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Microsoft’s New Commerce Experience in Effect: 'It's All Manageable'

Changes to Office 365 and more are impacting how the channel sells Microsoft platforms.

Kelly Teal

January 11, 2022

4 Min Read
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Microsoft’s New Commerce Experience (NCE) has gone into full effect, officially in play since Jan. 1.

For the last few months, the company’s cloud service provider partners have been preparing customers for the changes to a per-seat model. Those changes apply to Microsoft 365, Dynamics 365, Windows 365 and Power Platform subscriptions. There are a lot of caveats, requirements and promotions, and some exceptions, tied to NCE. Cloud marketplace distributor Pax8 does a good job of explaining those here.

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Zix’s Justin Gilbert

Most notably, NCE shifts subscriptions to annual and 36-month terms. Month-to-month options now will cost a premium, “a 20% price uplift,” Justin Gilbert, senior director of channel marketing at security vendor Zix, which specializes in Microsoft technologies, told Channel Futures. (OpenText bought Zix late last year.)

Microsoft also will not allow users to move from higher-paid SKU to a lower-paid counterpart, as Pax8’s Kristen Fehrenbach, director of Microsoft go-to-market, wrote in November. Microsoft further is requiring that all licenses stay with the partner and provider from which the end user purchased, Fehrenbach noted.

And, Microsoft is tightening cancelation policies, too. Now, organizations only have 72 hours. After that, they must pay for the remainder of the subscription term.

“Partners need to be more diligent on ensuring the customer is prepared to commit to the full term of the subscription,” Ingram Micro Cloud’s Briana Lau wrote in a blog last October.

However, Microsoft is letting organizations sign up under the legacy platform — but only until March. Regardless, all the New Commerce Experience activity means “the partner’s going to need to make some fundamental changes to the way they have set up [the end user’s] license,” said Geoff Bibby, chief marketing officer at Zix.

‘Just an Initial Reaction’

That might sound frightening but maybe it’s not such a big deal.

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Abel Solutions’ David Hammond

“Although NCE and its price increases may initially cause such a response, it is just an initial reaction,” David Hammond, president of channel partner Abel Solutions told Channel Futures. “In most cases, Microsoft technologies affected by NCE support critical business functions and workloads, and business leaders generally understand switching to another provider is either not an option or would ultimately cause more issues – and cost) – than remaining with Microsoft.”

Zix’s Bibby agreed. Microsoft, he said, has not raised its prices in the last decade. Now, it’s just catching up. But the company also has added 1,400 different features to Office 365, which, Bibby said, “far and away, runs corporate America.” Partners and organizations will adjust to the new requirements, he added.

“It’s all manageable,” he said.

Abel Solutions, for its part, continues to educate its clients about New Commerce Experience pricing, Hammond said. And despite the higher monthly charges associated with NCE, some customers still might require that flexibility.

“We anticipate that some customers may choose to incorporate some monthly subscriptions into their approach,” Hammond said. “Primarily, this ‘hybrid’ approach may be useful for companies that have a sizable workforce that is variable or seasonal. In these cases, the additional cost of monthly subscriptions could be less than an annual commitment. In all cases, we will be performing a cost-benefit analysis with our customers to recommend the best option for their situation.”

Making Sense of the New Commerce Experience

For now, Abel Solutions is finding that, rather than fielding customer pushback, making sense of NCE is consuming much of its energy.

“We feel like our biggest challenge now is ‘demystifying’ NCE and its impacts to be able to counsel our customers appropriately,” Hammond said. “This is a challenge because the rollout of NCE continues to evolve, and there is no single right answer for every business.”

In terms of impact on channel partners, Pax8 is optimistic.

“Moving to the New Commerce Experience will help you prepare for future growth thanks to improved revenue predictability, reduced licensing complexity, multiple term options, and features that enable new sales capabilities and operational efficiencies,” Fehrenbach wrote.

Microsoft calls the New Commerce Experience the third phase of its “multistage, multiyear transformational journey to deliver a simplified engagement experience.” The company started the effort in 2019 with Azure.

Want to contact the author directly about this story? Have ideas for a follow-up article? Email Kelly Teal or connect with her on LinkedIn.

About the Author(s)

Kelly Teal

Contributing Editor, Channel Futures

Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.

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