Microsoft NCE changes

In November, it was revealed that Microsoft were imminently announcing their pricing structures for 2022. We now have more detail of how this affects you and the Microsoft licensing your organisation consumes. This document outlines the actions required to amend your Microsoft subscription in order to continue to use Microsoft products.

The background

Many of the Software as a Service (SaaS) companies that provide products to the market have a clear delineation between the service models they offer.

One option is in the form of flexible pay as you go models – Where the organisation pays monthly, usually in advance, and can choose to stop or start the subscription at any point. The service carries a price premium for the short-term nature of commitment.

Alternatively you have the option of annual subscription models –  Where a more attractive monthly price is offered for the service or product – but entails a longer fixed period. The licenses are locked into the monthly payments for the duration of the subscription, which is usually 12 months.

Microsoft have been operating the flexible monthly subscription service model for a range of their products including the Office suite for many years. They have now decided to modernise their subscription models in line with the industry norm, which is to offer longer term, fixed and flexible subscription at differing price points.

Microsoft’s announcement reads:

“The new commerce experience sets out the new buying motions for Microsoft cloud services. Adding to the recent changes to Open Program retirement and Modern Azure, NCE will now encompass Microsoft 365, Dynamics 365 and the Power Platform”.

This change has already begun to take place but the new licensing models known as NCE (New Commerce Experience) launches on January 1st 2022.


What will the implementation of the New Commerce Experience (NCE) mean for your business?

Firstly, the end users of Microsoft products within an organisation will see no changes.

Those responsible for provisioning Microsoft Licences from a Microsoft Partner (such as Vissensa) will need to elect which subscription model under NCE they wish to adopt.

The Annual Subscription: (commit Annually/pay monthly)

An annual commitment, with no early termination rights, paid monthly to the Microsoft Partner. The partner will purchase a set number of licences for the year for a fixed price that will last for the term of the subscription. An important change to note is that licences can be added at any time during the term of the subscription but cannot be reduced until the end of the current annual subscription period. This will look and feel considerably different to organisations who currently flex their user count and licencing on a regular basis. There are some mitigations to this effect that Vissensa offer further in this document.

The Flexible Subscription: (commit Monthly/pay monthly)

The flexible subscription will allow an organisation to continue to provision licenses on a month-by-month basis, committed 30 days in advance with the ability to flex these up or down each month as required. The price point for the licence is also flexible, subject to any adjustments Microsoft makes throughout the use of the licence.

Legacy licenses that do not select the annual subscription model will experience a noticeable increase in their per seat licence cost. New flexible model users will be subject to a premium price point for the licences reflecting the ability to flex the commitment at any time.

During the period 1st January to 31st March 2022, Microsoft have placed incentives in the subscription models to entice organisations to choose one of the options before the end date. Please contact Vissensa for details about these incentives.

Microsoft 365 Price Increase

In addition to the new subscription models, Microsoft have announced a general price increase for certain products (From March 1, 2022)

An increase of between 8 and 25% will occur for the following licences is anticipated:

Microsoft 365 Business Basic – 20%

Microsoft 365 Business Premium – 10%

Office 365 E1 – 25%

Office 365 E3 – 15%

Office 365 E5 – 8.5%

Microsoft 365 E3 – 12.5%

*Note all dates and pricing are still subject to change by Microsoft and are quoted from current Microsoft announcements to partners and should be used as guidance only.

Get a free Microsoft Licence use assessment from Vissensa – limit your exposure to these new license charges!

With Microsoft changing the way licences are priced based on the commitment organisations are willing to make, there is a real danger that operational budgets for licences will see a significant impact.

Evaluating the core licence count required and assessing the split between licences that are stable and are unlikely to change over the subscription period versus licences that are provisioned under the flexible model will be key in stabilising the effect of the price rises.

As a seasoned Microsoft partner, our Microsoft team can work with you to manage the cost-effective way to provision Microsoft Licences under the New Commerce Experience (NCE) subscription programme.

Call us today and book your NCE mitigation meeting.