Microsoft is making changes to its licensing model that will take effect from 2022. At the moment, Organizations can purchase Microsoft products directly from their partners via a variety of platforms such as the CSP program, which has its terms and conditions. This is about to change. To create consistency in policies, agreements, and procedures, Microsoft is moving to a single unified platform for purchasing these services in what they have branded as the New Commerce Experience (NCE). Let’s have a look at what this is and how it will affect the licensing model for Dynamics 365.
The NCE is a streamlined and simplified subscription model for Microsoft services. It offers a lot of flexibility in subscription according to the needs of your business. It was initially supposed to be launched in October 2021, but this has been postponed to January 2022 to provide ample time for customers and stakeholders to prepare. The changes in the NCE will affect subscription licensing for Microsoft 365, Windows 365, Power Platform, and of course Dynamics 365.
The NCE provides 3 new purchasing options depending on the intended duration for use.
Monthly Subscription
Monthly subscriptions allow the customer to add, reduce, or cancel seats for each month. The customer is required to commit each month. A 20% premium will be incurred on subscription costs since it offers flexibility to be canceled with only a 30-day notice. The monthly subscription allows customers to adjust the number of seats depending on the business’ needs.
However, it does not protect the customer from price increases. Microsoft will determine all the price changes and the customer will have to incur this.
As part of the launch for this NCE, Microsoft will offer a 20% discount on the monthly price from 1st January to 30th June 2022.
- 12-month subscription
This option allows customers to make a 12-month commitment, offering price protection from cost increases during this period. With pro-rated billing, the subscription can be canceled only after 72 hours and not after. Otherwise, subscriptions can only be terminated after the 12 month period. You can also increase the number of user subscriptions (seats) with pro-rated billing only.
To promote the NCE, Microsoft will offer a 5% discount for this subscription plan from 1st January to 31st March 2022. This could be extended to 30th June 2022, but it is yet to be confirmed.
- 36-month subscription
This option allows customers to make a 36-month commitment while being protected from cost increases during this period. With pro-rated billing, the subscription can be canceled only after 72 hours and not after. Otherwise, subscriptions can only be terminated after the 36-month period. You can also increase the number of user subscriptions (seats) with pro-rated billing only.
Some customers currently have an active Dynamics 365 subscription. How do the proposed changes affect them?
What does this mean for currently active subscriptions?
Despite the NCE being launched in January 2022, it won’t be mandatory until 30th June 2022 for active subscriptions. Customers currently having active subscriptions can join the NCE any time before the 30th of June, 2022. However, Microsoft will restrict any new subscriptions from 10th March 2022 and any renewals after 30th June 2022 to be made only via the NCE. If a customer has a license that is due for renewal after June 30, it will be maintained as it is until the time of renewal.
To which customers will this new model apply?
This model is currently applicable to commercial pricing. There are no announcements concerning academic, non-profit, or government models. However, they are expected to onboard at some point in the future.
The NCE licensing model is meant to make purchases of Microsoft’s Power Platform and Dynamics 365 products more streamlined enhancing the onboarding experience.