Back to blog

Managing Charge-backs and True-ups for Enterprise Licence Agreements

Sep 2, 2016 by Emma Robinson

Last week we blogged about the challenges of IT charge-backs in a cloud-based, SaaS world, where the bill for services like Office 365 is typically dealt with monthly or quarterly. But there is another option we didn’t cover – what if you’re part of a larger enterprise and your licences are purchased as part of an Enterprise Licence Agreement?
If your organisation has at least 500 devices* that need Office 365 licences, it’s likely that an Enterprise Licence Agreement (EA) is the most cost-effective and convenient licensing model for you. This involves purchasing licences as part of a three-year agreement, which means that you are able to lock in better pricing up front, and that all purchases are made under a single agreement, streamlining your procurement process. During this agreement, you are able to increase and decrease licences depending on your needs, but without having to go through separate, incremental transactions each time. As part of the terms, you will also go through an annual ‘true-up’ process where you are required to revisit your EA and adjust it to reflect any increases in usage over the past 12 months.
*This used to be 250 devices, but was increased from July 1, 2016.
The model is designed to provide organisations with a manageable solution that remains flexible and accommodating of changing needs – and it can also offer much better value due to high volume purchasing. The agreement also includes Software Assurance, meaning that you receive new updates and features automatically throughout the three years. You will also receive annual true-ups (where you compare your actual usage against your initial Software Licence Agreement) and review your needs for the coming year.
The Problem: IT Charge-backs
Alongside the benefits of choosing an EA for licensing, the one downside to this kind of agreement is that, despite being better value over time, it can be an extremely large upfront cost. There are a couple of different payment options available in order to spread this initial investment (deferred, ramped, equal monthly, or quarterly payments), but organisations are often prompted to pay the full, majority or annual amount up front, in order to secure a better price for licences. So that’s what many choose to do.
This means that the IT team either receives a hefty bill upfront covering an extensive period of time, or alternatively, has to deal with significant ongoing costs at the intervals they have chosen. Whichever payment option is chosen, the task remains the same – charging the service cost back to the department that uses it. This involves trying to breakdown the total cost and – to the best of the IT team’s abilities – review each department’s usage, and present them with a bill that accurately reflects their IT costs.
The Problem: Inventory
The true-up process requires you to take a full inventory of all licenced users, services, and equipment that has been added to your organisation during the 12 month period. Even if you find that there is no change, you will still need to submit an ‘Update Statement’ or ‘zero usage order’ to highlight that there have been no changes during this time.
Taking an accurate licence inventory for a true-up, or coordinating Office 365 licence charge-backs in a large, expansive organisation is no easy task. If you have a high volume of staff in a number of different offices and locations, creating a charge-back model that is as accurate and agile as your growing business can be a real challenge. The key to successfully allocating these costs, and streamlining the licencing process from negotiations to true-ups is through gaining full visibility into your licence usage. You need to know how the licences are being used, where they are being used, and especially whether they are being used.
Two Problems, One Solution:
No matter the size of your organisation, or the complexity of your licencing model, Cogmotive Reports collects data every day on your licences and usage in Office 365 so you get a full view of the licences you’re paying for, what you’re using, and help you manage your charge-back and true-up process quickly and effectively. Better information also means you can renegotiate the terms and requirements of your next EA with more accurate information on your organisation’s actual licensing and usage needs to save on what can be considerable upfront or annual costs.
Let’s look at how this information can help streamline your licence management and charge-back processes.
1. See how many licences are assigned.
The ‘Subscription Overview’ report will show you how many licences you have assigned, and how many unused licences you have remaining. You can use this information to monitor your licence pool, and base any capacity planning on actual usage information. You can also optimise your licence usage, by removing any excess or unused licences.
sub drill down
This report gives you an overview of all assigned and unassigned licences, which you can compare against your initial EA to identify any additional purchases that have occurred. By clicking on each licence, you are able to see the purchase date, and billing date, so if you’ve purchased additional licences, you can see precisely where and when these have been added to your agreement.
You can also review historical trends in licence consumption using the ‘Licence Usage Over Time’ report which will allow you to review your past usage, and better predict your needs for the future.
Just set the date range in the top right-hand corner and toggle the ‘ActiveUnits’, ‘WarningUnits’, and ‘ConsumedUnits’ on or off. ‘ActiveUnits’ are the total licences you have available, ‘ConsumedUnits’ shows the number of licences you have used, and ‘WarningUnits’ will show you when you are close to using your full quota of licences.
By monitoring ‘WarningUnits’ carefully, you will be able to get very close to your full quota without exceeding it. It is possible to use scheduled reports to alert you when you have gone over your quota, and will need to make a purchase for more licences. You can filter by specific subscriptions to search for the exact licence types you need to monitor.
Licence Usage
2. Breakdown licence usage 
The ‘Licence by User’ report will show you your licence usage broken down by a wide range of fields including: subscription type, department, country, office, and many more. The information is shown in a graph, and the full detail in the table below it. You can select which columns to show and reorder them to get the information you need (and in the right order). You can even segment your licence data by Cost Center (if you have a custom attribute set), to create a charge-back system that shows your actual licence allocation numbers by product that meets your specific charge-back requirements.
licence by user
Using this report, you can quickly and easily segment your users, and see each sub-set’s usage. Depending on whether your IT team, your Finance or Accounts team are in charge of reporting for billing purposes, you can either calculate the cost based on this report in the application, export the report as a PDF or CSV file, email the report to the right person directly from the application, set up the report the way you want it and schedule it to be emailed automatically to the right recipients weekly, monthly, or whenever they need it.
3. Generate custom-built reports to get exactly what you need
If you have a large multi-tenant enterprise, use a different charge-back mechanism to manage your IT costs, or just have specific needs and find that our built-in licence reports don’t give you exactly what you’re looking for, you can use the Custom Report Builder to generate your own bespoke report by selecting your fields and applying filters specific to your organisation’s needs. As you can see in the screenshot below, it is also possible to add in custom attributes, such as Cost Center in order to create a report that is completely tailored to your needs.
Custom Report1
If you plan to use the report regularly, you can build it once, save it, then schedule it to be generated and emailed regularly to yourself or other users in your organisation. Both the custom and built-in reports can be saved, scheduled, emailed and exported, so it’s up to you how you choose to configure them. You could even schedule a report to run every 12 months, just before the true-up deadline so you have the information ready for when the time comes. Many agreements have very specific submission dates for any inventories or true-up orders, so why not automate it, so you never forget?
4. Use our powerful new Licence Pivot Report
We have just released an exciting new feature which makes it possible to see vast amounts of data grouped together by different attributes simultaneously.
Sounds powerful? That’s because it is.
The Licence Pivot tool will enable you to break down large data sets in a way that has not previously been possible with Cogmotive Reports. IT charge-backs, true-ups, and any task that involves some form of complex data segmentation will be made even simpler.
Find out more about the new Licence Pivot Report here.
Not a Cogmotive Reports customer? You can take a free 14 day trial of the full reporting suite, and see what better Office 365 reporting can show you.
Cogmotive is the leading global provider of enterprise level reporting and analytics applications for Office 365. Find out more now.