Microsoft Customer Agreement & New Commerce Experience

Microsoft have recently been working on a number of important licensing changes as customers transition from on-premise software to the cloud and you may have heard a lot of talk lately about their digital transformation with the new commerce experience.

Instead of buying through a variety of licensing programs, you will now be able to purchase through a single agreement called the Microsoft Customer Agreement. The goal here is to provide a consistent and simplified purchase experience, with greater choice in how and where you buy. Simplified, the Microsoft Customer Agreement is a streamlined way to buy.

You will now be able to accept one straightforward purchasing agreement that’s always up to date and doesn’t expire, simplifying the quoting and buying process meaning less administrative overhead with no lengthy paperwork required. Simply accept the Microsoft Customer Agreement and you’re ready to go.

So what’s changing?
Back in January 2020 Microsoft announced options for buying Azure services through the Microsoft Customer Agreement. Now, beginning January 2022, they’re launching the next phase in which Azure will be joined by seat-based offers for Microsoft 365, Dynamics 365, Power Platform, and Windows 365 through the improved commerce experience.

This means disparate program-specific offers, including EA, Select, Open, Web Direct and CSP will move to three new motions:

Breadth: CSP (Cloud Solutions Provider – Stone)
Enterprise: EA (Enterprise Agreement – LSP)
Self-Service: Web Direct (Credit Card)
The current familiar transactional models — cancel anytime, add or reduce seats as required, pay per day, annual term only for seat-based offers in the CSP Program — will be changed. The goal here is to provide a consistent and simplified purchase experience, with greater options in how and where you buy. As of 1st March 2022 there will be price increases on Enterprise and SMB Microsoft 365 and Office 365 plans, this will impact commercial and government customers.

What’s a seat-based offer?
A seat-based offer is a subscription that’s offered “per seat” for one user, regardless of how many devices they’re using, for services offered in the cloud. Those offers through the Microsoft Customer Agreement include:

Microsoft 365: A solution that enhances productivity and drives innovation to connect and empower every employee, from the office to the frontline worker.
Windows 365: A complete software-as-a-service (SaaS) solution that streams a personalised, secure, and scalable Windows experience to any device.
Dynamics 365: A portfolio of intelligent business applications that empowers everyone to deliver operational excellence and create more engaging customer experiences.
Power Platform: A collection of products that help you build end-to-end business solutions that accelerate business.
What does all of this mean for you?
With these changes, Microsoft can introduce some popular capabilities, offer types from other licensing programs, and deliver an end-to-end set of features, completing the suite of Microsoft cloud in new commerce. It will also enable you to buy a wider range of products with different terms to align with your business needs. From 1st March 2022 it will only be possible to purchase or renew licenses in NCE as legacy will be discontinued. You can now begin moving before that date allowing you to align your subscriptions and also access pricing advantages.

Breaking down your licensing term options
Short-term commitment for term flexibility — one-month commitment

Monthly subscriptions allowing flexibility (pricing at a premium over the annual option)
Pricing is locked for the month but can change at the monthly renewal point
24-hour cancellation window or at the end of the month
Upgrades are permitted mid-term for some products; downgrades are not permitted on any license until the end of the month
Quantity increases are possible, but no decreases during the month
Changes coincide when the license term ends.
Changes can be scheduled to apply at the end of the term.
Under new subscription terms, monthly commitment allows for month-on-month licence number flexibility
20% higher cost than annual commitments
Long-term commitment for price predictability — one-year or multi–year commitment

Stability in the price paid for the term of the contract (12 months or 36 months)
Annual subscriptions can be paid monthly or upfront.
There will be price advantages for annual agreements compared with monthly.
24-hour cancellation window or at term renewal at the end of the 12/36 month period.
Upgrades are permitted mid-term for some products; downgrades are not permitted on any license until the end of the term.
Quantity increases are possible, but no decreases during the term.
Changes will coincide with the end of the term of the license.
Changes can be scheduled to apply at the end of the term.
20% lower cost than monthly commitments
What are the benefits?
Transitioning to the new commerce experience positions you for future growth and gives you more and easier options for trying new products through free trials and add-ons. Though you can take a phased adoption approach, keep in mind that new subscription orders, offers, and renewals for seat-based offers in the CSP program will be exclusive to the new commerce experience beginning in March 2022—so it’s critical to plan accordingly.

The next release for new commerce includes several new features in CSP – scheduled for March 2022, including the following new offers and options for M365 (subject to change):

Feature enhancements for Windows 365 and three-year term offers
Hybrid use benefits (HUB), home use program (HUP)
Multi-geo add-ons for Microsoft 365
Adopting seat-based offers in new commerce early in this phased transition will simplify licensing and give you additional term options.

Upcoming timeline for NCE and points to know
January 2022 to March 2022: You can place orders in NCE for user-based programs and you can also transition your old licences to New Commerce. During this period you will still be able to place legacy orders however NCE will be the recommend route at this point.

March 2022 onwards: You will only be able to place user-based order in NCE. (new and renewal subscriptions will be in NCE).

Points to know

The current familiar transactional models are changing — cancel anytime, add or reduce seats as required, pay per day, annual term only for seat-based offers in the CSP Program will be changed.
Licensing changes will be available from January 2022 – make the move now to benefit from Microsoft’s pricing promotions.
Short term commitment – Monthly charged at a premium rate (e.g., much like adding data to a mobile phone contract) The Right choice for flexibility in transient workforce
Annual term commitment – Make the move! Gives you predictability on annual cost. These can still be paid for monthly. Designed for long term planning with flexible payment options.
Mid-term upgrades. You can always add more! New starter on seat-based licences can be added at any time. Change short term seat-based licences to the annual term. These will co terminate and benefit from any promotion that was in place at the start of an annual term.