Microsoft has announced some significant changes to how ordering and billing work for many of its leading cloud products.

The Microsoft new commerce experience (NCE) is a back-end billing and ordering mechanism that unifies how transacting with Microsoft cloud works. And all clients who transact through the Microsoft Cloud Solution Provider (CSP) program will be impacted by the new process. In this blog, we explain what the NCE is, the new terms to the CSP program, and what the changes to Microsoft billing and ordering mean for you.

MessageOps is here to help you navigate these changes and figure out the best plan for your business. Let’s start straight away by explaining what is going on.

What is the Microsoft new commerce experience?

Microsoft is making changes to its billing and ordering mechanisms, creating a universal back-end system for all transactions—across its entire technology stack and for all customers. It’s called the new commerce experience (NCE).

At this time, Microsoft is specifically bringing the billing mechanisms for seat-based platforms into the NCE. Essentially, everything will now sit in one place—one back-end platform for Microsoft to manage—including Microsoft 365, Azure, Dynamics 365, the Power Platform, and Windows 365.

Azure has been using the NCE platform since 2019, so the Microsoft new commerce experience is not exactly new. However, moving Microsoft seat-based offers to this system will have a greater impact on how, when, and what customers pay for Microsoft’s most popular business solutions.

In some ways, and for some customers, this is a very positive change. But for others, it’s arguably less so—some will pay more for the convenience of flexibility; for others, it means committing to longer terms with locked-in pricing; and for some, there will be no noticeable changes at all. Additionally, Microsoft will offer promotions and additional value-offers to varying degrees. So, let’s dive into the details to see what this really means.

Why the change? 

A few points about Microsoft billing and ordering are important here,  so here’s a quick look behind the scenes.

There are different ways of buying a license for, say, Microsoft  365:

  1. You, the customer, could go to Microsoft.com and buy a license directly from Microsoft.
  2. Then there are Cloud Solutions Providers (CSPs), like us, who have a direct partnership with Microsoft. CSPs provide licenses for their customers with added services—such as consulting, a licensing management platform, migration services, and/or ongoing support.
  3. Microsoft also sells seat-based offers via Enterprise Agreements (EAs). These are big contracts with large enterprise clients, where numerous commitments and thresholds are agreed upon and set in stone.

How Microsoft received and engaged in these different types of transactions was different, with each having its own system for billing and ordering. With NCE, Microsoft brings all these pieces together onto one platform. By making these processes more efficient for Microsoft, they can add this value back to all of us—customers and CSPs alike.

Things to Know

When does it start? 

Starting this month (January 2022), the NCE is available to transact through but is not yet a requirement. For new subscriptions, the NCE must be utilized by the partner starting in March of this year. And existing subscription renewals must be migrated to the NCE by July. Microsoft has set out a roadmap (you can read more about this here).

Our Inscape platform will be ready to support the NCE, and we are prepared for the changes to Microsoft billing. We will be able to continue to support you through this journey.

Learn how to simplify cost management and heighten visibility of your cloud environment with Inscape.

Term options

Microsoft customers now have three-term options for their subscriptions: MonthlyAnnual (12 months), or 36 months.

The upshot of this is that there’s more choice and more flexibility, but this comes at a cost.

If clients want the flexibility of signing up on a month-by-month basis, there’s a premium charge—a 20% price premium. This works very much like other subscription platforms in the market today, so Microsoft is in line with this approach.

To summarize, there are now three-term options clients will need to choose from by March for new subscriptions:

Monthly

  • Billing each month
  • Allows the number of licenses to change month-to-month
  • +20% price premium

Perk: Month-to-month is still the most flexible option. If you are looking for flexibility, and the ability to make changes to your licenses regularly, this is the best option for you.

12-month

  • Regular annual commitment
  • Billing options: monthly or upfront
  • Licensing quantity increases available during term
  • Licensing quantity decreases only available at renewal

Perk: With an annual commitment, there is no 20% premium charge, and your pricing is locked in for the year.

36 months

  • Three-year commitment
  • Enables a customer to lock-in pricing for a full 36 months
  • Billing options: monthly, annual, or upfront
  • Licensing quantity increases available during term
  • Licensing quantity decreases only available at renewal

Perk: Your price is locked in for three years—you pay nothing extra if there is a price increase by Microsoft during that time period.

Renewal

There are now more options for renewal and subscription management as well. Subscriptions used to auto-renew, and that was that. With these changes, Microsoft is also introducing a toggle on/off for subscription renewal—giving you more say in how your renewal process works.

Clients with existing subscriptions will have until July of this year to select a term for renewal.

Cancellation 

Subscriptions can now only be canceled within 72 hours of purchase, and prorated charges will incur for the period the subscription was active during the 72 hours.

Customer counts

One of the great virtues of cloud pricing structures was the flexibility to scale up or down when necessary. However, this will now become a premium feature.

Previously, subscriptions could be increased or decreased without penalty during the term, but now subscriptions can only be increased during a term. Any decreases can only take place at the time of renewal.

Most of our clients are currently on month-by-month subscriptions and are therefore able to make increases/decreases during the term. Under the new plan, they’ll still be able to increase on all term options, but decreases can only be done at the end of the term. Therefore, decreases for month-to-month clients would take effect at the end of the month.

However, it’s worth pointing out that many of our clients do not make significant changes over a twelve-month period. If this is you, then it’s highly likely that the 12-month subscription will suit you perfectly—and as we hinted earlier, you might not even notice any changes. This is something we can work out together. Make sure to contact with your account manager as soon as possible to start the process.

Promotions

The good news—Microsoft is expected to announce promotions soon for various licenses transacted in the NCE. MessageOps will help navigate the promotions to help our clients save as much money as possible.

Stay calm, keep innovating 

Microsoft continues to innovate by pushing the boundaries of what’s possible with digital technology and is helping lead the way in facilitating the hybrid workplace revolution. With constant innovation, we must expect change to follow—and perhaps a little disruption too. Anyone who works closely with Microsoft knows you need to go with the flow sometimes, and this is one of those occasions.

 

To learn more about the Microsoft new commerce experience and how changes to Microsoft billing and ordering will affect your subscription, get in contact with our team today.

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