Exploring the distinction between Annual Reports and True-Ups in Microsoft Enterprise Agreements
In the realm of Microsoft Enterprise Agreements and subscription contracts, terms like “Annual Report” and “True-Up” play a pivotal role in managing software licenses and ensuring compliance. While these terms may initially appear similar, they each hold a distinct significance within the realm of software licensing. Let’s delve into the key differences between Annual Reports and True-Ups, unraveling their significance.
Annual Reports: A comprehensive overview
An Annual Report is a procedural aspect within the Enterprise Agreement Subscription contract. It involves an annual payment for the total count of licenses covering Microsoft products and services, as agreed upon by a company. This report reflects the ongoing commitment to licenses made by the organization. It serves as a snapshot of the licensing landscape for products and services falling under the agreement.
True-Ups: Ensuring compliance through verification
In contrast, a True-Up is an essential procedure within the Enterprise Agreement itself. It constitutes an annual verification to assess the licenses utilized by an organization during the past year, beyond the initial order. This process also encompasses subsequent steps, including payments, to ensure the acquisition of any additional licenses. The primary goal is to ensure compliance with licensing terms.
However, it’s important to note that a “True-Down” option isn’t available for software products, meaning you cannot purchase fewer licenses than initially agreed upon.
Understanding the True-Up process
An Enterprise Agreement mandates an annual True-Up, which involves comparing the number of licenses used to the licenses purchased in the initial order. This process enables companies to adjust their license count and acquire additional licenses as needed.
Additionally, the True-Up serves as a mechanism for Microsoft to ascertain an organization’s adherence to licensing terms for various products and services. Typically, any growth throughout the contract year is considered during the True-Up, including the potential reduction of cloud services.
Regrettably, a “True-Down” principle doesn’t apply to software (unless available as a subscription).
All modifications made throughout the year must be reconciled in a True-Up Report or Update Statement, submitted 30 – 60 days before your Enterprise Agreement anniversary.
The True-Up process ensures that companies possess the appropriate number of licenses to cover software usage. Since products from the initial (renewal) report have fixed prices, the True-Up process aids organizations in budgeting for software-related expenses.
Advantages of a True-Up: Leveraging accuracy and compliance
One of the notable benefits of the True-Up process is its role in helping organizations maintain compliance with software licensing agreements. Many software vendors require accurate record-keeping of software usage and full licensing for all utilized software. Failure to meet these requirements may lead to penalties and legal repercussions, which can be both costly and disruptive.
In addition to compliance, a True-Up empowers organizations to accurately assess their software needs and make adjustments accordingly. By conducting a True-Up, businesses can identify areas where they may be over- or under-licensed (particularly for cloud subscriptions) and make appropriate adjustments, optimizing software spending and minimizing unnecessary costs.
Expert support for accurate reporting
Navigating the intricacies of Annual Reports and True-Ups can be complex. At BeSharp, our experts are well-equipped to provide guidance and support in accurately reporting your software usage. Contact us today for personalized advice and tailored solutions.