Conducting a Pre-Renewal License Audit for Microsoft EA Negotiations
Why a Pre-Renewal Audit is Critical
Microsoft views Enterprise Agreement renewals as a prime opportunity to upsell you on more or higher-tier products. If you approach a renewal without performing an internal license audit, you’re essentially negotiating blind.
Many companies simply renew last period’s quantities by inertia, meaning they pay for unnecessary licenses by default. Unused or redundant licenses become a silent drain on your IT budget – they quietly inflate costs and will be baked into your renewal unless you proactively remove them.
By auditing beforehand, you shine a light on this waste and eliminate “shelfware” instead of funding it for another term. Read our overview on how to manage Microsoft EA renewals.
A pre-renewal license audit gives you a competitive advantage. It provides a data-driven foundation to push back on Microsoft’s proposals and insist on right-sizing your agreement.
Armed with facts about what you use (and don’t use), you can negotiate from a position of strength.
Microsoft’s team will see that you’re prepared with a solid usage analysis, making it harder for them to justify upsells or inflated counts. The audit ensures you only renew what truly adds value.
Step 1 — Collect Your Current Licensing Inventory
Begin by gathering a comprehensive inventory of all Microsoft licenses across your organization.
Include everything under your EA (Enterprise Agreement), plus any additional cloud subscriptions or add-on licenses acquired through other channels (such as a CSP partner).
Account for all user subscriptions, server licenses, and any products with Software Assurance. Note any true-up additions made during the term, as well as any licenses purchased but not assigned.
The goal is to have one consolidated view of your Microsoft licensing estate.
This complete inventory serves as the foundation of the audit. With it, you can see what you’re paying for and set the stage to identify where you have waste or underuse.
Step 2 — Identify Unused and Underutilized Licenses
With inventory in hand, pinpoint licenses that are unused or underutilized – the classic “shelfware.”
Typical areas to check include:
- Premium suites (e.g., Microsoft 365 E5): Are users using the high-end features, or could some be on cheaper plans?
- Standalone apps (Project, Visio, Power BI, etc.): Were these bought for many users, but only actively used by a few?
- Overlapping services: Do you have multiple licenses for the same function, where one is redundant?
Look for licenses with little or no activity. If a service was rolled out to 500 people but only 50 actively use it, that’s a clear sign of over-licensing. Those unused licenses are prime candidates for elimination or reassignment.
Once you identify them, plan changes and quantify the savings from removing or downgrading each item.
Having a concrete dollar figure on potential savings provides powerful evidence for stakeholders and strengthens your hand in negotiations.
Plan by reviewing the EA Renewal Preparation Timeline.
Step 3 — Map Licenses Against Actual Usage
Next, map your entitlements to actual usage. Compare what you’ve purchased versus what’s being used. Use Microsoft’s admin centers and reports to check active usage of each product or service.
This will reveal mismatches between what you have and what you truly need. You may discover, for example, that you provisioned far more Visio or Power BI licenses than people actively use.
This usage data offers hard evidence of over-licensing. It validates the shelfware identified in Step 2 with real numbers.
You might also spot cases where a department overestimated needs, or licenses remain assigned to departed staff and defunct projects. Document these findings.
They form the backbone of your case to reduce license counts – it’s difficult to argue against actual usage stats when deciding what to renew.
Step 4 — Flag Redundant or Overlapping Products
During the audit, identify any redundant or overlapping products in your Microsoft portfolio. Sometimes you pay for capabilities in Microsoft licenses that duplicate what you already have through other vendors.
For example, you might have Microsoft’s phone system included in a bundle but still use a separate telephony provider, or you have Microsoft security features enabled while also running a third-party security suite.
These overlaps are opportunities to trim fat. Determine if you truly need the Microsoft component, or if your alternative solution adequately covers it. If a Microsoft feature isn’t providing value because you rely on another tool, plan to drop that feature or switch to a cheaper license tier without it.
In negotiations, you can then tell Microsoft you won’t be renewing certain components due to these redundancies. The result is an EA tailored to your environment – without paying twice for the same functionality.
You must do this: Identifying Unused Services Before Microsoft EA Renewal.
Step 5 — Use Audit Data to Reset EA Quantities
Armed with your audit data, you can now propose a reset baseline for your EA renewal. Instead of blindly renewing the same quantities as last time, determine the right number of each license based on actual need.
For instance, if you have 2,000 Office 365 seats today but only 1,800 active users, plan to renew around 1,800 (with a small buffer for growth). Every license you remove or downgrade is an immediate cost savings.
By presenting this learner demand to Microsoft, you avoid paying for phantom users or inflated forecasts. Vendors often assume growth and pad their numbers, but your data allows you to counter those assumptions.
Microsoft may not like seeing a reduction, but it’s hard for them to dispute an evidence-based adjustment. You’re right-sizing the agreement to what your organization requires, which eliminates wasteful spending and sets a financially efficient starting point for the new term.
Step 6 — Leverage the Audit During Negotiations
Use your audit results as a negotiation tool at every turn. When Microsoft’s proposal or sales team suggests renewing a certain quantity or adding new products, counter with your data.
If they quote 500 licenses for a product but your analysis shows only 300 are needed, make it clear that 300 is the number you’ll sign up for. Center the negotiation around your internal metrics, not Microsoft’s sales targets.
This data-driven approach prevents Microsoft from inflating the deal with extras you don’t need. It also strengthens your credibility when asking for discounts or concessions, since you can back up requests with a solid business case.
Just as importantly, it sends a message that you’ve done your homework. Microsoft’s reps will realize you’re not an easy mark for upselling because you have the numbers to justify every decision. Your audit report becomes both a shield (to guard against unnecessary additions) and a sword (to cut out fat) in the negotiation.
Step 7 — Pitfalls to Avoid in License Audits
Keep these pitfalls in mind to ensure your audit delivers the best results:
- Trusting Microsoft’s recommendations blindly: Microsoft might offer to analyze your environment, but remember, their goal is to sell more. Take their input as a secondary opinion. Rely on your data as the source of truth when deciding what to keep or cut.
- Starting too late: Don’t wait until the eleventh hour. Start your audit well ahead of renewal – ideally 9–12 months prior. A rushed, last-minute audit can result in missed savings and leave little time to act on the findings.
- Overlooking parts of your environment: Ensure you review all licenses and environments, including both cloud and on-premises environments. It’s easy to forget about on-prem software, smaller subscriptions, or department-specific licenses outside the main EA. Skipping these can mean missing significant savings. Aim for a holistic view so your renewal adjustments cover everything.
FAQ
How far in advance should we run a license audit before renewal?
Begin about 9–12 months before your EA expires. This gives you time to collect data, implement any changes, and use the findings to shape your negotiation strategy.
Can we trust Microsoft’s reports for license optimization?
Use them with caution. Microsoft’s recommendations often have a sales slant, so treat them as a reference point only. Let your analysis be the final guide for any optimization.
What yields the biggest savings in a pre-renewal audit?
The biggest savings come from cutting licenses nobody uses and downgrading users on expensive plans. For example, moving users from a high-cost E5 plan down to a cheaper E3 plan can drastically reduce spending.
Do we need to use third-party tools or hire consultants to perform the audit?
Not necessarily. Many organizations can audit effectively with internal teams using Microsoft’s admin dashboards and reports. If your environment is very large, you might consider specialized tools or expert help, but it’s not mandatory. The key is that the audit is thorough – whether done in-house or with outside assistance.
How does an internal audit improve our negotiation leverage?
Knowing your exact needs means Microsoft can’t push you to overspend. You set the agenda with data-backed requirements, forcing the deal onto your terms. The audit enables you to negotiate confidently and secure a deal that aligns with your true needs.
