When Microsoft launched the new commerce experience (NCE) for Azure in the Cloud Solution Provider (CSP) program in November 2019, the goal was to give customers greater choice and flexibility in how and where they purchase. Now Microsoft is rolling out NCE for seat-based products across its four platforms, M365, Windows 365, Dynamics and Power suites.
How It Will Affect Your License Purchases?
NCE will impact the way Microsoft 365 licenses can be purchased. Microsoft intends to reduce complexity and provide a carrot in the shape of cost savings for customers that make long-term commitments, and a stick in the shape of price increases for customers who require flexibility and cannot commit to a long term.
The NCE programme introduces other features that make it more comparable with Microsoft’s Enterprise Agreement (EA). It puts direct and indirect Cloud Solution Partners (CSP) on a more equal footing to large Licensing Solution Partners (LSP) as the minimum license count for organisations increases from 500 to 2400.
- The minimum billing period for all Microsoft 365 licenses goes from daily to monthly, meaning regardless of the day of the month that licenses are added or removed from a tenant, the charge will be for the whole month instead of a proportion based on the number of days consumed.
- Two new price plans:
- Monthly Commitment Plan: for maximum flexibility and minimum commitment this plan allows customers to commit to licenses one month at a time, with the ability to cancel at any time. It does come with a price hike though and prices are expected to increase by 20% in June 2022.
- Annual Commitment Plan: this is the best value. If you can commit to a 12-month licence you’ll get a reduced annual price. Moving to NCE annual prices will avoid the 20% increase.
- The billing period for the NCE plans will align to the first to last day of any calendar month.
- Only these license SKUs are currently available on the monthly commitment plan:
- All license SKUs will be available on the annual commitment plan.
Incentives to Move to NCE
To encourage customers to migrate, Microsoft is offering the following time-sensitive promotions:
- Monthly Commitment Incentive: Licenses migrated to NCE monthly plan before the end of June 2022 will receive a discount meaning month-by-month pricing will remain unchanged until the end of June 2022. After that, the 20% price increase will apply to monthly licenses.
- Annual Commitment Incentive: Licenses migrated to NCE annual plan before the end of March will receive a discount of 5% for the next 12 months resulting in a real-terms price reduction for one year.
How IT Naturally is Supporting our customers
IT Naturally is a Microsoft CSP and in readiness for the move to NCE pricing is working closely with our customers. For all affected we are presenting the options, advising how to secure the best value, and agreeing on dates for when to migrate:
- Identifying which M365 licenses are available on annual and monthly plan/
- Identifying the minimum numbers of licenses that will be required for a year and planning to migrate those to the annual plan.
- Deciding when the remaining licenses will move onto the monthly plan. (Mixing and matching between annual and monthly plans to meet full license requirements is perfectly acceptable.)
- We are agreeing the timing of the migration and issuing new price quotes based on when the customers migrate.
- We are encouraging all customers to migrate as soon as possible to maximise benefits from price discounts. Part of agreeing on the timing involves ensuring that there will be no overlapping charges caused by the minimum billing period being increased to one month.
- We are also changing our terms and conditions on license orders and in some cases introducing Master Service Agreements to recognise the constraints now placed on CSPs with annual commit which we must pass on to our customers to ensure nobody is left out of pocket.
- We are migrating our own licenses to the NCE plan, in advance of customer licenses to prove the process, particularly to ensure there is no dual billing that would generate unnecessary costs.
These licensing changes are difficult to navigate. Let the experts at IT Naturally help you sail through the process. If you would like advice or guidance on how to migrate your Microsoft M365 licenses, don’t hesitate to get in touch.