The evolution of Microsoft licensing
By Jacques Klopper, sales manager, IP Dimension
At the end of 2021, Microsoft announced it would be selling additional products that fall within its subscription licence offerings via its “new commerce” model. According to the vendor, the goal of the shift has been designed to deliver easier full-stack management of licences and a straightforward way for users to consume their software.
Unfortunately, as with any shift, we have noted that some confusion has crept in around what the changes mean for the customer, the partner's role in all of this, and how they should be planning future licensing spending. So, let’s unpack what this means to customers and where the partner fits in.
What is it?
The most significant catalyst for this change is how we use, consume and engage with software in the cloud has changed and is evolving. The new commerce experience or NCE addresses explicitly the need to simplify and streamline licence acquisition. Especially regarding how customers purchase and manage licences privately and through the vendor's cloud solution provider (CSP) programme.
NCE is not, in theory, "new". It was introduced in 2019 for Microsoft Azure. Still, the enhancements made to the programme in early 2022 now allow customers to purchase licences per seat and extend to Microsoft 365, Dynamics 365, Windows 365 and Power Platform subscriptions.
Unpacking the benefit
As a Microsoft partner, the model specifically speaks to companies like IP Dimension and requires a shift in how we work with customers. Microsoft calls it: "A multi-phase, long-term investment in the CSP programme aimed at helping our partners accelerate business growth, simplify licensing and address how their customers prefer to purchase.”
And therein lies the primary benefit. The model is there to honour how end-user customers consume their software by reducing complexity and providing cost savings for long-term commitments for both partners and end-user customers. In short, as the Microsoft partner, we need to work harder to ensure that customers get the most from their investment, are not oversold and can ultimately leverage the cost benefits promised by the cloud.
Another key change is that Microsoft has introduced additional features to make CSP licensing a comparable alternative to its longstanding enterprise agreement (EA) models. It is all about giving customers more choice, which is evident through a consistent and simplified purchasing experience, standardisation of offers and terms, and the fact that partners can now sell or upsell to a broader range of customers.
Another key benefit for customers is that with the introduction of the new monthly term subscription, they can cancel or reduce seats quickly and easily, and it is also easier to adopt new products and add-ons separately.
Central to the NCE is that as a partner, we are now able to manage better subscriptions, billing and data processing, all of which are benefits we can pass on to our customers. For example, we will be able to schedule changes at subscription renewal. This means we can change seat counts, add renewal changes like term length, and change billing options. These are key to managing subscriptions in advance and reducing the need to effect changes when renewals come about manually.
Other new features include automatic seat assignment for larger (enterprise) customers, an auto-renewal toggle option, better customer management options, subscription ownership enforcement which effectively aligns customers more closely to their partners, and the ability for a partner to suspend/resume subscriptions at any time during the licence term without cancelling it.
Lastly, it doesn't matter if a customer buys apps directly through Azure or a CSP – the new NCE impacts everyone. If you have an Azure plan subscription or buy perpetual software, server software, Azure Reserved Instances or third-party offers or apps through the CSP programme, all subscriptions are already on the NCE platform.
Change for good
While change is often daunting, the changes made to the NCE by Microsoft are 100% designed to simplify and streamline how customers buy their licences and enable both the customer and their partner to better tailor purchases based on specific customer requirements. It is all part of Microsoft’s desire to make the selling process, requirements and capabilities consistent across the Microsoft product ecosystem.