Microsoft NCE: The Good, the Bad and the Reality
In October 2021, Microsoft announced that they are streamlining their cloud product portfolio by introducing the ability to purchase seat-based or license-based offers such as Microsoft 365, Dynamics 365, Power Platform and Windows 365 in the New Commerce Experience (NCE) platform.
Microsoft NCE was designed as the new commerce experience to simplify and streamline how customers buy from Microsoft and to offer them more options for tailoring these purchases to their business needs and goals. This will also make the buying experience much more consistent across the Microsoft product ecosystem however you choose to buy.
SkyTerra, a Microsoft Tier 1 Cloud Solution Provider (CSP), has been strategically planning since early November 2021 for this major change and has been actively migrating clients since early February 2022.
While the NCE platform appears to be shiny and new, there’s nothing new about it. If you have an Azure plan subscription, buy perpetual software, server software or Azure Reserved Instances (RI’s) you are already using the NCE platform. SkyTerra migrated our clients from the old CSP Azure Consumption to Azure plan in the NCE platform in early 2020. That migration was seamless, and our clients had no negative impacts. It seems that many of you didn’t even realize or notice that there was a switch.
This does not, however, mean that you can let your guard down. The migration of seat-based or license-based offers from legacy CSP to NCE CSP is not as simple or seamless as the Azure migrations were.
There is good, there is bad and there is the reality of the long-term benefits and restrictions of the updated NCE platform when it comes to seat-based or license-based offers.
The Good
SkyTerra has worked with our clients to do a license review and clean up prior to migrating them to NCE. Many companies can use a validation of existing licenses that are being utilized and determine what features are required for their employees’ work roles. For example, are you paying for 35 users for Visio but only have five users assigned?
Our team has also worked with clients to better define their users into user types for more cost-effective licensing mapping options. Microsoft has added many licensing options over the last eight years, and this is a good opportunity to work with SkyTerra to find the right license for each of your company’s user types. With SkyTerra’s help, one of our clients was able to shift a significant number of frontline workers to a Microsoft F3 SKU, over an Office 365 E3 SKU. Between saving on their annual fees and avoiding headaches, that client scored big.
In NCE there are many ways to manage renewals of licenses. Renewals can be turned off completely or set to renew:
- Automatically with no changes
- Automatically with a change
Each subscription renewal can be set to the specific needs of your business. This customization can ensure that our clients do not lose access to the functionality of critical business operating systems.
Adding net new annual commitment license can be co-terminated with your other licenses to align your renewals to all happen at the same time. And pending renewal season will encourage annual license validations.
Look out for the free add-on features being added regularly to the NCE platform.
The Bad
For years, legacy CSP was an “outlier” and subscription terms were always visible but not enforced. This allowed for ultimate flexibility in seat increases and decreases every month. NCE does offer that flexibility with month-to-month terms, but it comes with a 20 percent higher price than annual-term subscriptions.
This is demonstrated by the Office 365 E3 subscription. If you want to remain with a monthly term invoiced monthly, the SKU will cost you $27.60 per user per month. If you commit to an annual term invoiced monthly, the Office 365 E3 SKU will cost you $23 per month. That’s $4.60 more per user, per month, to keep the flexibility.
Terms and cancellation policies are strictly enforced. An NCE subscription can be canceled only during the first 168 hours (seven days) of the subscription term. This was first rolled out as 72 hours (three days). But Microsoft came to their senses and increased the window. However, we also need to be aware that even though it allows you to cancel the term within 168 hours, you will get a prorated bill for the days that the subscription was in effect.
Here is a helpful tip: Provide your partner with a list of authorized license purchasers from your organization. Your partner will appreciate it, and so will you. You do not want people committing your company to an annual contract unless they understand how NCE restrictions work.
Microsoft loves to rebrand, and it can be confusing. You and your partner need to be up to date on what you are asking for and buying. A good partner can help and should know the difference between Power BI Premium Per User and Power BI P-Series. There is a cost difference of $7,980 per month. It would be a shame to have an annual commitment on the wrong subscription.
On an annual-term commitment, you cannot reduce seat counts regardless of the billing cycle (monthly or annually). If you commit to the annual term invoiced monthly for 50 seats of Office 365 E3, you will have to pay for the full 12 months, even if you reduce your head count.
But a clever way to think about it would be if you did a month-to-month commitment you would pay 20 percent higher prices. Unless you think your head count will be reduced by more than 20 percent annual commitment, it is still probably the better option.
You cannot downgrade a subscription in an annual term commitment, but you can upgrade. Let’s say you start with 100 seats of Microsoft Business Basics. You learn about the really slick security features that come with Microsoft Business Premium and want to switch. You can do that because you are upgrading your subscription. You could even do partial upgrades like keep 50 Basic and upgrade only 50 to Premium. Your only limitation is that you just cannot go down from Business Premium to Basic.
The Reality of Microsoft NCE
We are all here: Microsoft, clients and Microsoft partners. It is what it is, and the reality is not going to change.
The rules are the rules and they are strictly enforced. We can no longer use the gap in the system to get around them. Microsoft got together to align with their other commercial programs, but also the SaaS industry in general.
Clients cannot change partners midterm. You and the partner are obliged to the full term of a commitment unless canceled within the first 168 hours. February through April will now be Microsoft renewal season for many clients and partners.
Terms are strictly enforced. The month to month term is a full month. There is no prorated cost if you cancel mid-month.
We live in uncertain times. If you are unsure about the longevity of your business and believe you might need to stop using the subscription before the term ends for financial reasons, seasonality of the business or other reasons, you should purchase the monthly terms subscription option. The bills will keep coming for the partner and for the client. There are no exceptions to the rule, and you are committed to payment in full in any circumstance.
New product SKUs and features will only be added to the NCE CSP portal; nothing new will be added to legacy CSP. If you are still in legacy and want to add a subscription you have never previously purchased, it can only be added in NCE.
Pricing is the same for all partners or if you purchase directly from Microsoft. Think about your partner choice before you commit to a year-long higher priced SKU: There may be a better option. Does the partner know all the features of the SKU they are selling you? Is there a better way to plan your user types?
Scared about a yearlong commitment? Ask about a trial availability. The Power Platform tools are innovative, but are you ready to fully implement them? Try before you buy.
Have you made the switch to Microsoft NCE?
Change is hard. We understand that, but changes are coming, and we cannot stop them. If you have not started the process this is the timeline of what to expect and what will happen if you do not start planning now.
- Now: You can no longer purchase net new subscriptions outside of the Microsoft NCE platform
- July 11, 2022: This was the last day that license seat count changes in the legacy CSP portal could be made
- After June 30, 2022: Your existing legacy CSP subscriptions will not automatically renew, and your subscription will expire (that means your email will just stop working)
In Summary
No one is moving off Microsoft any time soon. Not us, and not you. They are the leading provider of business solutions (Office Suite), industry best for collaboration tools (Teams, SharePoint, OneDrive, Teams Voice, Viva, Power Platform), leading edge security solutions, and everything within this set of tools integrates.
If you have not talked to your SkyTerra Customer Success Manager, call them back or respond to their email. They have tried to reach you a few dozen times now. 😊
We can help you get through this. The good news is SkyTerra has identified the bugs and the workarounds, so this will not be as bad as you might think. Let us work together to get to the reality of Microsoft NCE.
