It’s Time – Microsoft New Commerce Experience (NCE)

Microsoft’s long awaited New Commerce Experience transition is finally upon us, so it’s time to ensure you really understand the impact. This is the largest and most significant change to the Microsoft Cloud Solution Provider (CSP) program to date with the announcement of adding seat-based products to the New Commerce Experience (NCE).

How did we get here?

The current Microsoft licensing experience includes an overabundant suite of choices including Volume License Agreement options such as Enterprise Agreement (EA), MPSA and Open Value.  Alternatively, customers can purchase through Microsoft Direct with no partner support, or through a Cloud Solution Provider (CSP) partner to receive value-added support.  Each of these purchasing paths include their own set of terms, conditions, and complexities.

In 2019, Azure Plan became the first subscription category to move from Legacy CSP into the New Commerce Experience (NCE).  Then, in 2020 and 2021, Microsoft began including perpetual software into NCE.  The latest announcement from Microsoft rounds out the NCE portfolio by adding in the per-user/seat-based subscription licenses into the buying program, such as:

• Microsoft 365
• Dynamics 365
• Power Platform

The New Commerce Experience:

Microsoft’s objective is to simplify the buying experience for their customers.  Moving forward, under the New Commerce Experience (NCE), all buying options will be governed by one contract: the Microsoft Customer Agreement.  The size, scale, and support requirements of your organization will determine which option is the best fit for you as the customer.

NCE Buying Options:

• Breadth Motion – Cloud Solution Provider (CSP) through a Partner
• Enterprise Motion – Enterprise Agreement
• Self-Service Motion – Web Direct

(Source: Microsoft/Arrow Electronics)

The Breadth (CSP) motion is now the foundational purchasing path under New Commerce Experience because the NCE announcement has created a much larger customer base.  Any organization looking for the most value out of their Microsoft licensing contracts should start by fully evaluating the Breadth (CSP) buying motion. 

Organizations above 2400 seats might also consider the Microsoft-led Enterprise Motion (EA), and organizations below 50 seats might also consider the Microsoft-led Self-Service Motion (Microsoft Direct).   

NCE New Term Offers:

Microsoft has always had an anniversary date for your license subscriptions in the background, but never enforced the subscription expiration dates. Therefore, customers were able to add, change and delete subscriptions at any time.  Under NCE, customers still have the option to have similar flexibility, but it will come at a premium price. The two options for customer subscription terms are:

NCE Short-Term Commitment ($$$):

• Term: Month to month
• Available at a premium for the flexibility included (20% price premium when compared to annual/multi-year pricing option)
• No price protection, month-to-month exchange rate
• Seven calendar day cancellation window for new purchases
• Quantity increases possible; no decreases during term (instead schedule decrease for end of term/end of month)
• Upgrades are permitted mid-term for some products; downgrades are not permitted on any license during term (instead schedule changes for end of term)

NCE Long-Term Commitment ($):

• Term: Annual or Multi-year for price predictability
• Available at a discounted price for your commitment to Microsoft (20% discount compared to monthly pricing)
• Price protection for committed term (annual or multi-year)
• Seven calendar day cancellation window or at term renewal (annually)
• Subscription upgrades are permitted mid-term for some products; downgrades are not permitted on any license during term (instead schedule changes for end of term)
• Quantity increases possible; no decreases during term (instead schedule changes for end of term)

Pros and Cons for you, the Customer:

Any major Microsoft change will take some time to learn the specifics of the new program.  Generally, most of these changes are beneficial, with a few exceptions.

Pros:

• Lock in your set price for up to 36 months for long term for predictable budgeting
• Billing is now aligned to the calendar month
• Easier adoption of new products and services with streamlines conversion of trial licenses to paid offers
• 1 Microsoft contract governing terms and conditions – Microsoft Customer Agreement
• Scheduling of subscription changes/upgrades to new SKU’s (which removes the need for admins to make changes on anniversary dates)

Cons:

• Monthly term now comes with a 20% premium
• Cancellation policy is now enforced for all term commitments.
• Customers can no longer switch licensing partners mid-term

Logically Recommendations:

• We recommend customers work with a partner to identify and use a blend of long-term and short-term commitments of NCE for their specific licensing needs.
• To avoid paying for unused seat counts, we recommend working with a partner to determine your core license counts for annual or multiyear terms to lock in your current price per user vs your floating monthly license counts, to take advantage of the flexibility it brings.              
• Ensure you are with a trusted licensing partner prior to committing to a license term since you can no longer switch partners mid-term.

Important NCE Dates:

All Legacy licensing that is expected to auto renew after July 11^th, must be converted to NCE before the subscription expiration date. The legacy licensing will not renew as legacy and will cease functioning after that expiration date. Be sure to work with your trusted licensing advisor regarding when your Microsoft subscription licenses are coming up on their anniversary date.

While many are used to a constantly changing Microsoft landscape, the impact of New Commerce Experience will require a very dedicated effort for both the customer and partner to navigate together.  It is important to have a trusted Microsoft partner in your corner helping your organization navigate these changes.  Additionally, as you cannot change partners during an NCE subscription term, it is equally as important to find a partner you trust to manage your Microsoft licensing subscriptions throughout the full licensing term.

Logically is the trusted Microsoft licensing advocate for your organizations across the US.  We are offering a complimentary Microsoft licensing analysis to help you fully understand the impact of these upcoming changes from Microsoft and choose the best path for your business.