UPDATED: March 18, 2022
Microsoft recently announced they have reimagined the way commercial customers will transact with them. Their latest initiative is referred to as the New Commerce Experience, or NCE. Their goal is to simplify the licensing process and improve the purchasing experience for Microsoft customers.
NCE is Microsoft’s vision to unify cloud licensing, known as CSP, with their other software products and industry standards. CSP is their primary channel for selling Microsoft solutions like traditional desktop (Microsoft 365) and server licensing (Azure) to small and medium-sized businesses.
NCE will give customers ways to purchase licenses offering monthly, annual, and three-year subscription plans. These longer-term plans provide price predictability, in contrast to monthly licensing that will come at a premium price and without price protection. Here is a high-level breakdown of NCE and what we know so far:
Note: Current Microsoft licensing has always had an annual renewal date but had no real financial implications until now.
It’s important to point out that Microsoft's NCE only applies to commercial customers. Education, nonprofit, or government entities are excluded from NCE.
Microsoft's NCE initiative goes into effect on January 1, 2022, and gives businesses a few options to purchase and manage Microsoft 365 licensing. We have reviewed Microsoft's NCE options and offer the following recommendations for your business to consider ahead of your 2022 renewal date:
This option offers month-to-month billing with only a 1-month license term for all your Microsoft 365 licensing. Monthly licensing will cost an additional 20% compared to the other options. If your business’s employee count is highly variable or your business might need to protect budget flexibility, the 20% premium cost might be a good option.
The annual option allows you to renew your Microsoft licensing annually and commit to a single, minimum total cost per year for Microsoft 365 licensing. For any new hires or licensing upgrades, those activities are permitted in the annual model. However, the annual plan does not allow you to decrease your Microsoft 365 licensing agreement cost within each annual term.
A 3-year licensing commitment option is new and now available for Dynamics solutions. Your business will be able to commit to a three-year term and pay either monthly, annually, or full-term. If you are running a mature business that will have modest employment growth over the coming three years, the 3-year commitment provides price protection in a world where price stability could be an attractive option. As this option and Microsoft NCE are relatively new, Systems Engineering is not recommending the 3-year commitment to clients at this time.
For help navigating licensing purchases or renewals under Microsoft's new NCE program, contact Systems Engineering at info@systemsengineering.com or 866.624.6737. For our Microsoft 365 CSP customers, please work closely with your Account Manager.
