Starting this year, Microsoft will be fully implementing its New Commerce Experience (NCE). According to the company, “the goal was to give customers greater choice and flexibility in how and where they purchase, while giving our partners more opportunities to sell to a growing base of existing and new customers.”
Originally announced and introduced in 2019 as part of their Cloud Solution Provider (CSP) program, NCE is a move to simplify the purchasing process and provide a better experience for both customers and partners.
But what does that all mean? How will it affect your business operations going forward? In this article, we will cover everything you need to know, so you’ll have the answers to these questions and more.
NCE: What Is It?
The Microsoft NCE launched in January 2022 and intends to have everything moved over to the new program by March. The company is introducing new rules and procedures for how businesses and individuals will purchase licenses in the Microsoft ecosystem.
Instead of a program or service-specific subscription model as with the legacy CSP, NCE aims to roll them all into one through one platform. The change will affect the following seat-based subscriptions:
- Office 365 (E1, E2, and E3)
- Microsoft 365 Business Basic
- Microsoft 365 Business Premium
- Microsoft 365 E3
- Power Platform
- Additional add-ons
The Azure Plan was added back in 2019, and perpetual software was integrated into the NCE over 2020 and 2021. From now on, all licenses will fall under one contract that’s called the Microsoft Customer Agreement (MCA).
What Does the NCE Mean for the Future?
The biggest change coming is the price increase across some of the commercial Microsoft 365 and Office 365 products under the change. Here are the updated numbers that will go into effect on March 01, 2022:
- Microsoft 365 Business Basic: $5 → $6 per seat
- Microsoft 365 Business Premium: $20 → $22
- Office 365 E1: $8 → $10
- Office 365 E2: $20 → $23
- Office 365 E3: $35 → $38
- Microsoft 365 E3: $32 → $36
Every new subscription from March onward will have to fall under the NCE and MCA.
You might be wondering the cause of the price hike. Simply put, they’re raising the price — over ten years since the initial release of Office 365 — because they have added more value to each product over the years.
For example, since its debut, Microsoft 365 has been updated with great features and solutions such as OneDrive, Teams, and more. Not to mention the other tweaks and security updates that have been released over the past decade as well.
The Three New Motions Coming with the NCE
With the new rollout, Microsoft will be stepping away from its program-specific products. That includes things like Open, EA, CSP, Direct, and Web. Starting in March, there will be three new motions to facilitate the buying options and licensing. These are called:
- Breadth Motion
- Enterprise Motion
- Self-Service Motion
The breadth motion is a CSP suited for customers who have between 1 and 2,400 users. The enterprise motion will be the new enterprise agreement (EA) for customers who need more than 2,400 seats or have to deal with more corporate and complex requirements.
The self-service motion lets users manage and purchase their licenses via a web platform or through an assisted portal. It’s aimed to satisfy the needs of organizations and individuals alike.
Changes in Microsoft Terms Under the New Commerce Experience
A new ecosystem under the NCE means there will be some drastic changes ahead. As a customer, you need to know what’s coming so you can adapt to the evolving landscape.
Right now, the model works with options like cancel at any time, remove and add users as needed, and even pay per day. However, that transaction framework is coming to an end. Here are the new models customers will have in the future:
NCE Short-Term Agreement: 1-Month Commitment
Here are the highlights:
- 72-hour window to cancel after purchase
- No price lock
- 20% premium added to the monthly cost
- No pay per day is available
- Upgrades may be possible for some products
- Downgrades are not available on any license
- Possible to increase seats, but can never decrease them
The 1-month commitment comes at a premium (20% higher cost.) However, it grants you more flexibility.
NCE Long-Term Agreement: 12-Month and 36-Month Commitments
The long-term agreements offer price locks and other benefits as well. Here are the highlights of these commitments:
- 72-hour window to cancel after purchase or at renewal
- Price is locked in during the duration of your license
- Better pricing for longer-term commitments
- No pay per day is available but can be paid monthly or upfront
- Upgrades may be possible for some products
- Downgrades are not available on any license
- Possible to increase seats, but can never decrease them
These are the agreement offers that will be available to customers going forward.
Was Open Licensing Retired Because of NCE?
Yes, it’s true. OLPs were taken offline when the NCE officially launched in January 2022. Since then, customers haven’t been able to create or add to their existing OLP agreement.
Now you have to make these changes using the CSP for perpetual licenses. We can guess that other programs under volume licensing will meet the same fate in the end. It’s not entirely out of the question that these will also be entirely phased out at some point in time.
How Will the NCE Affect You? The Pros and Cons
Now that you understand what’s coming under the NCE let’s take a look at some of the pros and cons you need to consider so you can properly plan for these upcoming changes.
The Pros
The following are the pros we see under the NCE:
- Everything will now be under a single buying umbrella, taking away some of the confusion
- You can schedule upgrades and changes to the new SKUs
- Billing now falls in line with the calendar month
- The MCA governs every contract
- There will be an option to auto-renew
- You can lock in your price for up to three years
- Communication credits will be available across all programs
- Long-term agreements come with discounts
- EA’s multi-geo capabilities will be available across other areas
- It will be a lot easier to move from trial to full licenses
- Hybrid use benefit is now available across offerings
Microsoft’s overall goal is to make the entire purchasing and licensing process more streamlined and simpler for everyone involved.
The Cons
Now let’s look at some of the cons coming out of the NCE:
- Monthly subs are hit with a 20% upcharge to offset the flexibility
- Cancellation policy is more strict
- There will be a contract for longer-term agreements, meaning partners can be on the hook for missed payments
- You won’t be able to switch partners mid-term
Now that you know some of the pros and cons of the NCE, you’ll be able to move forward.
Important Dates for the NCE
Below, we will detail some of the important dates for the NCE rollout. However, it’s still an ongoing process at the time of writing, and things are subject to change.
- Jan. 1st, 2022: NCE is available for purchase
- Feb. 28th, 2022: No new purchases will be made through legacy CSP
- Mar. 1st, 2022: NCE becomes the only way to buy new licenses; new pricing model goes into effect
If you’re still relying on the legacy CSP after March 1st, you will need to convert to the new ecosystem when it’s time to pay. It’s also possible some of the plans you’re using won’t be available anymore.
What Should You Do Now?
While this will be a drastic change, it will be a necessary one. You should speak with your managed services provider before these changes are fully implemented to avoid the new price increase and also get to choose which commitment terms work best for you and your company.
It’s a great opportunity to take a look at your current licenses and make sure you aren’t paying for ones you don’t need or are forking over dollars for features and services you aren’t using.
On the other hand, it might be time for an upgrade. The right partner will be able to help you identify these areas where you can see improvements, such as gaining additional cybersecurity features. Remember, you won’t be able to change your partner once your plan goes into effect, so choose wisely.
Final Overview
In short, the New Commerce Experience is Microsoft’s answer to the confusing, multi-program buying choices they’ve used in the past. Some of these from the Volume Licensing Agreement include Open Business, Open Value, Select (MPSA), or Enterprise Agreements.
With the NCE, it will be easier for businesses, partners, and customers to better manage and pay for their licenses. It will also make it easier for people not already using Microsoft’s regular licensing solutions to come under the fold.
