Azure FinOps Essentials

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Hi there, and welcome to this week’s edition of Azure FinOps Essentials! 🎉

In this edition, I’m diving into the shift from Enterprise Agreement (EA) to Microsoft Customer Agreement (MCA)and what this means from a FinOps perspective. While EA has been the go-to for large enterprises, MCA introduces more flexibility, transparent pricing, and improved billing options—a significant change for organizations managing cloud costs at scale.

We’ll break down the key differences, including invoicing structures, payment options, and cost visibility. One of the most impactful benefits? MCA allows for multiple invoices with separate sections and payment methods, eliminating the need for complex internal rebilling—something EA never offered.

If you’re navigating Azure contracts and want to optimize your billing and cost management strategy, this edition will give you everything you need to know about the transition.

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The shift from EA to MCA

If you’re deep into FinOps, the transition from Enterprise Agreement (EA) to Microsoft Customer Agreement (MCA) is probably already on your radar. But for others—developers, IT admins, or business teams—this shift might not be as visible, even though it impacts how organizations manage and optimize their cloud costs.

Microsoft is moving away from the traditional EA model, which required long-term commitments and upfront negotiations, towards MCA, a more flexible, self-service approach. This transition is important because it changes how cloud costs are structured, who can manage them, and how organizations track spending.

At the same time, it’s useful to understand how Azure subscriptions fit into this picture. Microsoft defines a cloud subscription as a way to organize and manage Azure services, but these subscriptions extend beyond just Azure compute resources. They also include Microsoft 365 licenses, Microsoft Support plans, and the Microsoft Azure Consumption Commitment (MACC). Importantly, cloud subscriptions themselves don’t cost anything—they simply serve as a management layer for the products and services an organization consumes.

So, what exactly is changing with MCA? And how does it impact cost governance, discounts, and purchasing flexibility compared to EA? Let’s dive into the details.

Understanding billing in Azure and the role of MCA

With the shift from Enterprise Agreement (EA) to Microsoft Customer Agreement (MCA), it’s important to understand how billing in Azure works and how costs are structured. Billing is more than just invoices—it’s about managing accounts, organizing subscriptions, setting up payments, and tracking cloud usage.

At the core of Microsoft’s Commerce system is a data pipeline that processes every transaction, whether for Azure, Microsoft 365, Dynamics 365, or Power Platform. Each service feeds usage data into this pipeline at different intervals, where it gets rated based on pricing agreements, applied discounts, and credits, and finally, an invoice is generated at the end of the billing cycle.

The Azure billing system operates on different billing scopes, such as billing accounts, billing profiles, and invoice sections. These scopes allow organizations to manage costs efficiently by creating multiple subscriptions, grouping resources under different cost centers, and applying specific policies for governance.

Billing isn’t just about payments—it directly impacts cost visibility, forecasting, and accountability. Organizations can use built-in tools in Azure Cost Management to analyze trends, detect anomalies, and allocate costs across teams.

With MCA replacing EA, the question is: How does it impact billing and cost management? Let’s take a closer look at the key differences, the benefits of MCA, and what this means for FinOps professionals.

MCA vs. EA: What’s changing in Azure contracts?

For years, organizations using Azure under an Enterprise Agreement (EA) have benefited from volume-based discounts, predictable billing, and a structured approach to cloud spending. However, Microsoft is shifting towards a more flexible model with the Microsoft Customer Agreement (MCA)—and that comes with key differences that FinOps professionals and IT teams need to be aware of.

Key Differences Between MCA and EA

1. Commitment vs. Flexibility

• EA required a multi-year commitment (typically three years) with upfront payments and locked-in pricing based on estimated usage.

• MCA offers pay-as-you-go pricing with no long-term commitment, allowing companies to scale up or down as needed.

2. Billing Model

• EA had fixed pricing with volume-based discounts, making it predictable but requiring a strong upfront commitment.

• MCA introduces real-time pricing updates, which means cost optimization needs to be more proactive as rates may fluctuate.

3. Subscription and Cost Management

• EA grouped costs under a single enrollment with departments and accounts for tracking.

• MCA shifts to billing profiles and invoice sections, offering more granular control but also requiring organizations to rethink their cost allocation strategies.

4. Purchasing Process

• EA required direct engagement with Microsoft to negotiate terms and pricing.

• MCA is fully digital, allowing organizations to purchase services on demand without complex contract negotiations.

5. Invoicing and Cost Visibility

• EA invoiced usage monthly, with costs often consolidated under a single invoice for all linked subscriptions.

• MCA provides monthly invoices with clearer breakdowns, offering better cost tracking and forecasting.

6. Access to Cost Management Tools

• MCA improves integration with Cost Management + Billing, providing real-time insights, budgeting tools, and proactive alerts—features that were more limited under EA.

Why the move to MCA matters

While EA worked well for organizations with predictable, high-volume cloud usage, MCA aligns better with modern cloud consumption patterns, offering greater agility and control over cloud costs. However, this shift requires FinOps teams to rethink how they monitor, forecast, and optimize spending in a more dynamic pricing environment.

A shift towards more flexible and granular billing

The transition from Enterprise Agreement (EA) to Microsoft Customer Agreement (MCA) marks a significant shift in how Azure billing and cost management are handled. While EA provided volume-based pricing with a single consolidated invoice, MCA introduces greater flexibility, real-time pricing, and more granular cost tracking.

One of the biggest improvements in MCA is the ability to have multiple invoices with sections and individual payment methods—a major advantage over EA, where organizations had to manage internal rebilling themselves. This change allows for better financial control and cost allocation across teams, projects, or business units.

For organizations currently using EA, the migration process is well-documented on Microsoft’s website, making it a structured transition rather than a sudden shift. As always, keeping a close eye on cost management and ensuring your billing structure aligns with your internal processes will be key to making the most of this new model.

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Want more FinOps news, then have a look at FinOps Weekly by Victor Garcia