Microsoft New Commerce Experience (NCE) FAQ
Q: Will the new commerce changes apply to all types of CSP partners?
A: Yes, all partner types in CSP (Indirect Provider, direct bill, indirect reseller) will be included in the new commerce experience.
Q: When will I be required to move existing subscriptions to new commerce?
A: Microsoft recognizes that CSP partners will need time to operationalize the provisioning, billing, and policy changes in new commerce and to migrate existing (legacy) subscriptions to the new commerce platform. A phased approach will be followed:
Phase 1 – March 10, 2022: Partners can no longer place new commercial subscription orders on the legacy platform.
Phase 2 – July 1, 2022: Partners can no longer renew legacy commercial subscriptions on the legacy platform. Please note that existing legacy subscriptions can remain in effect with the legacy billing date, pricing, and policies until they reach the end of the term, if the partner and customer so choose. But starting July 1, 2022, all legacy commercial subscriptions must be renewed on new commerce.
Q: Will I need to sign or accept any new or different agreements?
A: The Microsoft partner Agreement that partners accept to activate their CSP tenants will continue to be the standard agreement for partners. Customers will continue to accept the Microsoft Customer Agreement (MCA) that governs their purchases from CSP partners.
Q: Is Microsoft changing the focus on CSP with the new commerce experience?
A: No. We will continue to invest in the CSP program as one of our key sales motions for small and mid-sized businesses (SMB), as well as in Microsoft’s overall commerce experience, to provide the differentiated offers and capabilities partners need to grow their business?
Q: Will Microsoft automatically move all my subscriptions to the new commerce experience?
A: No, if partners wish to move to the new commerce experience, they will have to migrate existing subscriptions.
Q: Will all the offers in the existing CSP catalogue be available to sell in the new commerce experience catalogue?
A: With the October launch, only commercial offers are available for provisioning in new commerce. Government, education/academic, and charity/non-profit offers will be added to the new commerce catalogue in the future (date TBD).
Q: What products can be purchased under NCE for 3yr terms?
A: Currently only specific Dynamics 365 offers are available with three-year terms in new commerce (as is the case in legacy). In March 2022, the current plan is to offer three-year terms for M365 offers and possibly for other seat-based offer types.
Q: Will legacy and new commerce experiences coexist, and if so, for how long?
A: Legacy and new commerce offers will be available side by side for provisioning in CSP and Partner Centre for a period of time (the exact number of months is to be determined). We want partners to have ample opportunity to become accustomed to the new commerce features and functionalities, migrate legacy subscriptions to the new commerce experience, and adjust customer billing and accounting operations based on the standardized new commerce invoicing process and schedule. The formal announcement for sunsetting the legacy platform and offers will be announced at a later date.
SALES AND PROFITABILITY IN NEW COMMERCE
Q: How will the new commerce experience affect partner profitability?
A: The new commerce experience in CSP will help increase profitability for partners by providing a durable and scalable business model and improving operational efficiency in the CSP program. With the new cancellation policy and premium pricing for the new monthly term offers, the new commerce experience encourages customers to commit to long-term subscription ownership and leverage the CSP program benefits, including the partners’ bundling of Microsoft offers with their own solutions, IP, and value-added services. Partners will also be able to monetize the flexibility of the monthly subscription term, and to increase customer lifetime value with the ability to upgrade to Enterprise SKUs in the middle of the term (not enabled for Windows 365 offers). Finally, the new commerce experience will improve subscription-management capabilities, optimize offer ingestion, and increase accounting efficiency.
Q: What specific benefits will my company receive from this migration?
A: Some of the enhancements and benefits that partners and customers can take advantage of as a result of this transition:
- More flexibility in provisioning offers, such as a new monthly term that allows customers to cancel at the end of any month with no further payment obligation
- More customer billing options, such as annual billing for multi-year offers
- More options and flexibility in managing subscriptions (e.g., scheduling subscription changes such as SKU conversions at renewal, and the ability for the partner to suspend/resume subscriptions with no cancellation required)
- New subscription upgrade and seat assignment capabilities
Q: Which new capabilities and benefits will the new experience bring to customers?
A: In this release customers will get faster time to value with more efficient subscription management and offers to meet different customer’s needs. Customers will save time with automatic seat assignment for Enterprise level SKUs and trial auto-conversion (not enabled for Windows 365). New customers sensitive to cancellation flexibility will benefit from brand new monthly term offers that will allow to cancel a subscription in any month without penalty. All customers will have more billing options such as annual billing for multi-year term plans in addition to monthly and upfront billing and early payoff for an annual subscription. They will also be able to schedule trial conversion to a different seat count, billing, or term.
Q: With the new commerce experience for seat-based subscriptions, when a customer purchases an annual-term subscription from Partner A, are they allowed to move that subscription to Partner B within that year’s term? Or are they locked in with Partner A until the term ends at the end of the year?
A: No, moving subscriptions across partners is not a supported feature. Partners can cancel subscriptions but must adhere to the cancellation policies regarding their committed term. For example, if the customer purchases a subscription from Partner B after the first 72 hours of the term of the subscription purchased from Partner A, the Partner A will not be able to cancel that original subscription on behalf of the customer and there will not be any refund for the remainder of the annual term of the subscription with Partner A. In that case, it would be best for the customer to wait until the time of renewal of the Partner A subscription to purchase the same SKU from Partner B and then to not renew the subscription with Partner A.
Q: With an upgrade from E3 to E5, for example, how long does the customer have to move users to new SKU?
A: After an upgrade from E3 to E5 the customer might have more assigned seats than purchased seats for E3. There is no enforcement or duration within which the customer has to reassign licenses from E3 to E5, but they would get an alert message in M365 Admin Center saying that they are at risk of being non-compliant.
Q: Will I be able to sell Windows 365 as part of the new commerce experience in CSP?
A: Windows 365, announced in July 2021 and launched as a product in August 2021, is the world’s first cloud PC for every organization, securely streaming the Windows experience — including desktop, apps, processing power, storage, and more — to any customer device.1,2 The cloud PC experience can scale to fit customers’ needs and is easy to deploy without the need for VDI expertise.
Q: Does the new cancellation policy apply to all subscriptions in CSP?
A: No, it applies only to license-based/seat-based subscriptions such as M365, D365, and Windows 365, which are billed in advance. Azure subscriptions are billed based on consumption over the previous month, so cancellation would simply end consumption and therefore the billing.
Q: What are the refund policies for cancellation?
A: A partner can receive a prorated refund of the initial subscription payment of the term only within the first 72 hours after the order is placed or renewed. After 72 hours of the term, the subscription cannot be cancelled and payment for the remainder of the term must be made.
Q: Does the 72-hour window for cancellation and seat reduction in new commerce only apply to business days? For example, if I order a subscription on Friday, do I have until the following Wednesday to cancel? And does the cancellation window also exclude holidays?
A: The 72 hours at the beginning of each seat-based subscription term in new commerce, during which a partner can cancel the subscription or reduce seats on that subscription, includes all days of the week and does not exclude weekend days or holidays. So if a subscription is purchased on a Friday, the partner has until the following Monday to cancel or reduce seat counts. Note that the 72-hour cancellation and seat-reduction period begins at the time on the clock at which the subscription order or renewal is made.
Q: When I transition legacy annual-term customers to new annual or multi-year offers, how can I explain why the cancellation policy will be enforced?
A: The cancellation-policy enforcement in the new commerce experience is aligned with similar standard policies both within Microsoft and of competitors. In the new commerce experience, customers are rewarded with more favourable pricing for longer terms in which pricing is locked in for the entire term, as opposed to monthly term subscriptions that have a higher price at time of purchase and are subject to price increases month to month.
Q: When I suspend a customer’s subscription for non-payment or if the customer is temporarily unable to use the subscription due to business disruption, how do I resume the active subscription when the customer is paying again or their situation returns to normal?
A: To resume a subscription, you would simply need to go to the subscription account in your tenant and change the status from “Suspended” to “Active.” The customer’s access to the subscription would then be restored with no loss of data or user accounts. You can perform this resumption step at any time during the subscription term, unlike the legacy experience in which a suspended subscription automatically expired 90 days after suspension. Note, however, that unlike legacy, the billing for the subscription will continue during the period of suspension.
Q: To which new commerce offers should I transition my legacy subscription customers?
A: The transition to the new commerce experience is the time to assess each customer’s needs and develop a holistic transformation strategy, including an opportunity to increase seat counts, plan for upgrades, and upsell other solutions and value-added services.
- Customers with a stable or expanding workforce will be attracted to annual or multi-year term offers due to price predictability. Even with the enforcement of the new cancellation policy in the new commerce experience, those customers will be able to cancel a subscription within first 72 hours of each annual term.
- Customers with variability in workforce due to seasonality or business uncertainty will likely prefer monthly term offers that allow cancellation or seat reduction in any month.
Q: When all of the seat-based offers are added to new commerce, will I still be able to order subscriptions from the legacy system?
A: Yes, legacy and new commerce offer SKUs will exist side-by-side in the CSP subscription catalogue for a period of time (the exact number of months is to be determined). Any subscription order placed in the new commerce experience will be billed on the standard new commerce invoice schedule of the sixth to eighth day of every month, instead of the monthly billing date that the partner chose during enrolment.
Q: Can the customer combine annual and monthly terms – for example, if the customer had a core set of users on the annual term and more seasonal users on the monthly term?
A: Yes, the customer could have both a monthly term and an annual term subscription for the same seat-based offer at the same time with the appropriate number of seats in each term to accommodate its permanent and seasonal employees.
Q: Why do monthly term subscriptions cost more than annual-term ones in new commerce?
A: The new monthly term subscriptions in new commerce are billed by Microsoft at a 20% higher price than annual-term offers of the same type because they give the partner the ability to cancel on behalf of the customer at any time without incurring additional payments for the remainder of an annual term. The premium pricing is in line with standard practice in the Microsoft Web Direct program and in other industries – for example, an airline ticket with a higher price that’s refundable instead of a lower-priced non-refundable ticket.
Q: Can monthly term subscriptions be changed to annual term easily in new commerce? Some businesses need subscriptions or additional seats only during peak times of year, for example.
A: Yes, a customer’s subscription can be changed from monthly term to annual term in new commerce. The following month’s reconciliation file will include a credit for the prorated difference that is paid in advance (reflecting the 20% less expensive price for annual), and the annual term charge will be effective from the date the subscription term is changed.
Q: Can an Annual Term subscription be converted to Monthly term and Monthly to Annual?
A: Annual subscriptions cannot be converted to monthly. Also 3 years cannot be converted to monthly nor annual. It is allowed to convert monthly subscriptions to annual, also monthly and annual to 3 years. When a customer’s subscription is changed from monthly term to annual term, the following month’s reconciliation file will include a credit for the prorated difference that is paid in advance (reflecting the 20% less expensive price for annual), and the annual term charge will be effective from the date the subscription term is changed.
Q: Will a customer be able to increase or reduce seat counts on a subscription in the middle of the term in new commerce?
A: The seat count on a subscription can be increased during the middle of an annual term, with billing adjustments reflected on the next invoice and reconciliation file. But if more than 72 hours have elapsed since the subscription order was placed or renewed, the seat count cannot be decreased until next renewal of the subscription. This policy is in line with current market practices for per user subscription plans. For monthly term subscriptions, the seat count can be increased or decreased at any time. A seat-count decrease within the first 72 hours of a subscription term (after either initial purchase or renewal) can be made via self-serve in Partner Center or through the API.
Q: Can licenses be increased and decreased on demand?
A: Seat counts can be increased at any time during a subscription term in the new commerce. Reductions in seat counts can only be made during the first 72 hours after the initial order or renewal, or within the first 72 hours after an order
Q: What is the benefit of being able to purchase addons on their own?
A: The ability to purchase add-ons separately from base offers can be a benefit when the customer already has a prerequisite base offer (which can have been purchased from another partner or directly from Microsoft) and just needs the add-on from the specific partner. Note that in new commerce, it will be required that the customer has a prerequisite subscription in place in order for the partner to sell the add-on separately.