Start with usage, not with the price list
The first move is a clean baseline: who is assigned what, who actually uses it, and where Microsoft and 3rd party entitlements overlap. Microsoft 365, Entra, Defender, Purview, Dynamics 365 and Power Platform - many have overlapping capability or entitlements across E3/E5/E7, F1/3/5 and standalone SKUs, and organisations may pay twice for at least one control, or from different vendors (Microsoft and 3rd party).
Understanding what you're entitled to and what you're using, and what contractual rights you may or may not have is critical at each milestone of an agreement.
Active-usage reporting per workload, not per licence assignment
Leavers, service accounts and duplicated add-ons removed before any counting
Third-party tools mapped against Microsoft entitlements you already own
Growth and divestment plans reflected in the forward user count
Minimum commitment levels within your agreement type and terms.
Right-size the licence mix
Once usage is visible, the mix question becomes concrete rather than ideological. A blanket E5 uplift may not be the cheapest route to the same security posture; equally, an all-E3 estate with six bolt-ons often costs more than E5 and is harder to run.
In addition, which users are Frontline worker eligible and which are Enterprise users is key, or they may be contractors who don't need a full suite (but may need a consistent security and compliance posture to reduce possible attack surfaces.
The right answer is usually a segmented estate: a small high-privilege population on the richest SKU, frontline and shared workers on F-series, and everyone else in the middle. This mix may evolve over an agreement term, or you may choose to use a commercial lever to gain capability at the start but subsidised over the deployment and usage term?
Treat Azure consumption as a separate discipline
Licence optimisation and Azure optimisation are different jobs. Azure savings come from reservations and savings plans, rightsizing, storage tiering, orphaned resources and a FinOps rhythm that has an owner. Do the Azure related review and optimisation ongoing as its real cashflow and OPEX impact in real time - but definitely do this before any MACC commitment is set or you're considering changing MSP provider, or you will commit to a number built on today's inefficiency. You can still optimise post new agreement, but the consequences for you and Microsoft could be significant in terms of flexibility, tracking against consumption plans, resourcing and investments or leaving money on the table if not understood, planned and ideally rightsized before signing.
Convert findings into negotiation leverage
Optimisation work has a second payoff. Every credible usage insight becomes a position you can hold in a renewal conversation: a defensible forward forecast, a willingness to move volume, a clear view of what you would drop. You may be very open to the "step-up" commitment at renewal being offered, but assessing its value comes from understanding the baseline and consequences of Day 2 after signing. Commercial terms (and often alignment of contractual concessions) are where the durable value sits - price protection, ramped commitments, flexibility to reduce, and clarity on how AI SKUs are counted mid-term and the flexibility of usage.
Model at least two credible scenarios before entering the room
Know your walk-away and your must-haves separately
Agree internal governance so late scope creep does not reset your leverage, but may be something you can take advantage of for mutual benefit.
Time the work to start 9-12 months before renewal, not 9 weeks
What good looks like afterwards
A licensing position you can explain to a CFO and the wider leaders in one page: what you own, why, what it costs per user, what changes at renewal, and which levers you still hold. Also, having records of why decisions were made from prior renewals is part of the planning for the next one as things can change post signing that may look odd but can be explained. That clarity, more than any single discount, is what keeps cost under control across the term.