Understanding Microsoft’s New Commerce Experience

January 12, 2022
IT Microsoft

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There’s been a lot of buzz about Microsoft’s New Commerce Experience (NCE). What is it? Who does it impact? What do customers and partners need to know?

In 2019, Microsoft launched the New Commerce Experience (NCE) for Azure to simplify licensing management. This was done under the vendor’s Cloud Solution Provider (CSP) program to deliver a simplified engagement experience that would benefit both Microsoft’s partners and customers as they purchase Microsoft’s cloud solutions. NCE recently regained the spotlight when Microsoft announced it was expanding NCE to include Microsoft 365, Dynamics 365 and Power Platform.

This expanded New Commerce Experience will be generally available starting in January 2022 and then become the requirement from March 1, 2022 forward for all new and renewing subscriptions. In order to understand the impact of the changes that the NCE ushers in, it is worth taking a look back at the legacy Cloud Solution Provider (CSP) offering.

The Next Evolution in Microsoft’s CSP Program

The CSP Legacy offering was a flexible, convenient transactional licensing agreement for sub-500 seat customers. It did not have the same contractual requirements as an Enterprise Agreement, where all users have to be licensed with the same license ‘bundle’ and cannot reduce the license counts listed on the Customer Price Sheet. The CSP Legacy offering allowed customers to license their users on a monthly or annual basis for the same price, with the monthly option of allowing customers to add or drop subscriptions with a prorated refund.

Microsoft’s New Commerce Experience is intended to be a replacement for CSP Legacy licensing. While there will be a period of coexistence of CSP Legacy and NCE, with new orders having to be transacted through NCE only beginning March 2022, the forced retirement of the CSP Legacy licensing program is coming in February 2023.

What Changes under Microsoft’s New Commerce Experience?

Under the NCE, customer can choose from three different term commitments, which will be enforced by Microsoft:

  • Monthly – This gives customers the flexibility to increase and decrease the number of licenses every month, but now comes with a 20% premium.
  • Annual – This commits you to a number of licenses at a more attractive price for the annual term. However, if staff numbers change and drop below the baseline, you will still need to pay the baseline level. This can be paid upfront or monthly.
  • 3-Year – Similar to Annual, but with a 3-year commitment. This can be paid upfront, annually or monthly.

It is worth noting that customers can mix and match subscriptions, which is a useful option for organizations that have fluctuating staffing levels. For example, you could commit to an annual or 3-year term for “core” staff to lock in the best price, and then have a monthly commitment to license seasonal staff.

Key Dates to Know

Here are some key dates to be aware of as Microsoft rolls out its expanded New Commerce Experience:

  • January 2022 – The New Commerce Experience (NCE) will become available for Microsoft 365, Dynamics 365 and Power Platform. Microsoft will also offer two time-bound promotions to incentivize partners to migrate customers from CSP Legacy to NCE. These promos are: (1) 5% off annual subscriptions January through March 2022, and (2) Monthly subscriptions will be available at annual pricing from January through June 2022.
  • March 10, 2022 – All new subscriptions for Microsoft 365 and Dynamics 365 will be required to be procured through the NCE Platform.
  • July 1, 2022 – All renewal subscriptions for Microsoft 365 and Dynamics 365 will be required to be procured through the NCE Platform.
  • October 1, 2022 – Incentives only available for NCE transactions (through Microsoft Commerce Incentive program – MCI).
  • February 2023 – All remaining subscriptions on CSP Legacy must be moved to the NCE.

Who Will Be Affected by Microsoft’s New Commerce Experience?

If you have an Enterprise Agreement with Microsoft, you will not be affected by the New Commerce Experience. The NCE only applies to customers that purchase Microsoft’s cloud solutions through a partner or reseller affiliated with Microsoft Cloud Solutions Provider program.

However, even customers not affected by NCE would be wise to pay attention to how Microsoft’s approach to cloud selling is evolving. Microsoft has always relied heavily on partners to reach the broader market, and the importance of their role continues to grow as businesses rely on these partners and resellers to guide them through their digital transformation journey. Furthermore, the prevailing trend among Microsoft customers (of all sizes) is a demand for more flexible, responsive ways to transact with Microsoft – whether directly or indirectly. Microsoft’s CSP program, and now its New Commerce Experience, has an important role to play in meeting that demand.

Still have questions on Microsoft’s New Commerce Experience? NPI’s Microsoft sourcing specialists can help. Contact us here.