Changes are coming soon to the Cloud Solution Provider program, according to a recent announcement from Microsoft.
Most of Microsoft’s business-oriented products and services, including the widely used Microsoft 365 suite that includes Word, Excel, Teams, Outlook, and dozens of other apps you may be using every day are being affected, so it’s time to share a little more about what you can expect moving forward.
The term you might come across that describes these changes is the Microsoft New Commerce Experience. Most of the changes within it are technical and behind the scenes, things that your IT service provider will handle for you. But there are a few changes you should know about, including some exciting new features and efficiencies — along with some potential changes to how billing and contracts work.
Here’s everything you need to know as a business leader about Microsoft’s New Commerce Experience — plus a timeline for when the changes will take effect.
What Is the Microsoft New Commerce Experience?
The Microsoft New Commerce Experience is Microsoft’s latest initiative to simplify and streamline its business services offerings. If you’ve worked with Microsoft licenses before, you know that they can be complex and multi-layered, both from an end user perspective and from a solutions provider or partner perspective.
Under the Microsoft New Commerce Experience, a wide range of plans, each with its own distinct set of policies and procedures, will now be offered under similar licensing terms.
Is This a New Program?
The Microsoft New Commerce Experience isn’t brand-new. Some business products, including Azure plans, server software, Azure RI, and others moved to the New Commerce Experience starting in 2019.
What’s new for 2022 is the transition of other much more broadly used software into the Microsoft New Commerce Experience.
Microsoft 365, Dynamics 365, Power Platform, and Windows 365 in the Cloud Solution Provider Program are transitioning to the New Commerce Experience, which means a much wider set of customers and solutions providers now need to understand the new program and its guidelines.
What’s These Changes Mean to Businesses and End Users
Much of the change involved in this transition is technical, behind-the-scenes tweaking that end users won’t see or deal with on a day-to-day basis. However, a few of the changes could make a big difference for organizations using Microsoft 365 or other business solutions. Here’s what you need to know.
More Subscription Plan Options
First, the new commerce experience allows businesses to choose from three subscription offers:
- 1-month subscription (month-to-month)
- 12-month subscription
- 36-month subscription
Legacy plans allow for only one choice, a 12-month subscription.
This flexibility is helpful in several ways, though in other ways it’s less flexible than the old plan. The old 12-month subscription allowed companies to drop seats at any point, so it acted more like a monthly subscription in practical terms.
So, what do customers get when choosing each of the new subscription plans?
The 12- and 36-month plans work similarly. Businesses that choose those plans lock in their pricing for the length of the term, both for current and for additional seats. Pricing stays the same as it was under the legacy 12-month plan, and you still pay by the month if you so choose.
The one big change with these plans is that you’ll no longer be able to execute seat reductions at any point. Now you’ll need to do those at the end of your 12- or 36-month term. For businesses with high volatility or seasonal workforce expansion and contraction, this change is less than ideal.
What about the month-to-month plan? That plan offers everything that the other plans include, just with less commitment. You’ll be able to add or reduce seats at the end of every month, giving you much greater flexibility. However, that flexibility and lack of commitment comes at a cost: the 1-month plans are priced at a 20% premium over the others.
These costs and terms are consistent with other products, including the Microsoft Web Direct program, bringing greater transparency and simplicity to Microsoft products and plans.
Alongside updated subscription options come several price increases for 6 key Microsoft packages. These increases are as follows:
- From $5 to $6 per user for Microsoft 365 Business Basic
- From $20 to $22 per user for Microsoft 365 Business Premium
- From $8 to $10 per user for Office 365 E1
- From $20 to $23 per user for Office 365 E3
- From $35 to $38 per user for Office 365 E5
- From $32 to $36 per user for Microsoft 365 E3.
These price increases will take effect whether you choose a monthly (price increase + 20% premium for all licenses) or annual subscription. However, a 3-year term will lock in current pricing.
Better Provisioning and Subscription Management Capabilities
Along with these new plans, Microsoft is rolling out new behind-the-scenes tools and updates that make life easier for businesses and the providers that serve them. The company is enhancing provisioning capabilities so that companies (or their IT services partners) can more easily provision equipment without running into licensing snags.
There’s also improved subscription-management capabilities, with streamlined methods for adding seats and reassigning licenses. Along with this comes the ability to automate subscription changes at renewal and an easier price list.
Increased Choice and Flexibility
By better aligning these core product offerings with other products and services, Microsoft is making it easier for businesses to adopt new products and add-ons. Now, those additional services don’t require an entirely separate billing and payment system, because nearly everything available through Cloud Solutions Providers is now a part of the New Commerce Experience.
And while the premium-priced monthly term subscription may sting a little, businesses with wide variances in software needs within a calendar year will benefit from all this added streamlining and flexibility.
Windows 365 Now Available
Another strategic advantage for some businesses is the addition of Windows 365, now available on a monthly term (with annual pricing). Windows 365 is a cloud-based service for creating cloud-based Windows virtual machines, called Cloud PCs.
Again, while not every business has a need for Windows 365, the ones that do use this service will benefit from a streamlined commerce experience that makes this service available alongside other Microsoft offerings.
When Does the Microsoft New Commerce Experience Begin?
Microsoft expanded this new experience and model out to include Microsoft 365, Dynamics 365, Power Platform, and Windows 365 on January 10, 2022.
That means you already have access to the new model and can switch at any time. New customers likewise already have the opportunity to start their Microsoft relationship in the New Commerce Experience (though there’s a short window during which new customers can choose either experience).
If you’re a current Alltek client and we haven’t yet discussed what these changes will mean for your plan, we’ll be in touch soon. Or, if you’re itching to switch earlier than is required, feel free to get in touch with us first.
When Do Microsoft’s Legacy Commerce Plans End?
While Microsoft is positioning this change as a positive, forward-thinking one, we understand that any change can be disruptive. If you’re hoping to hold onto your current plan for a little longer, you may have a small window to do so depending on when you last renewed.
The final date for sales under the Legacy Commerce plans is March 10, 2022. No new sales under the legacy terms will be allowed beyond that date.
Businesses and organizations on an existing Legacy Commerce plan have a little longer to renew. Microsoft has set an end-of-renewal date of June 30, 2022.
The takeaway: if your plan is up for renewal before June 30, 2022, you have the option to renew your existing legacy contract or to move to the New Commerce Experience. If your renewal lands after that date, you’ll need to choose from the available options in the New Commerce Experience.
Other Key Takeaways
We’ve covered the basics of this transition, but there are a few more observations and takeaways you should know.
12- and 36-Month Customers Should Plan Carefully
The 12- and 36-month new commerce plans allow customers to lock in rates for those time periods and to add seats to their license at that locked-in rate.
However, these plans don’t allow customers to drop seats during the term at all. This change means that customers on these plans need to plan their seats carefully.
If there’s a likelihood of lowering headcount or fluctuating staffing levels, you might end up paying for seats you don’t need for quite a few months.
Subscriptions Don’t Transfer Between IT Providers
Another point worth noting is that customers on Microsoft New Commerce Experience plans cannot transfer those 12- or 36-month subscriptions to a new IT provider. Locking in on one of those plans essentially means committing to another 12 or 36 months with your current managed IT provider — or getting stuck with a costly “dead subscription” if you do make the switch.
If you’re not 100% satisfied with the service you’re getting from your current provider, then be ready to make the switch when your current license is up for renewal. We are ready to step in and help you navigate this kind of switch as well.
The New Commerce Experience Is Independent from Already-Announced Price Increases
Last, you may have heard about another recent Microsoft announcement, where the company explained that price increases were coming across the board to its commercial plans for products like Microsoft 365.
That is still happening, effective March 1, 2022. Unfortunately, those price increases will apply to the 12- and 36-month agreements. The month-to-month arrangement will be priced 20% higher.
There’s a bit of good news on this point, though: as an incentive to get companies moving toward New Commerce Experience plans, legacy customers can postpone the price increase and even lock in an additional 5% savings — but only if they move quickly. For more on this discount — or anything else about the New Commerce Experience — don’t hesitate to reach out to Alltek Services. We’re ready and well equipped to help you navigate this transition.