Microsoft has recently announced a change in how customers purchase and manage their licenses through their Cloud Solution Provider (CSP) Program. This CSP plan is being replaced by a new program called the “New Commerce Experience."
CSP to NCE: Why the Change?
From the beginning of the launch in 2015 of the Microsoft CSP plan, many products have evolved. Over the last few years, Microsoft has been targeting the reduction of licensing costs and complexity.
In addition, Microsoft aims to provide flexibility to support a range of client purchasing scenarios. To achieve this, Microsoft launched the New Commerce Experience (NCE) for Microsoft Azure in 2019 – and in fall of 2021 expanded NCE to include Microsoft 365, Dynamics 365, Windows 365, and Power Platform for commercial seat-based offers.
The goal of introducing NCE is to enable customers to broaden their choices and buy more easily, while optimizing costs. NCE licensing creates a standardization of offers and terms by reducing CSP’s pre-existing array of options. This NCE plan includes term subscriptions that reward loyalty and commitment to Microsoft.
Who will be affected?
The NCE plan is directed at commercial businesses only. Government and non-profit organizations will not be affected by this plan.
What is the NCE subscription?
With this new platform, Microsoft will be adding guidelines for how users can add and remove licenses to a subscription. This updated process goes into effect on March 1, 2022, and the details you need to know are outlined below:
There will be 3 subscription lengths: Monthly, Annual, and Tri Annual.
Monthly Subscription - This option allows for the most flexibility > The change in NCE will enact a 20% increase to current subscriptions under the CSP plan. > Upgrades are available for mid-level products, while there are no downgrades permitted > Billing will be expected upfront on the first of every month
Annual – This subscription offers the same costs as existing CSP pricing > Upgrades available, downgrades not permitted > Billing options: monthly or annual
Tri Annual – (3-year plan) Same pricing as CSP > Upgrades available, downgrades not available > Billing options: monthly, annually, or 3-year upfront
Users who opt for the convenience of a monthly subscription will incur a 20% increase in pricing from the annual subscription price - this applies to all Microsoft CSP licensing. Users will still be able to add licenses during the term of a subscription, but will no longer be able to reduce the number of licenses during the term of a subscription.
Which Applications of Microsoft are Included with NCE?
Listed below are the seat-based subscriptions impacted by the changes:
While it is not directly tied to the new commerce experience, Microsoft will be increasing its pricing on average for each of its bundles by an average of 15%. The amount of increase will depend on your SKU and begins on March 1st 2022.
As a result, no matter what plan your company decides on with the NCE subscription (monthly, annually, tri annually), you will be paying more for Microsoft services after March 1st, 2022.
The chart below reflects the increase from each individual SKU.
Important Dates: When does NCE launch?
March 1st 2022 – From March 1st onward, all new and renewing subscriptions must be purchased through NCE (Legacy CSP customers will be able to finish their existing terms).
July 1st 2022 - Legacy CSP customers must renew to the NCE plan to continue subscriptions.
October 1st 2022 – All customers will have to purchase through NCE, partner incentives and rebates are removed.
For Legacy CSP Customers
For Legacy CSP customers, there are a few key dates to remember. All new subscriptions must be made on NCE after March 1st 2022.
However, the ability to renew existing subscriptions on the legacy CSP platform will continue through June 30th 2022, ending on July 1st 2022. Legacy subscriptions will remain in effect until each of the subscription term’s end.
Microsoft partner incentive rebates on legacy subscriptions will be removed in October 2022. After June, legacy customers will have to renew subscriptions in the New Commerce Experience to continue Microsoft services.
Can I Change an Annual Term Commitment Offer to a Monthly Commitment Offer?
The option to switch plans from annual to monthly is only available within 72 hours after placing an order for an annual subscription.
This would require you to cancel the annual commitment offer within 72 hours of placing the order to receive a pro-rated refund. You can then place the order for the Monthly commitment offer.
You cannot switch from an annual commitment offer to a monthly commitment offer outside of the initial 72 hours.
Who should be aware of this program?
The New Commerce Experience (NCE) will have an impact if you are:
A commercial business (schools and non-profits excluded)
Paying monthly to Microsoft (pay as you go plans included)
Using Microsoft on a seasonal basis or to support temporary work requirements
Monthly subscription pros and cons:
The NCE monthly plan STILL offers companies the most flexibility. This is especially true if your organization has a lot of turnover. By retaining this plan, you can re-evaluate your organizations need for Microsoft products every month.
You are able to upgrade or downgrade subscriptions during each month
With the monthly option, you are free to to ADD MORE and Decrease the amount of licenses each month
The flexibility of this term will come with a 20% increase to pricing.
Can I have one NCE SKU with multiple terms? (Hybrid)
Yes, you can enact a plan with two terms in the same offer. In a small-midsize business space, temporary employees are common over the course of the year.
For these customers, mixing annual and monthly agreements for permanent and temporary users may be the most cost effective and flexible solution.
For example, as a partner, you can elect to mix monthly, annual, or multi-year term expiration. This alternative route gives you maximum flexibility to choose the right term for your company.
Company A has 500 employees and purchases the Microsoft NCE Annual plan.
They order 500 licenses for the full year. Throughout the year, 80 employees leave the company, leaving Company A overpaying for these 80 unused licenses.
Company B has 500 employees also. However, they decide on using the NCE Annual plan for 400 users while using a NCE Monthly plan for 100 users.
Company B will pay 20% extra on the monthly price for these 100 users, but will save on the annual subscription costs of the departed employees.
NCE’s Cancellation Policy
The cancellation policies are slightly changing with the NCE plan. With the CSP plan, Microsoft allowed 30 days to use the services; and offered a full refund and a cancellation policy within the first 30 days of use.
Beginning March 1st, this cancellation period will change to a 3 day trial period to cancel, and a 24 hour period for a refund.
Q&A on Terms of NCE:
1: What seat-based subscriptions does NCE affect?
Microsoft 365, Dynamics 365, Power Platform, and Windows 365 offers, plus associated add-ons.
2: Will billing dates change?
Yes. The billing cycle will be updated to reflect a beginning-of-month to last day-of-month cycle.
3: Will the available subscription terms change?
Yes. As well as continuing with the 12-month commit term, Microsoft will be introducing 1-month and 3-year commitment terms for subscriptions.
1-month commit term (incurs 20% price uplift vs legacy)
1-year (12-months) commit term (same as legacy pricing)
3-year (36 months) commit term (currently Dynamics 365 subscriptions only - others expected March 2022)
4: Can I purchase the annual term and still pay monthly?
Yes. You can choose to commit to a 1-year or 3-year term and pay for subscriptions monthly. However, you will be unable to decrease seat count or subscription type each month during the commitment period. You can only do this at renewal.
5: Can I increase or decrease my seat count mid-term?
You CAN INCREASE your subscriptions seat count mid-term with immediate effect and the additional seats will be pro-rated to the original commit term end date.
You CANNOT DECREASE your subscriptions seat count mid-term. You will have to wait until subscription commit term renewal to reduce the seat count.
6: Can I upgrade or downgrade a subscription mid-term?
You CAN UPGRADE your subscription(s) mid-term (partial/all) with immediate effect and the upgraded subscription will be pro-rated to the original commit term end date.
You CANNOT DOWNGRADE your subscription(s) mid-term. You will need to wait until subscription commit term renewal to downgrade/change to a lesser subscription.
7: Are subscription seat adds pro-rated when adding mid-term?
Yes, you can increase your subscription(s) seat count mid-term and the additional seats will be pro-rated to the original commit term end date.
8: When will I have to transition to the Microsoft CSP New Commerce Experience model by?
Originally planned for March 10th 2022, Microsoft announced on November 12th 2021 that they will extend the period during which subscriptions can be renewed on the legacy CSP platform to June 30th 2022.
Short-term commitment for term flexibility: one-month commitment
Monthly subscriptions at a premium
No price protection, month-to-month exchange rate
72-hour cancellation window
Pay by day is unavailable, upgrades are permitted mid-term for some products, and downgrades are not permitted on any license
Quantity increases are possible, but no decreases during the term
Long-term commitment for price predictability: one-year or multi-year commitment
More stability in price for the term of the contract
Annual subscriptions can be paid either monthly or upfront
Price advantages for annual agreements
72-hour cancellation window or at-term renewal at the end of the year period
Upgrades are available mid-term for some products, downgrades are not permitted on any license
Quantity increases are possible, but no decreases during the term
Datalink Networks NCE Support
To many organizations, the switch from CSP to NCE and the price increase is a surprise; and NCE creates a decision to be made within the company.
Datalink Networks makes the NCE transition easy. We offer a free analysis on your Microsoft licensing plan through our health check. Our team of trusted professionals will find the most cost efficient and sustainable strategy to implement Microsoft's essential applications for your business.
We conduct thorough analysis and offers solutions to each organization struggling with this transition. Through our Microsoft 365 Health Check, Datalink Networks eliminates confusion and has saved its existing clients an average of $7,100 per check.
What our health check will do for you:
optimize your licensing
review your security settings
adjust administrative roles within the company
provide documentation and a full report of your MS stats and new plan