A few years ago, Microsoft announced the New Commerce Experience (NCE) model for Cloud Solution Providers
How do the changes affect you in your contracts?
As you'll be aware, NCE for CSP began two years ago. Azure was the first offering introduced on the new commerce platform, followed by Azure Reserved Instances and, most recently, perpetual software offers.
With the next phase, Microsoft will add seat-based cloud offers.
NCE – in a nutshell
- The concept is to have a uniform pricing model and buying experience regardless of contract type (EA, CSP or direct) following criticism that it was “all over the place” before
- From Oct 2021 Microsoft Partners were able to sell subscription licences under this new program
- From March 2022 all new and renewing subscriptions will automatically adopt the new experience
- There is no significant operational change to Microsoft Partners, but the changes are likely to affect them commercially.
Old buying experience (pre-October 2021)
- Cloud Solution Providers buy a subscription on a 12-month term, which can be terminated early without penalty.
- The number of subscriptions purchased can be increased and decreased throughout the term, so there’s no issue for the Microsoft Partners if a client wants to cancel, they can easily manoeuvre the licenses, buying more or less as required.
- Most Microsoft Partners enforce at least a 1-month commitment from the client. They may also require a minimum user count.
2 key challenges for Microsoft Partners
With the introduction of NCE, there are some contractual issues that Partners need to be aware of.
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Ensuring you lock in 12-month terms
Previously your customer could have the luxury of 30 or 60 day rolling terms.
This is no longer allowed under the NCE terms and you mist lock in your customers for 12 month terms.
We recommend looking at automatic renewal terms with price increase mechanism - we can help you with this particular set of terms now needed.
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Risk of insolvency of your customers
We hear this all the time from the community - the risk on partners now to ensure they pay their distributors or Microsoft directly for all licence costs even when the customer fails to pay you.
How do you manage this? You will need to establish a new process and adjust your contracts. You can Contact Law 365 for assistance with this.
Questions?
Microsoft has provided recommended steps and self-help articles for incentive-related questions on the Partner Center home page. Type “incentives” in the search bar. You can also create a support request directly in Partner Center.
And of course, Law 365 is here to help you navigate these changes and amend your contracts. Contact us
Common questions Microsoft Partners have been asking us on NCE and CSP:
