As a Microsoft Cloud Solution Architect supporting our global enterprise customers on FinOps and Microsoft Cost Management topics I am often involved in conversations with customers explaining the different relationships existing in Microsoft Cost Management.
In this article I will shed some light on key relationships for commercial enterprise customers to provide clarity. The knowledge provided in this article can be especially helpful for those customers currently planning to transition from a Microsoft Enterprise Agreement contract towards a Microsoft Customer Agreement.
Building blocks for Cost Management relationships
Before we start looking into the individual relationships, we need to understand the building blocks of these Cost Management relationships:
- Billing contracts – Enterprise Agreement (EA) and Microsoft Customer Agreement (MCA) providing legal and commercial terms as well as certain technical capabilities like Billing Roles.
- Microsoft Azure Consumption Commitment (MACC) as a contractual agreement where an organization commits to spending a certain amount on Azure services over a specified period and might gets a certain discount on their usage.
- Billing roles provided by each contract like Enterprise Administrator or Billing Account Owner to manage the contract.
- Tenants based on Microsoft Entra ID providing entities access to Billing Roles and Azure Resources
- Azure subscriptions as containers to deploy and manage Azure Resources at specific cost.
- Azure customer price sheet (CPS) determining the current Customer prices for specific Azure Resources.
Key Cost Management relationships in EA and MCA contracts
Customer to contract
Customer Organizations can sign multiple contracts with Microsoft. Even though it is generally advised to have a 1:1 relationship between Customer and Microsoft contract, Customer can theoretically use multiple contracts at the same time.
Examples
- Best example for this is during a transition period from EA to MCA, where the customer has an active EA and an active MCA contract.
- During M&A activities a customer organization might end up with multiple EA or MCA contracts.
Contract to price sheet
Every contract is associated with a customer specific price sheet determining the individual customer prices in the agreed billing currency.
In MCA the default associated price sheet basically equals the Azure Retail price list in USD.
The price sheet can be accessed in the Azure portal.
Contract to Microsoft Azure Consumption Commitment (MACC)
Customers can sign a MACC. There is usually a 1:1 relationship between a contract and a MACC.
As a benefit of this commitment, Customers might get discounted pricing on Azure Resources (usage). This potential discount will be reflected in the price sheet associated with the contract.
Contract to billing roles
Both EA and MCA provide Customers with roles, that can manage certain aspects of the contract. These roles are called billing roles. Billing roles differ from EA to MCA and are described in detail here for EA and here for MCA.
A key difference between EA and MCA is, that Customers can associate any valid work, school, or Microsoft account to EA billing roles but only work accounts of an approved tenant for MCA.
Contract to tenant
To manage billing roles customers must associate exactly one Entra ID tenant with the contract. This happens at contract setup. Identities within this Tenant can be assigned to billing roles within the contract.
Example
User Dirk from the contoso.com tenant can be assigned to the EA admin role in Contoso’s EA contract.
In MCA this tenant is called the primary billing tenant. Only users from this tenant can be assigned to billing roles within the MCA contract.
CAUTION: The tenant global administrator role is above the billing account administrator. Global administrators in a Microsoft Entra ID tenant can add or remove themselves as billing account administrators at any time to the Microsoft Customer Agreement.
If you want to assign identities from tenants other than the primary billing tenant, you can add associated billing tenants.
NOTE: Even though customers should strive for a single tenant, there is no restriction in how many tenants a customer can create within a contract.
Contract to subscription
An Azure subscription is a logical container used to provision and manage Azure resources. Resource access is managed by a trust relationship to an Entra ID tenant and billing is managed by a billing relationship to a Microsoft contract (EA or MCA).
Every subscription can only have one billing relationship to one contract. This billing relationship can be moved to a different contract based on certain conditions (e.g. in EA/MCA transition scenarios or M&A scenarios).
Every contract can manage 5000 subscriptions by default.
NOTE: The billing relationship determines the prices for the consumed resources within the subscription. If you have a subscription that is associated with a contract that uses Azure retail prices you pay the retail price. If the associated contract has customer specific prices (e.g. by signing a MACC with applicable discounts), the resources within this subscription will be charged at these prices.
Subscription to tenant
Every subscription has a 1:1 trust relationship to an Entra ID tenant. This trust relationship determines, which identities can manage the resources within the subscription.
Tenant to subscription
Every tenant can manage trust relationships with virtually unlimited number of subscriptions. These subscriptions can use billing relationships to multiple contracts which might lead to different prices for resources deployed to these subscriptions.
Example
Contoso is using a single Entra ID tenant, has just signed a new MACC agreement and is migrating to MCA. At signing the MCA contract, the MACC is associated with the MCA account and not with the EA contract. During an EA to MCA transition period, some subscriptions still have a billing relationship to the old EA contract and others are already moved to the MCA contract. In this situation the same VM in the same region might be charged differently, depending on the subscription the VM is deployed to. If the subscription is still using the EA billing relationship, the price might be different (e.g. due to lack of applied discounts).
Summary & key takeaways
Relationships on a page
Let’s summarize the described relationships:
Fully understanding the described relationships can be very helpful in a variety of scenarios, especially when you are currently discussing the transition from an Enterprise Agreement contract towards a Microsoft Customer Agreement.
Key takeaways
Three key takeaways:
- Tenants do not determine the price of an Azure resource!
- Only the billing relationship between a subscription and a contract determines the price of a resource!
- Customers can use multiple tenants to manage their Azure resources. Only for managing billing roles there is usually a 1:1 relationship between the contract and an Entra ID tenant.
Next steps
- If the provided information was helpful for you: Share this article within your FinOps, Finance and Cloud Competence Center teams.
- If you need in-depth support for planning the proper relationships and billing structures for your organization, please reach out to your local Microsoft representative.
If you have a unified support contract, you can ask your Customer Success Account Manager (CSAM) to reach out to our global team of FinOps experts from the Culture & Cloud Experience (CCX) practice. - This article lays the foundation for an upcoming post about how to manage the transition from EA to MCA from a FinOps perspective.
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