Microsoft has announced changes coming into effect on 1st March 2022.

There are two major aspects to these changes, first a global price increase on some of the most popular licensing products for commercial clients. The second is new contractual arrangements that come into force as part of an update to the Microsoft CSP program which Microsoft calls the New Commerce Experience (NCE).

ACS will set out the key points of those changes within this new article, however, we will also be following up to discuss them in more detail in the coming weeks as we know they’ll have a significant impact on many of our clients and are somewhat complex.

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Key Dates announced by Microsoft:
1. General availability of NCE Subscriptions will be in January 2022
2. Announced Microsoft Price Increase comes into effect 1st March 2022
3. Customers can still procure via the existing ‘legacy’ route until NCE is mandated on 10th March 2022 (New subscriptions only)
4. Customers can renew via the existing ‘legacy’ route until 30th June 2022
5. There will be promotions available for monthly and 12-month term subscriptions for all seat-based offer types (except Windows 365) up to 2,400 seats

New Price Increases

On August 19th, 2021, Microsoft announced that it was increasing the pricing globally of Microsoft 365 Business Basic, Microsoft 365 Business Premium, Office 365 E1, Office 365 E3, Office 365 E5, and Microsoft 365 E3 from the 1st March 2022 for commercial customers. As the original announcement states (which can be read in full at https://www.microsoft.com/en-us/microsoft-365/blog/2021/08/19/new-pricing-for-microsoft-365/ ) there will be local market adjustments we do not know for the exact impact as yet, or whether other licenses will be affected here in the UK. However, from the announcement we anticipate that this will likely result in a 10-25% increase in licensing costs for vast majority of our Microsoft 365 customers.

New Commerce Experience

Secondly, and potentially more significant, are the new subscription options that come into force as part of Microsoft’s New Commerce Experience (NCE) evolution of the Microsoft CSP program. Up until now, within the UK, it has been possible to increase or decrease your Microsoft 365 license counts as and when required with minimal restrictions even though, technically, clients entered into a 12-month agreement with Microsoft and their chosen Microsoft CSP Partner (in this case ACS). This will change for all new subscriptions from the 10th March 2022 and all customers seeking to renew after the 30th June 2022.

There will be three new Subscription types which we’ve summarised below:

1. Monthly Subscription

NCE will provide customers with the opportunity to consume Online Services on a true monthly basis without the need for an annual commitment. This will provide additional flexibility for customers who need to make regular changes on a month-by-month basis to their seat count and plans.

The monthly subscription via NCE comes at a premium of uplift of 20% across all online services plans. This is in addition to the announced price increases.

2. 12 Month Subscription

The 12-month subscription via NCE will provide customers with the opportunity to consume online services on an annual commitment basis. Unlike the legacy CSP model customers who consume on a 12-month subscription, you will have the option to be billed on a monthly or annual basis.

Pricing will be locked in for the duration of the term which provides customers with additional cost savings and security against any price increases due in that time. You can increase seats during the 12-month subscription term but are not able to reduce seat count.

3. 36 Month Subscription – Not Available until later in 2022

As a part of NCE, Multi-Year Pricing will be coming to CSP. This will allow for customers to secure 3-year pricing upfront for a longer-term commitment. Customers who consume via this model will have the option to be billed monthly, annually, or upfront. Similarly, to the monthly and 12-month subscription terms, they will not be able to reduce their seat count for the duration of the term.

In addition to these changes, Microsoft has also announced a range of new features as part of these two announcements including Multi-Geo, Home Use Program (HUP), and Hybrid Use Benefits (HUB) for NCE customers during 2022.

How do we mitigate the impact of these changes?

By entering into a 12-month agreement on the NCE before 1st March 2022 it should be possible to delay the impact of the price increases by up to 12 months. In addition, it is possible to mix-and-match the 12-month and Monthly subscriptions to preserve an element of flexibility for example if an organisation had 100 users but anticipated that during the following 12 months it may need to reduce its seat count to 80 users then it would be possible to take out a 12-month subscription for 80 users and further Monthly subscription for 20 users.

ACS will be in contact with all our Microsoft CSP clients in the coming weeks to ensure that they are aware of the forthcoming changes and to help you to decide on what action you would like to take. We anticipate February to be particularly busy and so we are recommending clients seek to decide and act in January where-ever possible.