assurance. This can significantly reduce Azure VM and database costs (since you’re not paying Microsoft twice for the OS or DB license).
• Be cautious with multi-year cloud commitments: If Microsoft offers extra discounts for a bigger or longer Azure commitment, model different scenarios (if your growth doesn’t happen as fast as planned, what’s the cost?). It might be better to commit more conservatively and then expand later, even if that means passing up a discount upfront.
• Hedge with flexibility: Ensure you have a contingency plan (technical or contractual) in place in case you need to reduce cloud costs. For example, avoid locking into irreversibly prepaid deals for experimental projects. Maintaining some pay-as-you-go components or shorter-term commitments can be a safety valve if budgets tighten unexpectedly.

In summary, Azure can deliver immense value, but only if your commitment and usage are in sync. The best approach marries cloud innovation with cost governance, so that real workloads and tangible benefits justify your Azure investments, not just optimistic plans.

Evaluating Dynamics 365 ROI

Dynamics 365 (D365) offers a suite of CRM and ERP modules — for sales, customer service, marketing, finance, supply chain, HR, and more — with the promise of digitally transforming business processes.

The potential value is significant: a unified platform for end-to-end workflows and data visibility. However, achieving that value often takes time and strong user adoption. If a D365 module isn’t fully adopted or a deployment stalls out, you could be paying for an expensive system that few people use.

The primary risk with Dynamics in an EA is over-licensing modules that the organization is not yet ready to use.

For example, it might be tempting to include the full Dynamics suite (such as Sales, Finance, and others) for thousands of users because Microsoft’s bundle pricing makes each component appear more affordable.

But if one department isn’t prepared or the implementation takes longer than expected, you’ll be bleeding cash on licenses in the interim.

We often see companies roll out the Sales CRM module successfully (salespeople start using it to track opportunities). Still, the Finance module rollout might lag (perhaps the finance team sticks to the old system for a while). During that lag, those Finance licenses are effectively shelfware.

That’s why the importance of piloting cannot be overstated. Before locking in 5,000 seats of a Dynamics module, test it in one division or with a smaller group. Let’s say deploy the Dynamics Finance module in just one regional office for the first year, while the rest of finance stays on the old system.

If the pilot shows strong adoption and clear process improvements, then expand it and add more licenses in year 2 or 3. If not, you just saved yourself from paying for a thousand finance licenses that would have gone unused.

Microsoft often allows true-downs or reductions at renewal if you negotiate that flexibility upfront, especially for new workloads like Dynamics – use that to protect yourself.

Consider a real scenario: A global company included both the Sales and Finance modules of Dynamics 365 in their EA.

After a year, the Sales CRM was widely adopted by the sales team (they were actively managing leads and deals in it), but the Finance module had very low adoption – the finance department found it too complex and was still mostly using their legacy system.

In the renewal, the CIO removed the Dynamics 365 Finance module from the EA, retaining only a small number of pilot licenses for Finance to continue testing in one region, while maintaining the Sales module for the entire sales organization, as it was delivering value.

This move immediately freed up roughly 8% of their total EA spend.

They channeled some of that saved budget into extra training and support for the sales team (to extract even more value from CRM) and into a new pilot of a Dynamics AI add-on, while the rest went back to the IT budget.

The net effect was a higher ROI on Dynamics: they only paid for what was working, and stopped funding a module that wasn’t (at least for now).

When evaluating Dynamics 365 in your EA renewal:

• Align licenses to business readiness: Only include modules and users that have a clear adoption plan. If a certain team isn’t fully on board or the deployment won’t happen until year 2, consider deferring those licenses.
• Negotiate flexibility for adjustments: If you are committing to a broad set of Dynamics 365 products, consider including terms that allow you to swap or reduce certain licenses after a year if they’re not used. For example, the ability to drop unused modules at the next anniversary or swap some Dynamics seats for other products of equivalent value.
• Monitor adoption metrics: If you’ve deployed Dynamics, track usage closely (login counts, record creation, and process completion rates). If six months in, only 100 out of 500 licensed users have logged in, you have an adoption problem and a looming ROI problem. Address it (through more training or process changes) or plan to scale back licenses.
• Remember, the total cost: Dynamics 365 ROI isn’t just about the license fee versus value; it’s also about the implementation cost versus value. Suppose you’re paying for a pricey system integrator and extensive customization; factor that into your ROI. It may take longer to see net gains, so temper your rate of license expansion until the solution proves its worth.

In short, treat Dynamics like any major enterprise software rollout: start small, prove the benefits, then scale. It’s better to have a success in one department than a failure enterprise-wide. And the EA budget should support a successful program rather than fund a failing one.

Negotiation Through the ROI Lens

When it’s time to negotiate the EA renewal, a CIO should shift the conversation with Microsoft from “give us a bigger discount” to “show us the value.” In other words, make it clear you’re interested in paying for outcomes, not shelfware.

This mindset change alters the negotiation dynamic: Microsoft sales reps are accustomed to discussing percentages and up-sells, but you want to focus on how each aspect of the agreement will be utilized to advance your business goals.

Here are some ROI-focused negotiation tactics and levers to consider:

Using these levers, CIOs can guide the negotiation toward a win-win outcome: Microsoft still gets a committed customer, but the terms ensure the customer is paying for value received.

For example, if Microsoft is eager to have you adopt a new product, you can say, “We’re open to it, but only as a pilot to prove the ROI first.” This challenges Microsoft to be a partner in your success, not just a seller.

Swap rights are another powerful tool – essentially an insurance policy against changing needs. If you guess wrong about how many licenses of a certain product you’ll need, swap rights let you rebalance during the EA term.

That way, money isn’t locked into an underused product for years. Flexibility = value in an era where business needs evolve quickly.

Price protections are increasingly important as Microsoft has introduced price hikes (and now charges separately for certain features like AI add-ons). Insisting on caps or locked pricing for major elements of your agreement means you won’t be blindsided later. It maintains a stable and predictable ROI for budgeting purposes.

And don’t overlook support. Many organizations simply accept Unified Support fees as a cost of doing business, but there can be significant waste in this approach, especially if the fee scales with your spending.

If your EA cost increases by 30%, should your support costs also increase by 30% automatically? Not unless your support needs did. You can often negotiate a fixed fee support arrangement or at least push for a smaller percentage.

The key is to pay for actual support value – the expertise and responsiveness you need – rather than a formula based on spend.

Overall, frame your asks in terms of ROI. Microsoft reps respond well when customers have clear plans to use their products (because successful use often leads to more licenses later).

So, make it clear: “We’re willing to invest in X, but only if we’re confident it will drive Y results. Here’s how we’ll measure that…”

This approach not only helps you get better terms, but it also sets the tone that you expect Microsoft to be a partner in making the deployment successful, not just in closing the deal.

Example Scenario — CIO Balances Cost and Value

To illustrate the above principles, let’s walk through a simulated scenario of a CIO approaching an EA renewal with a balanced cost-vs-value mindset:

Company Background:

A global manufacturing firm with 10,000 employees is up for its EA renewal. They currently have Microsoft 365 E5 for all 7,500 office-based users, a significant Azure commitment, two Dynamics 365 modules deployed, and Unified Support tied to the EA. The CIO’s goal is to eliminate spending that does not provide value and reinvest those savings into areas that will drive business outcomes.

Steps Taken:

• Right-Sizing Microsoft 365: Usage data showed that only about 20% of employees genuinely use the advanced E5 features (such as enhanced security, compliance, or Power BI Pro). The other 80% primarily use email, Office apps, and Teams – all of which are well covered by E3. The CIO downgrades 1,500 of those E5 licenses to E3, retaining E5 only for the 20% who require those additional capabilities. This yields roughly a 15% reduction in Microsoft 365 licensing costs with no loss of productivity, because those downgraded users weren’t using E5-only features anyway. (For a few specific users who needed one or two E5 features, they added a small handful of standalone security and compliance add-on licenses rather than full E5s.)
• Azure Commitment Adjusted: The company had committed $10 million/year to Azure in the last EA, but actual usage averaged around $8.8 million due to some optimization and project delays. In the new EA, the CIO negotiates the commitment down to $9 million/year, closer to what they truly expect to use. They also decide that all dev/test workloads will move to a pay-as-you-go model via a CSP, so those non-production resources can be scaled down when not needed (avoiding paying for idle capacity). These moves are estimated to save the company 12% annually on Azure costs, while still providing headroom for growth in Azure for production systems.
• Streamlining Dynamics 365: The prior EA included licenses for both Dynamics 365 Sales (CRM) and Dynamics 365 Finance, catering to a broad set of users. The sales team actively utilized the Sales module, but the implementation of the Finance module was only partially completed, and adoption was low. In the renewal, the CIO drops the enterprise-wide Dynamics Finance licenses entirely, keeping only 200 Finance licenses for a small pilot in one division. They retain the Sales module licenses for the sales organization, as they have proven their worth. This change eliminates the cost of roughly 800 Dynamics Finance licenses (about 8% of the EA value). The freed funds are partly redirected to a new Microsoft 365 Copilot pilot (investigating AI-driven productivity gains for the engineering team) and to additional user training for the CRM system to maximize its impact. The remainder of the savings simply reduces the overall EA spend.
• Re-evaluating Support Costs: The company’s Unified Support agreement was charging a fee equal to 10% of total EA spend. With the EA spend going down now, that fee would drop somewhat automatically, but the CIO goes further. They decouple the support agreement from the EA, negotiating a fixed annual support fee based on actual usage and criticality. By tailoring support to their actual needs, they manage to reduce support costs by approximately 25% compared to the previous setup, while still maintaining 24/7 critical support coverage for their key systems. In essence, they halted the automatic “support tax” from rising in tandem with licensing and aligned support costs with reality.

Outcome:

After these adjustments, the company achieves approximately 16% overall savings on Microsoft spending compared to a status quo renewal.

More importantly, every remaining dollar in the EA is now tied to a purpose:

• Microsoft 365: Only paying for top-tier E5 where it’s needed; no more paying for unused deluxe features.
• Azure: Committed spend aligns with actual consumption; no large chunk of prepaid cloud is left unused.
• Dynamics 365: Licenses only for modules that people are using; no spending on unadopted software.
• Support: Costs calibrated to the support value received, not just a percentage of spend.

This balanced approach turns the EA renewal into something the CIO can defend and celebrate. They can present to the CFO and CEO a clear story: we eliminated what wasn’t working and invested in what will drive results.

Instead of just squeezing Microsoft on price, the CIO fundamentally improved the value the company gets from Microsoft. The renewal wasn’t just a procurement exercise, but a strategic realignment of Microsoft investments with business outcomes.

CIO EA Renewal Checklist

For any CIO preparing to renew a Microsoft Enterprise Agreement, here’s a checklist to ensure you’re balancing cost and value:

• ☐ Map EA components to business outcomes: For each major product or service in the EA (Microsoft 365, Azure, Dynamics, etc.), identify the primary business outcome it supports (e.g., “improve cybersecurity for remote work” or “enable faster go-to-market for apps”). If you can’t tie a component to an outcome, reconsider its inclusion.
• ☐ Audit current usage and adoption: Inventory all the licenses and services in your current EA and check their usage. Find the “shelfware” – licenses assigned but not used, or services running that aren’t needed. Plan to eliminate or scale these down. Use real data: Microsoft’s admin portals and reports can show you who’s using what.
• ☐ Identify overlaps with other tools: Look for where Microsoft products duplicate capabilities you already have from third parties. Decide if you will replace the third-party tool (to consolidate and save money) or if you’d rather stick with it – in which case, maybe you don’t need to pay Microsoft for that feature. Common overlaps might be security software, reporting tools, voice/calling solutions, etc.
• ☐ Negotiate pilots for new additions: If there’s a new Microsoft offering you’re unsure about (say, a Power Platform, AI feature, or a Dynamics module), negotiate it as a pilot or in phased increments. Don’t commit to enterprise-wide deployment in the EA until it has proven value on a small scale.
• ☐ Scrutinize Unified Support separately: Don’t just accept the default support addon. Determine the level of support you need (based on ticket volume, critical systems, and internal IT capabilities) and negotiate accordingly. This might mean a separate support contract or a reduced percentage fee. Ensure that support costs will decrease if your spending decreases.
• ☐ Define success metrics for the EA: Before finalizing the renewal, establish how you’ll measure whether these Microsoft investments are paying off. For example, “Success = 30% reduction in security incidents due to new E5 security tools,” or “Success = 20% faster deployment of apps by using Azure PaaS services.” These metrics will help you focus on value during the term and give you leverage in future negotiations (you can say which goals were met or not).

By going through this checklist, you ensure the EA renewal isn’t just about getting a better price, but about structuring the agreement so that every part of it delivers something positive to the business.

5 CIO Recommendations for Balancing Cost vs. Value

Every organization is unique, but these five recommendations capture the essence of how CIOs can balance cost and value in an EA renewal:

1. Define business outcomes first. Don’t enter negotiations just hunting for discounts. Start by clearly defining what the business needs from IT and how Microsoft’s solutions support those needs. If your goal is, say, to improve data security or enable a mobile workforce, let those objectives drive what you include in the EA. This way, your spending directly targets value.
2. Don’t buy “premium” without proof. Be skeptical of premium tiers or new products that promise a lot. Ask for proof that they’ll be used and useful in your environment. It’s often wise to start with the lower-cost option (e.g., E3 instead of E5, basic Azure services instead of the top-tier SKU) and upgrade later if needed, rather than going all-in upfront and finding out adoption is low.
3. Treat Azure commitments like investments, not entitlements. Committing to cloud spend is like investing capital – you expect a return (in efficiency, performance, etc.). Continuously evaluate cloud projects to ensure they’re delivering that value. If certain Azure services aren’t pulling their weight, don’t be afraid to scale them down. Avoid the mentality that once budgeted or committed, it must be spent regardless of outcome.
4. Pilot new capabilities before wide rollout. Whether it’s a Dynamics 365 module, the latest AI add-on, or any major new Microsoft technology, do a pilot or phased rollout. Measure the results and gather feedback. Expand the deployment (and the licensing) only when you have evidence of success. This approach de-risks your EA and often yields internal champions who can help drive adoption later.
5. Keep support and ancillary costs in check. It’s not just about licenses. Support, training, consulting, and other factors all contribute to the cost versus value equation. Don’t let support costs ratchet up automatically; negotiate them based on actual needs. Similarly, factor in training users on any new tools you’re paying for – a modest training investment can turn an underused product into a valuable one, dramatically improving ROI.

By following these recommendations, CIOs ensure they’re neither penny-wise and pound-foolish (over-cutting in ways that harm the business) nor paying for shiny extras that go unused. Instead, they act as savvy investors of the IT budget, always asking: “If we spend this dollar, what value do we get back?”

FAQ

Q: How should CIOs measure ROI in Microsoft 365?
A: Start by identifying the specific benefits or outcomes you expect from Microsoft 365 (e.g., improved productivity, enhanced security, reduced software redundancy). Then track metrics that relate to those outcomes. For productivity, it could be employee survey results or collaboration statistics (like Teams usage, documents co-authored). For security, measure incidents detected or prevented by the Microsoft 365 security tools versus previous baselines. Additionally, consider cost avoidance – for example, if adopting an M365 feature enables you to cancel another software subscription, those savings contribute to the ROI. Finally, periodically compare these benefits (in dollar terms or qualitative improvement) against the cost of your M365 licenses to ensure the value received justifies the spend.

Q: When does an Azure commitment deliver value vs. become waste?
A: An Azure commitment delivers value when you actually consume what you’ve committed (or very close to it) and thereby earn whatever discount or pricing benefit came with the commitment. Essentially, you’re getting the resources you planned for, at a lower unit cost, which is a win. It becomes wasteful if you overcommit – for example, if you commit $1 million but only use $ 700,000 worth of Azure, the $ 300,000 difference is a wasted budget. It’s also problematic if a commitment locks you in such that you can’t adjust to changing needs (for instance, if business priorities shift and you want to use another cloud or scale down usage, but you’re stuck trying to use up Azure credits). To ensure value, commit conservatively based on well-founded forecasts, and leave some room for flexibility.

Q: What’s the risk of including Dynamics 365 broadly in the EA?
A: The risk is paying for a lot of expensive Dynamics 365 licenses up front without being certain that employees will use them fully. Suppose adoption is low or the implementation phase takes longer than expected. In that case, you may have hundreds or thousands of users licensed for Dynamics Finance or Marketing, while still operating in the old way. That’s wasted spend. Another risk is opportunity cost and lock-in: pouring budget into Dynamics might mean less available for other solutions that could drive value, and it commits you to Microsoft’s platform even if it turns out not to be the best fit in some areas. In short, the risk is being shelved and inflexible. Mitigate this by phasing deployments and scaling up Dynamics licenses only as fast as users are onboarding and deriving benefits.

Q: How can CIOs negotiate EA renewals with an ROI focus?
A: Come to the table with data and a clear story. Prepare usage reports showing what you used and didn’t use in the last term; have internal feedback on what delivered value and what didn’t. With that in hand, push for terms that address your findings: if certain products weren’t used, maybe you want to remove them or get the ability to drop them later (flexible quantities). If a product could deliver value but you’re not convinced, propose a pilot arrangement. Emphasize to Microsoft that you need business justification for each element – essentially invite them to help prove the ROI. Also, be willing to share your future vision: for instance, “Our goal is to enable advanced analytics, so if you (Microsoft) can bundle Power BI or AI features in a way that’s cost-effective until we prove their value, we’re interested.” By focusing on outcomes and evidence during negotiations, you set a collaborative tone: you’re not just bargaining harder, you’re asking Microsoft to partner in ensuring their solutions succeed in your organization.

Q: Should Unified Support be bundled with the EA, or kept separate?
A: It depends on your situation, but many CIOs find it beneficial to negotiate support separately. Bundling Unified Support with the EA is convenient – one renewal, one bill – and sometimes you can get a slight discount by having it all in one deal. However, the classic Unified Support model charges a percentage of your total license spend. That means that if you expand your Microsoft footprint, your support costs will automatically rise, even if your support ticket volume remains unchanged. If your Microsoft environment is stable and you don’t need a lot of help, you could be overpaying. Separating support allows you to choose the exact level of service needed (for example, perhaps only your Azure infrastructure requires the top support tier, while your Office 365 can be fine with a lower tier). You can often negotiate a cap or fixed fee on support that is lower than the percentage would have been. In summary, bundle if the bundled cost is low and you truly expect to utilize that level of support; otherwise, treat support as a separate decision. It should be aligned with how critical Microsoft systems are to you and how much help you realistically need – not just a blanket percentage added to your EA.

Would you like to learn more about our Microsoft negotiation services?

Please enable JavaScript in your browser to complete this form.

Name *

Email *

Company

Message *

Submit