Introduction
We know Microsoft licensing isn’t the most exciting of topics, but there’s some importing upcoming changes to Microsoft seat-based (i.e. per-user) licensing that will affect all Microsoft 365 commercial customers.
The first, is a price increase across almost all Office 365 and Microsoft 365 subscriptions for commercial customers; there are no price increases for consumer, education, or non-profit (i.e. charity) organisations at this time.
The second, is the announcement of Microsoft’s New Commerce Experience (NCE) for seat-based licenses, which will impact any organisation transacting their licensing via the Cloud Solution Provider (CSP) program. NCE aims to provide a ‘simplified journey for both the customer and the Microsoft partner to transact a consistent, standardised purchase motion’. Crucially, NCE will also introduce enforced commitment terms for seat-based licensing, making CSP more comparable to traditional Enterprise Agreements (EA).
Fortunately, we’ve been working closely with Microsoft over the past two-months to digest all the upcoming changes, their impact, and the crucial decisions our customers need to make over the coming months to beat the price increase and navigate NCE to work in their favour, whilst also ensuring their organisation’s licensing is right-sized for their future.
The Price Increase
Since its launch over a decade ago, Office 365 has revolutionised the way organisations work and collaborate. Over that time, Microsoft have launched over 20 new apps to the suite, including Power BI, OneDrive, Yammer and most notably for organisations globally over the past 18 months - Microsoft Teams. Despite all this innovation and added value over the past decade, this will be the first substantive price increase since Office 365’s inception in 2011.
Most Office 365 and Microsoft 365 subscriptions will typically see a price increase of between 9 and 25% from March 2022, with the detailed breakdown of all increases as follows; local currency adjustments will be made nearer to March 2022.
Microsoft 365 E5 has notably escaped the price increase for now, narrowing the price gap for organisations looking to ‘step-up’ their licensing from E3 to E5.
We’re helping our customers take advantage of early-adoption promotions in the New Commerce Experience, enabling them to not only beat the price increase, but reduce their licensing expenditure over the next 12-18 months.
The Sweetener (Audio Conferencing)
To coincide with the price increase, Microsoft also announced plans to extend audio conferencing to all Enterprise, Business and Frontline subscriptions over the coming months. Audio conferencing provides the ability for people to join Microsoft Teams meetings whilst on the go, or in areas with poor internet connectivity, by dialling in using a traditional PSTN phone line, must like traditional conference calling services such as BT MeetMe.
Whilst currently only included with Office 365 E5, the Audio Conferencing add-on for other subscriptions will become nil-costed in the coming months.
The New Commerce Experience
The New Commerce Experience (NCE) will fully replace the old CSP experience, now Legacy Commerce Experience (LCE) for all CSP seat-based subscriptions by February 2023, and from March 2022, new or renewed subscriptions can only be transacted in the New Commerce Experience. So what’s all the fuss about? Well, the most noteworthy difference, is the introduction of enforced commitments terms in NCE. Today (in LCE), all licenses are provisioned within 12-month auto-renewing subscription containers. These containers are largely transparent to an organisation, given that there are no commitment terms and license quantities can be reduced to nil at any time. In NCE however, subscriptions will now be offered with 1-, 12- and 36-month commitment terms. That means no cancellations (although a 72-hour cooling-off period applies) and no license reductions during the term.
The introduction of commitment terms means organisations now need to forecast their licensing footprint over the next 12-36 months, working with the wider business to understand anticipated staffing levels as the organisation evolves. Don’t worry, it’s not a case of ‘one size fits all’; an organisation can choose a blend of the 3 different subscription lengths, so for example, an organisation may choose to license their full-time employees on a 12-month subscription, whilst utilising 1-month subscriptions for seasonal or contract workers.
Licenses can be added into existing subscriptions at any time and will be co-termed. It’s also worth noting that upgrade options will be available to ‘step-up’ between eligible products (for example, moving from Microsoft 365 E3 to E5).
A summarised breakdown of the 3 new licensing terms is available below:
Microsoft naturally want to encourage uptake of the New Commerce Experience and will be incentivising customers to do so. From January 2022, Microsoft will offer two, timebound promotions for all seat-based subscriptions except Windows 365.
Dates for your Diary
We know all these dates flying around can get a bit confusing, so here’s the most important one - January 2022 signals the start of a critical 2-month window in which organisations will be able to take-up Microsoft’s early adoption promotions for NCE on a 12-month commitment term, crucially before the price increase comes into effect in March 2022. Want to have your cake and eat it? Sure…remember that price protection is granted for the entire subscription term, so thanks to the combination of beating the price increase and taking up an early adoption promotion, an organisation can expect to spend less over their first NCE 12-month term than they are today!
Wrapping Up
Microsoft licensing has never been straightforward, and most organisations therefore look to a Microsoft Partner to help them stay on top of all the changes in licensing and entitlements, helping them remain optimally configured and crucially compliant with the latest licensing terms. We are now at a critical point where CSP customers need to rationalise and consider their future licensing position and how they can make the NCE work in their favour.
If you’re already an Advanced CSP customer, great – we’re glad to have you with us and we’ll be reaching out to you over the coming months if we think you could benefit from early adoption of the NCE.
If you’re not an Advanced CSP customer and your current licensing partner isn’t engaging with you to talk through these important changes, perhaps it’s time to consider a proactive Microsoft Gold Partner and get in contact with us today – we’d love to hear from you and talk through your Microsoft licensing position in greater detail.