You may not find Microsoft licensing to be the most thrilling subject, but impending changes to Microsoft seat-based licensing (i.e., per user) will have a significant impact on all Microsoft 365 business users.
Firstly, business customers will see a rise in the price of practically all Office 365 and Microsoft 365 subscriptions; consumers, schools and non-profits (i.e., charities) will not see any changes in price at this time.
Secondly, Microsoft are announcing the New Commerce Experience (NCE) for seat-based licenses. This will affect any organisation using the best cloud solution Provider (CSP) program to purchase licensing. National Center for Emerging Technologies (NCET) seeks to simplify the process of purchasing Microsoft products by making it easier for both customers and Microsoft partners. For the first time, NCE will include enforced seat-based license commitment terms, making CSP more equivalent to existing Enterprise Agreements (EA).
Increase in Costs
There is little doubt that since its inception in 2003, Microsoft Office 365 has revolutionised the way companies work and interact. More than 20 additional programs have been released by Microsoft since then, including Power BI, OneDrive, Yammer, and Microsoft Teams, which has been a massive hit with businesses across the world. Yet this is the first substantive price rise since Office 365 was first launched in 2011, despite all of the innovation and improved value.
As of March 2022, the following split of all price increases will take effect: 9-25 per cent for Office 365 subscriptions and Microsoft 365 subscriptions; local currency adjustments will be made closer to that date.
If you’re wanting to upgrade from E3 to E5, Microsoft’s 365 E5 has been spared from the price hike, reducing the price difference between the two.
Taking advantage of early-adoption incentives in the New Commerce Experience will allow clients to not only beat the price hike but also lower their license costs over the following 12-18 months.
The Sweetening Agent (Audio Conferencing)
Microsoft has announced intentions to roll out audio conferencing to all Enterprise, Business, and Frontline subscribers throughout the next couple of months in conjunction with the price hike. In places with poor internet access or while utilising a standard PSTN phone line, audio conferencing allows users to attend Microsoft Teams meetings while on the move or by dialing in using a traditional PSTN phone line.
The Audio Conferencing add-on for Office 365 E5 subscriptions will soon be free for all other subscriptions.
For all CSP seat-based subscriptions, the New Commerce Experience (NCE) will completely replace the Legacy Commerce Experience (LCE) by February 2023, and new or renewed subscriptions may only be transacted via the NCE from March 2022.
So what’s the big fuss about all this?
With NCE’s adoption of mandatory commitment periods, this is the most notable change. In LCE, all licenses are supplied inside 12-month subscription containers that renew automatically. There are no commitment conditions and licenses may be increased or decreased at any moment without affecting cost, which was Microsoft never intended to be the case. Subscriptions in NCE, on the other hand, may now be purchased with 1-month, 12-month, and 36-month durations. As a result, no cancellations or license reductions are permitted throughout the term (although a 72-hour cooling-off period does apply).
Organisations must now predict their license footprint over the following 12-36 months, working to understand projected workforce levels and licensing needs. This is due to the introduction of commitment periods. To be on the safe side, organisations may mix and match the three various subscription durations. For example, a business may decide to license its full-time staff on a 12-month subscription while using 1-month subscriptions for seasonal or contract personnel.
Existing subscriptions may be expanded at any time by adding additional licenses, which will be labelled as such. It’s also worth mentioning that stepping up between qualifying items will be possible through upgrade choices (for example, moving from Microsoft 365 E3 to E5).
In order to promote the adoption of the New Commerce Experience, Microsoft will be offering incentives to consumers. All seat-based subscriptions apart from Windows 365 will have two time-bound promotions starting in January 2022.
Dates to mark on your calendar
A 12-month commitment period begins in January 2022 and ends in March 2022. This 2-month window allows organisations to take advantage of Microsoft’s early adoption promotions for NCE before the price increases in March 2022. This is critical because the price increase will go into effect in March 2022.
Remember that price protection is given for the whole subscription period, so an organisation may anticipate to pay less throughout their first NCE 12-month term than they are now!
Most organisations rely on a Microsoft Partner to help them keep on top of licensing and entitlement changes, ensuring that their systems are efficiently configured and, most importantly, compliant with the current license conditions. In order to take full use of the NCE, CSP customers must immediately analyse and evaluate their future license status.
As your Microsoft Partner, Digital Cloud UK will proactively work with you to discuss how this affects your license portfolio and how you can maximise your use of the Office 365 system. We’re happy to talk through these changes with you and discuss your options. We’re here to support you.