Introduction to Microsoft’s “Enterprise” License Plans
The “Enterprise” volume licensing plans are designed for organizations that have a minimum of 250 PCs, although most customers who choose these plans have much more. These plans offer the highest discount level of all the volume license plans – about 15% more than what’s available through the Select volume license plans.

Enterprise license plans allow customers to use certain Microsoft software (such as Office) on all of the desktop and portable PCs in the organization. Customers will typically combine an Enterprise Agreement for their desktops and laptops with an Open or Select Agreement for their servers.

There are two plans within the Enterprise family: Enterprise Agreement and Enterprise Subscription Agreement. The biggest difference between these is that one offers a perpetual license, while the other is a subscription.

Features Common to both Enterprise Plans
There are a number of things that are common to both Enterprise plans:

• Software Covered - In an Enterprise agreement you can purchase Windows upgrades, an upper-end bundle of Office Suites (the lower-end bundles are not covered), or a Client Access License bundle – all with full upgrade and downgrade privileges.
• Devices Covered - Enterprise agreements are only for “qualified” desktops or portable computers. A client device is “qualified” if it can run Microsoft desktop software. So a PC running Windows or an Apple is qualified, while a PC running Linux is not. Also excluded are servers and any device that is only used to run line-of-business software.
• Agreement Length - These are 3-year agreements, renewable for either 1-year or 3-year terms. However, an Enterprise agreement can only be extended for a 1-year period once; after that you need to either drop the plan or renew for 3 years.
• Agreement Scope - Enterprise agreements are global in their scope. They cover all of the desktops and laptops of the entire organization worldwide, as well as those located at any of the organization’s affiliates.
• Record Keeping Requirements - None. Unlike other volume licensing agreements, Enterprise does not require organizations to keep detailed records of their various licenses.
• Software Assurance - Software Assurance (SA), a subscription for Microsoft’s maintenance program, is required and included with all Enterprise plans.
• Discounts - Discounts are based on the number of qualifying desktops. There are four pricing tiers, with the discounts improving about 7% between levels:
  • A Tier: For 250 or more desktops
  • B Tier: For 2,400 or more desktops
  • C Tier: For 6,000 or more desktops
  • D Tier: For 15,000 or more desktops
  In addition, organizations that agree to purchase a Windows upgrade, Office Suite, and Client Access License bundle for each PC receive an additional 15% discount.

Benefits of the Enterprise Agreements
There are three key reasons why larger organizations often choose an Enterprise Agreement over other options:

1. Ease of License Management – Let’s face it: tracking software licenses on desktops and laptops can be a real pain. Companies buy these licenses from OEMs, through other licensing programs, or even in retail stores. You can end up with hundreds of licenses, each with different rules and expiration dates. An Enterprise Agreement lets you avoid this hassle. Based on a simple count of your computers, an Enterprise Agreement blankets your entire organization.
2. Lower Costs – Enterprise Agreements offer the highest discounts of all the volume license plans. However, because they include Software Assurance, they might not be a “bargain” for organizations that do not need this service.
3. Negotiation Flexibility - All of the other volume licensing programs from Microsoft are fixed. Enterprise Agreements are fairly unique in that there can be a fair amount of flexibility during negotiations regarding what is or is not included.

The Enterprise Agreement (EA): Perpetual Licensing
The Enterprise Agreement is differentiated by its:

• Perpetual License – You get the right to use the software in perpetuity.
• Budget Predictability – With an Enterprise Agreement you can calculate how many licenses you need, multiply everything out, and then break it back down into three annual payments. Then when it comes time to renew you’ll typically get about a 30% discount over your original contract, since at this point you will only be paying for the SA (since you would have already purchased a perpetual license).
• “True Up” Pricing – Once a year Microsoft will require you to re-inventory your computers. If you have added any PCs or laptops you will have to pay a pro-rated fee to cover the licensing and Software Assurance for the remaining duration of your agreement. So your “true up” price for a PC depends on the year in which it is added.

The Enterprise Subscription Agreement (ESA): Subscription Licensing
There are a few things that set the Enterprise Subscription Agreement apart:

• It’s a Subscription – The Enterprise Subscription Agreement does not provide a perpetual license. It’s a subscription, and it only gives you the right to use the software as long as your subscription is active. After that you must uninstall the software, extend the subscription, or pay a “buy out” of roughly 1.7 times the annual fee in order to convert the subscription into a perpetual license.
• Lower Up-Front Costs – An Enterprise Subscription Agreement is 10 to 35% less expensive than a comparable Enterprise Agreement for the same time frame.
• Flexibility Regarding PC Counts – This agreement has no “true up” process, as each year you only pay to rent the software for that year (as compared to pro-rated pricing for the remainder of the license term). This allows you to easily increase or decrease your license count on an annual basis.

Negotiating an Enterprise Agreement
If you’re considering entering into an Enterprise agreement, I strongly recommend that you start by knowing what you have and what you use. In fact, the more informed you are about your organization’s true needs, the better your negotiating position will be.

As I mentioned earlier, there can be a fair amount of flexibility regarding what is or is not included in an Enterprise Volume Licensing Plan. While getting a larger discount will require escalating within Microsoft, there are a variety of other levers you can try.

For example, you can try negotiating for which devices are counted and which are not. You can discuss the discount level on the Office products or – if you can prove that your company does not use all of the software in the higher-end Office suites – you may be able to negotiate for a lower-end suite price. In addition, you can try negotiating for things that do not involve the actual software licenses, including consulting services, technical resources (such as an on-site person), training, or Microsoft Case Studies (which would give your firm some positive PR).

Conclusion
Is an Enterprise Agreement a good fit for your organization? Well, the answer (as always) is “it depends.” Assuming you have at least 250 PCs, Enterprise might be a good fit if you’re going to use the bigger Office package, you don’t want to manage your desktop software licenses, your organization is geographically spread out, and you have the necessary budget and IT structure to help you gather the requirements and understand exactly what the license will mean for your firm.

Need help figuring it all out? Talk to a qualified advisor – such as Coyote Creek Consulting or your reseller – that understands the ins and outs of all the programs and can steer you in the right direction.

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