More profit, fewer expenses, and ease of use: this is Microsoft's commitment to the New Commerce Experience (NCE). But what does this mean for your business?
What is Microsoft NCE?
Microsoft's New Customer Experience (NCE) is the global hardware, software cloud services vendor's most modern buying platform. First launched in 2019, the company's goal was to increase businesses' flexibility and choice concerning how and where they purchase Microsoft licenses.
The NCE was meant to allow partner businesses to sell and resell licenses to new and existing customers, following the need for digital transformation among businesses. Businesses could scale their services, enhance their value, and reduce costs.
And now, in its third phase of transformation, Microsoft has gone live with its seal based licenses for buying licenses like:
- Microsoft 365
- Windows 365
- Dynamic 365
- Power Platform
These changes aim to reduce the long-term commitment costs and purchase process complexities to encourage a more unified experience for businesses. This change comes with new features intended to make their Cloud Solution Provider (CSP) solution an excellent alternative to the longstanding Enterprise Agreement (EA).
How NCE Changes Your Operations
Initially, Microsoft offered its customers an array of programmatic choices to purchase license subscriptions. For instance, customers could buy without partner support through Microsoft Director with a CSP partner.
But now, all purchases will be under the contract of the Microsoft Customer Agreement. With this new contract comes three motions and three subscriptions options to choose from depending on your business requirements, size, and scale.
Also, the NCE has changed how you purchase Microsoft licenses, primarily how you select your subscription type as well as add and remove licenses from the subscription. In essence, you can now choose between a monthly, annual, or tri-annual subscription.
Remember that NCE is still a commitment. You can add licenses during your subscription term, but you cannot remove them until your subscription is up for renewal.
However, Microsoft offers seasonal or business volume fluctuations as an easier subscription management option that blends long and short-term offers. In other words, if your business seats need to change per season, you can use the hybrid approach to purchase your licenses.
For instance, if you need 50 fixed seats in a year, you can lock in your price for these seats for 12 months. But suppose you need 20 more seats during a peak season; you'll be able to pay for them using the monthly subscription option– the hybrid model.
On March 1, 2022, Microsoft intends to increase the purchase price of licenses like Office 365 and Microsoft 365. The good news is that there is a 5% discount that is ongoing for annual Microsoft 365 commitments until the end of March 2022.
You will also have to renew your subscription through the NCE after March 1. The recommendation here is that you commit to a new subscription before the end of March so that you can benefit from the purchase discount.
But before making this shift, it is crucial to understand the different subscription options within the NCE and how your choice will affect your business, even though the NCE is currently affecting businesses on a subscription licensing model.
Start By Determining Your Ideal Buying Motion
Once the NCE was announced, it paved the way for the Breadth CSP motion to reach a more extensive customer base relative to the value of the buying options and the pricing for each subscription. As such, it has become the main purchase motion under the NCE.
This is where you should start your evaluation if you want to get the most value out of your licensing contracts. Another thing to consider is the number of seats your business offers customers.
For instance, if you have less than 50 seats, consider Microsoft Direct, but if you have more than 2400 seats or complex global licensing requirements, then EA is the better licensing fit for your business. If your seating ranges between 0 and 2400, CSP through a partner is ideal.
Next, Determine Your Preferred Subscription Type
As mentioned, the NCE comes with monthly, annual, and tri-annual subscription options. Once you select one of these models, you have 72 hours to adjust or cancel the subscription. After that, you have to remain committed to the subscription until the purchase period is over.
This means waiting 36 months before changing from the tri-annual subscription, for instance, which will be in full effect in March 2022. Regardless of the subscription model you choose, you cannot reduce the number of seats you have unless it is within the 72 hour grace period for cancelation or adjustment.
Knowing that this is what you should expect from each subscription model:
- Monthly Subscription
Payment for this model is made every month, but it has a 20% increase in charge compared to the annual subscription. The advantage of this model is that it is flexible since you can adjust your seats depending on your needs every month.
- Annual Subscription
This is a commitment to remain on the same subscription for 12 months, but you have the option of making payments monthly or annually. Once you choose this option, you are locked to it until 12 months are over. As such, the most significant benefit of this model is that you will remain protected from any price increment within the period.
- Tri-Annual Subscription
This 36-month commitment plan is similar to the annual subscription in that you can pay for it monthly or annually. You will also be protected from any price increments for the 36 months you are committed to this model.
How Can You Prepare?
- Open your license to CSP migration by shifting your sales to CSP, primarily with cloud subscriptions
- Start to familiarize yourself with the CSP offer under the NCE
- Work with your partners to ensure you fully grasp the changes and how they impact your business
- Prepare how you can capitalize on the opportunities of the seat based offers and leverage the incentive structure and the tools provided by the new model
This is also an excellent time to audit your licenses and determine whether you need them and the features they provide. Need more insight? Schedule an assessment today!
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