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Microsoft ESA (Enterprise Subscription Agreement) pro and con by scottbraden
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Microsoft Enterprise Subscription Agreements (or ESA’s) as their name suggests are Subscriptions to Microsoft Software.  “Enterprise” means the client agrees to cover all of the desktop “qualifying” pc’s in the organization with the same bundle of software, typically Windows upgrade/SA, Office Pro Plus/SA, and Core CAL / SA.  This is commonly referred to as a ‘full platform’ ESA. 

In the case of the ESA, the client pays an annual fee (typically in a three year deal) to maintain useage rights for the products in the subscription. When the subscription ends, the client no longer has any useage rights for any of the products in the subscription and must remove the software from all the machines.

Microsoft includes “buyout” terms in the ESA contracts for when / if the client eventually decides to exit the ESA.  This gives the client the ability to purchase the underlying perpetual license.  At that time, the client can decide whether or not to cover the purchased license with software assurance.

Typically the cost of the ESA subscription + eventual buyout adds up to be higher than if the client had simply purchased licenses via other means. This, in my opinion, is the biggest “downside” of the ESA: the cost to exit is usually higher than the cost to purchase and/or maintain, making the real-world TCO higher than conventional Enterprise Agreements (EA’s) or a more optimized approach.

ESA’s are a good fit in a very limited number of cases:

1. Clients that have made a conscious, long-term infrastructure decision to aggressively invest and stay leading–edge on Microsoft products but need to avoid capital costs and would prefer to expense the investments.

2. Clients who need to get / stay current for the next few years but are likely to significantly reduce the size of their business by organic decline (not divestitures), or who experience business cycles of less than 3 years where the infrastructure significantly grows and shrinks.

We frequently see cases where a client needs to get compliant or otherwise upgrade large portions of their infrastructure to the latest Microsoft versions. In these cases Microsoft typically proposes an EA. If the cost is too high for the client, sometimes Microsoft will offer an ESA as an alternative, since the per-year and initial costs are lower. But, if a client simply needs to reduce licensing costs (capital or expense), there are other more effective methods that offer improved beneftis over this approach.

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