Microsoft has unveiled its new flagship contract model, the Microsoft Customer Agreement for Enterprise (MCA-E), which has generated significant buzz. But what exactly is the MCA-E, how does it differ from the traditional Enterprise Agreement (EA), and what should enterprises watch out for?
What Is the Microsoft Customer Agreement for Enterprise (MCA-E)?
The MCA-E is Microsoft’s attempt to modernize and simplify the purchase and management of its products and services. It’s a user-friendly, evergreen contract model that is entirely digital, designed to provide a streamlined experience for buying Microsoft Cloud solutions such as Azure, Dynamics 365, and Microsoft 365.
Unlike the Enterprise Agreement (EA), which has an expiration term and is often managed through partners, the MCA-E is a direct, non-expiring agreement between Microsoft and its customers. Subscriptions procured under this agreement can be managed entirely online.
Differences Between MCA-E and EA
While Microsoft markets the MCA-E as a more modern and flexible option, the reality is more complex. Here’s a breakdown of the key differences:
Currency Risks: MCA-E contracts are USD-based, exposing customers to exchange rate fluctuations. Monthly invoices can vary significantly depending on exchange rates.
Limited SKU Options: Important features such as discounted FromSA SKUs (10% savings) and flexible SKUs (e.g., step-ups, add-ons) are not included in the MCA. Customers often end up purchasing higher-priced bundles.
Price Lock Elimination: Unlike the EA, the MCA-E does not offer a long-term price lock. Pricing for resources like Azure services can change monthly, making budget planning challenging.
No Price Tiers: The MCA-E eliminates traditional pricing levels (A, B, C, D). This can result in higher costs, particularly for organizations currently benefiting from levels B, C, or D in the EA.
On-Premises Licensing: MCA-E does not support License and Software Assurance (L/SA), compelling customers to adopt subscription models for critical products like Windows Server and SQL Server.
Standalone Microsoft Teams: Microsoft Teams cannot be included in certain Microsoft 365 suites due to regulatory changes. This adds complexity to enterprise collaboration tools.
Direct Customer Management: With the MCA-E, Microsoft removes the partner intermediary. All administrative, pricing, and licensing tasks now rest solely with the customer.
True-Up and Reporting: The EA’s annual true-up reporting is replaced with individual license management. Monthly subscriptions under MCA-E come with a 20% uplift.
Why Customers Should Proceed with Caution
The MCA-E’s flexibility may benefit Microsoft more than its customers. While it introduces new invoicing and payment features, these come at an additional cost—such as a 5% uplift for flexible payment options. For many enterprises, the lack of price stability, fewer SKU options, and USD-only pricing could outweigh the touted benefits.
Key Pitfalls
- Increased Costs: Higher costs due to the removal of discounts and price locks.
- Administrative Burden: Customers must manage their contracts directly with Microsoft.
- Currency Risks: Exposure to exchange rate volatility with USD-based contracts.
What Is the Current Impact?
Most enterprise customers are not immediately affected by the MCA-E due to its current limitations. However, organizations relying on on-premise products, FromSA SKUs, or custom amendments may face challenges when transitioning to this new model.
Your Next Steps
The MCA-E represents a significant shift in Microsoft’s contracting strategy, and organizations should carefully evaluate its impact on their licensing needs.
Contact us today at info@2-data.com to schedule a consultation. We’ll help you navigate the complexities of the Microsoft Customer Agreement for Enterprise and optimize your licensing strategy to ensure you stay ahead of the curve.
