Microsoft's New Commerce Experience & What It Means for Dynamics 365 CSP Licensing

Dynamics 365 NCE Licensing Changess

Microsoft has announced some changes to its Cloud Solution Provider (CSP) licensing program coming in 2022.

Many of our clients use CSP to transact and provision their licences for Dynamics 365, Microsoft 365 and Office 365 products via Preact, so in this post, we’ve outlined the main changes and important dates.

This information is based on the latest announcements released by Microsoft but is subject to change.

What is changing?

Microsoft is moving from a structure of multiple licence models across its products with program-specific offers to a New Commerce Experience (NCE) that provides flexibility to meet varying user needs. This will create a consistent set of policies, agreements and procedures across Microsoft's cloud products and purchase channels.

The New Commerce Experience will initially only apply to agreements for commercial customers. Not for Profit and Education channels are currently not in scope for this transition, but it is expected these will be onboarded to NCE at some future point.

Under a global Microsoft Customer Agreement, NCE covers transactions for self-service (web direct), enterprise and CSP. As a result, all IT providers globally must transition their CSP billing of client licences to the New Commerce Experience.

The CSP transactional model will change within the New Commerce Experience. This includes:

  • A standardised cancellation policy aligns with existing non-CSP Microsoft licensing programs and subscription models, including Azure.
  • The new one-month subscription term allows seat numbers to be decreased month to month. This also allows licences to be cancelled in any month with no further financial commitment.
  • Flexibility to pre-schedule subscription changes before the renewal date. This includes scheduling changes to renew at a higher or lower SKU count.
  • New option to lock in licensing rates by committing to a 36-month term.

These changes will cause some concern, but our consultants and licensing specialists are on hand to assist with this transition. They will walk you through the changes and explain what the NCE means for your existing subscription to Dynamics 365 and other Microsoft products and what options are available to ensure your business is on the most cost-effective licensing model.

If you currently transact licences with another Microsoft partner, we will help explain how this impacts your licensing and your options to transition to the New Commerce Experience.

When do these changes take effect?

The New Commerce Experience was planned to launch in October 2021, but Microsoft delayed this until January 2022 following partner feedback.

Once available, the NCE will run alongside the current CSP model until 30 June 2022; this has recently been extended from 28th February 2022. During this period, customers can continue to transact licences and renew their agreements on the same CSP terms.

Between its release in January 2022 and 30 June 2022, customers will be able to:

  • Cancel existing subscriptions and renew using the new NCE terms
  • Or renew subscriptions on the current CSP model

From 1st July 2022, all new subscriptions and CSP renewals will be on NCE terms.

A New Commerce Experience early adopter promotion will be available for orders placed between January and June 2022 that will offer a saving on monthly and annual term orders.

36-month terms will not immediately be available in January; these are expected to be available from July 2022.

When will our licences be subject to these changes?

Up to 30 June 2022, agreements can be renewed on the existing CSP model.

June 2022 will be the last month when existing customers can reorder their subscription on the legacy CSP model and retain the current billing terms for Dynamics 365, Microsoft 365, Office 365 and the Power Platform.

How is Microsoft’s CSP cancellation policy changing?

For the annual and new 36-month agreement options, after an initial 72-hour cancellation window (based on UTC zone), all cancellations will be billed for the entire remaining term. Cancellations will not include a pro-rata refund for the unelapsed time outside this cancellation window.

Additional licences can be added during these agreement terms, but seat reductions can only be made at the end of the respective periods. The updated policy will not allow licence volumes to be reduced mid-term.

When an organisation is transacting licences through NCE, billing will not be transferable to another partner until the expiry of this agreement.

How can we decrease seat numbers month-on-month?

Within the New Commerce Experience, Microsoft is introducing a one-month subscription term which enables the number of licences to be reduced or increased in any month.

Compared to annual or 36-month agreements, the one-month term will only lock prices in for one month. Also, these licence prices will be transacted at a 20% higher rate.

Can seats be held on a combination of 1-month, annual and 36-month terms?

Yes, within the NCE, Microsoft allows customers to blend and combine licences across these terms. This provides flexibility to support permanent and seasonal worker scenarios and gives greater control if an organisation wants to reserve a portion of its licences which could be reduced or cancelled during any month.

For example, an organisation may elect to hold 85% of its Dynamics 365 licences on a 12-month agreement. The remaining 15% of seats could be held on a one-month term, allowing the overall seat count to be decreased within this threshold if required.

NCE Subscription Terms in Summary

Blend and combine subscription terms for Dynamics 365, Power Platform, Microsoft 365 and Office 365 licences.

Monthly Subscription

Flexibility to decrease licences in any month at a price premium

Change licence seats up and down month-to-month

Cancel in any month with no additional financial cost

Prices locked in for 1 month

Cancellation after 72 hours will be billed for the full month term

20% higher price compared to the annual subscription

Annual Subscription

Fix licence prices for 12 months and reduce user count at the end of term, if required

Increase user count at any time

Reduce licences at the end of the annual term

Prices locked in for 12 months

Cancellation after 72 hours will be billed for the full 12 month term

3 Year Subscription

Remove pricing uncertainty by locking in licence prices for 3 years

Increase user count at any time

Reduce licences at the end of the 3 year term

Prices locked in for 3 years

Cancellation after 72 hours will be billed for the full 36 month term

Available from mid-2022

Questions about the new Microsoft licensing?

Contact us with your questions about Microsoft's New Commerce Experience and review your existing licences with the new NCE model.

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