How the Upcoming Changes in NCE Will Impact Your Business in 2024

As we edge closer to 2024, it’s crucial for Microsoft direct customers to stay informed on the significant changes looming on the horizon with Microsoft’s New Commerce Experience (NCE). The transition into NCE has been happening since January 2022, but it isn’t over. In fact, for many, it has yet to go into full effect.

Effective January 11, 2024, those on legacy models will be transitioned so that their licenses can only be procured on either an Annual or a Monthly term, locking in subscriptions for a set duration. This represents a significant departure from the status quo for many - and necessitates a deeper understanding and strategic planning.

First, a Recap: What is NCE?

Microsoft’s New Commerce Experience (NCE) for Cloud Solution Providers (CSPs) is a significant evolution of its cloud service program. Launched initially for Microsoft Azure in 2019 and later expanded to include various Microsoft services, NCE aims to simplify licensing and align with customer purchasing preferences. It offers various term options for seat-based services (monthly, annual, or multi-year), enhancing customer choice. NCE also focuses on improving revenue predictability for partners, reducing licensing complexity, and enabling new sales capabilities and operational efficiencies. This program supports partners in owning the end-to-end customer lifecycle, from offer creation to billing, and includes features like custom pricing, promotional tools, and multi-currency support.

What’s Changing?

1. Microsoft-Led Migration: Starting January 11, 2024, Microsoft will begin migrating all remaining commercial license-based subscriptions to the new commerce at the end of each subscription term. Subscriptions transition to an annual commitment and keep the existing billing frequency (annual or monthly)

2. Cancellation Policies: The new commerce subscriptions come with updated cancellation rules. Unlike the legacy system, where you can cancel anytime, the new commerce model allows changes within seven business days after acquiring a subscription. After this window, your subscription terms are locked in​​.

   Below are the cancellation policies available for (NCE) subscription products:

   Product	Self-serve cancellation window in Partner Center	Learn more
   Software subscriptions	Prorated refund (except where otherwise required by law) within seven calendar days of purchase. For example, if you cancel on the third day, the refund will be for the remaining paid period minus the three days.	Cancelling software subscriptions
   License-/seat-based (per user)	Prorated refund within seven calendar days of purchase	Cancelling licensed-based subscriptions
   Marketplace offers	Monthly 24 hours/yearly 14 days from the date of purchase	Cancelling licensed-based SaaS subscriptions

3. Subscription Term Adjustments: The migration process carries over your existing subscription properties, like license counts, term, and billing frequency. However, if you need a different arrangement, like switching from annual to monthly terms, it’s advised to self-initiate the migration before the end of the legacy subscription term​​. Key information to note:

   • Changing commitment terms or billing terms requires a cancellation followed by a repurchase.
   • For same-day cancellations, the subscription will be terminated immediately.
   • Seat number adjustments, increases, or product upgrades can be scheduled for a future date.
   • Product downgrades necessitate cancellation and repurchase.

4. Add-Ons and Bundles: For those using add-ons, the migration supports moving these along with the base subscription. It’s essential to ensure that all active add-ons are eligible for migration; otherwise, the entire bundle can’t migrate​​.
   There are two main migration methods. The first is migrating the Base Subscription, which includes all eligible add-ons in the migration process; thus, if a base subscription is migrated, any associated add-ons that qualify will be included in this migration. The second method, introduced in November 2022, is Migrating Add-Ons Individually. This approach allows for the individual migration of add-on subscriptions independently of the base subscription. Key Points to Note:

   • Bundled Migration: A base subscription and all its active add-ons must be migrated together as a bundle. The migration of such a bundle is only possible if all active add-ons are eligible for migration to NCE. If any single add-on in the bundle is ineligible, the entire subscription, including all add-ons, cannot be migrated.
   • Post-Migration Independence: Once migrated, the add-ons will appear as independent subscriptions within the NCE.
   • Legacy Subscription Properties: If no specific changes are made during the migration, the properties of legacy subscriptions, like quantity and term duration, are carried forward into the NCE.
   • Migration Eligibility Restrictions: Purchasing a new add-on makes the entire bundle ineligible for migration for the next 30 days. Each subscription in the bundle is checked individually for eligibility, including a 30-day purchase review. If any single subscription in the bundle fails the eligibility check, the entire bundle cannot migrate.
   • Independent Migration of Add-Ons: Partners can also migrate add-ons independently using the Partner Center User Experience (UX) or APIs, as long as the customer has the necessary services included in the base offer.
5. Seat Limits for SMBs: Small and Medium Businesses (SMBs) must be mindful of the 300-seat limit when migrating. If you’ve got more than 300 seats to migrate, you’ll need to adjust the seat count to comply with this limit​​.
6. Migrations vs. Transitions: It’s important to distinguish between migration and transition. Migration refers to moving your subscription from traditional licensed-based commerce to the New Commerce Experience. In contrast, transitions involve upgrading or converting subscriptions within the new commerce platform​​.

What Does This Mean for You?

The question then arises - how will these changes impact your organization? Will the new model offer the agility and cost-effectiveness that modern businesses require? And more importantly, how can you navigate these changes to ensure your organization is compliant and positioned to take full advantage of what the NCE has to offer?

Our upcoming Tech Talk, ”The BIG Shift for Microsoft Direct Licensing in 2024,” will demystify these questions. Our Microsoft expert, Chad Seymour, will break down how these changes will impact the way you procure Microsoft 365 licenses and how you can maintain flexibility.

Be sure to register to save your spot. If you can’t attend live, we still recommend you register for the event, and we will send you the recording when it’s ready.