In 2022, Microsoft will be rolling out what it's calling the New Commerce Experience (NCE) for software licensing. Completely revamping the way organizations buy software. Details are still being worked out, but for now, any new purchases or renewals after March 1, 2022, must be in the NCE platform (with the new terms and pricing).
Annual Commitment terms will be enforced under NCE.
The biggest change with NCE is Microsoft will begin enforcing "Annual" subscription terms. To date, Microsoft has not been enforcing “Annual” terms. Giving you the flexibility to decrease seat counts without penalty. With NCE, to have the option to decrease seat counts mid-term, you must be on the “True Monthly” subscription.
There will be 3 subscription options:
1) Annual (paid upfront)
|2) Annual (paid monthly)
|3) True Monthly (paid monthly)
"Annual" (whether paid upfront or monthly) means you commit to a full year of payments (12-months) without the ability to cancel (even if you don't need the license). If you would like the flexibility of a month-to-month plan, then you will need to choose the "True Monthly" subscription which adds a 20% cost premium IN ADDITION TO the price increases already coming in March 2022.
Our recommendation is to have a single anniversary date per SKU, this way seat quantity changes mid-term are pro-rated for the remainder of the term. For example, if you purchase 20 seats on June 1st, with an “Annual” commitment, and need to add an additional 5 seats in 3-months later, the 5 “additional seats” will be prorated for the remaining 9-months of the 12-month subscription. You will be able to increase seats but cannot decrease seat counts until annual renewal date.
Prorated refund for the first 72 hours only.
It’s also important to note the new cancellation policy. Microsoft will allow a prorated refund for new seats only within the first 72 hours of term. After 72 hours, you are committed to the full term of the agreement. No refunds on cancellations or downgrades will be given.
So, what's next?
Staying on top of subscription anniversaries and proper planning will be extremely important to minimize costs. As part of our Technology Roadmap and Planning process, we’ll guide you with the best strategy that continues to give you the most flexibility while keeping costs as low as possible.
Most likely, this will be a combination of pre-paid "Annual" and "True Monthly" subscriptions.
We do have a strategy to lock in current pricing for up to 36-months before the price increase (if done before March 1, 2022). Just reach out to our team and we can show you how to do this.
*** If you are not a current client of SCS, we may be able to help your organization prepare a strategy for these coming changes.
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