Decoding Microsoft’s New Commerce Experience

Whether you are new to the Microsoft Cloud Solution Provider (CSP) party or have been a veteran of the program, you will agree that Microsoft has been constantly bringing advancements and upgrades to augment the experience as well as efficiency for its CSPs. As most businesses today are undergoing significant transformation with a transition to remote work, increased adoption of everything digital and much more, Microsoft has been on the forefront to help its CSPs create shared business value.

As a CSP, you must have been enjoying several Microsoft products including Microsoft 365, Azure, PowerApps, among others. In a bid to augment this experience for customers and partners, Microsoft has introduced the New Commerce Experience (NCE) marking an end to the open license program. While you must be reading about NCE almost every day considering it is underway now, there are several details you might be foggy on. We are here to help you navigate your way through understanding, planning, preparing for, adopting, implementing, and succeeding with NCE.

Through the course of this article, we will shed light on:

• Decoding the New Commerce Experience for CSPs
• Better business outcomes for CSPs with NCE
• Next steps for CSPs

Decoding the New Commerce Experience

While you may have a fair understanding, we believe a recap on what the New Commerce Experience exactly entails will help set a strong context and foundation. As mentioned earlier, Microsoft has been constantly reinventing its CSP program to enhance customer experience as well as create better opportunities for the partners. That’s exactly what NCE seeks to achieve. Microsoft’s New Commerce Experience (NCE) is the new invoicing and subscription licensing system for the Microsoft CSP program. NCE has been a result of the changing customer expectations and demands. It seeks to streamline customer experience across Microsoft services spectrum and discard purchasing options that no longer align with customer needs.

New Commerce Experience for CSPs

With a broad understanding in place, let’s now quickly delve deeper into what the New Commerce Experience will mean for you as a CSP:

• With NCE, you will be able to eliminate or significantly reduce licensing costs and complexities
• You can streamline how customers purchase software licenses in a way that’s easy to understand, directly improving licensing asset management, and with predictable costs
• Customers will be able to purchase or subscribe to Microsoft products more easily with greater flexibility
• NCE seeks to achieve the dual goal of giving customers greater choice in their purchasing options of how, when, where and for how long, as well as, for CSPs to scale their customer acquisition journey and expand their business horizon

Key Dates for NCE

NCE was slated to be released in October 2021, but the date has been pushed back to give Microsoft CSP partners more time for a smooth transition. Invariably, it is common knowledge now that 2022 is the year for all NCE related upgrades and advances. There are 4 key dates that need to be marked which illustrate Microsoft’s approach to a phased transition to NCE. It seeks to give all CSP enough time and ensure a smooth transition. Following this phased approach will enable CSPs to understand and leverage NCE benefits, and create maximum business value, while ensuring minimal disruption and chaos. The phased approach will follow the below mentioned schedule:

January 1, 2022: Launch of the New Commerce Experience

Commercial customers won’t be able to buy new or renew software licenses or online services through the Microsoft Open License program. New license-only purchases should be transacted through partners in the Cloud Solution Provider program.

June 30, 2022: NCE Only Transactions

Purchase of a new subscription or renewal of an existing one will be through NCE only. Initially, this date was decided as March 2022, but to facilitate a smoother transition, Microsoft is now offering additional 3 months. However, the ability to place new orders on the existing platform will end on March 10, 2022.

October 1, 2022: New Incentives under NCE

Transforming the incentive structure, the month of October will see a transition to the way incentives are received. Incentives will only be valid for CSPs transacting through the New Commerce Experience.

February 2023: End of the Current Platform

Finally, a year after the launch, the current platform will be put to rest.  Microsoft has planned to decommission the existing purchase platform by February 2023. Post these all existing and new subscriptions will be moved to the NCE.

Better Business Outcomes for CSPs with NCE

Now, as we understand what NCE means for CSPs and their customers along with key dates to plan your transition, it is important to understand the major changes that are likely to impact your business, as well as gauge the major benefits NCE will bring along.

What’s New in the New Commerce Experience?

Let’s start this section by understanding how the New Commerce Experience is different from the CSP program that most of you have been using till now. The changes in term options, cancellation policies, etc. are aimed at improving operational efficiency and license asset management for CSPs and augment customer experience with greater experience for end users. Almost every change brings along some positive impact for the CSPs in direct or indirect ways. The top changes include:

Billing term and options

Under the original CSP program, customers had to choose between a monthly or an annual term option. However, with NCE, there are three options available, including monthly, annual and 36 months. This enables CSPs to lock in greater commitment from customers for a longer period of time.

A similar change has been observed in the payment terms too. While initially the payment could be made only monthly or annually, now based on different payment options mentioned above, customers can pay monthly, up-front or annually.

On a closer look, it is clear that the new billing term and options can help you maximize efficiency and achieve longer commitments.

Cancellation and refund

From a cancellation and refund point of view, the NCE brings along major changes that seek to impact CSPs in a positive way. The original CSP program had a cancellation period of 30 days, giving customers 30 days to change the fate of their subscriptions and preventing CSPs from accurately predicting their revenue. However, with NCE, the cancellation period has been reduced to 72 hours. This indicates that customers have to notify their CSP partner in 72 hours if they need any change/cancellation in their subscription. This will enable CSPs to accurately predict their revenue stream in the very beginning and manage business expenses, expansion plans, etc. accordingly.

On the refunds too, the earlier timeline of within 30 days has been reduced to 24 hours. This suggests that refunds of any cancellations will be processed within 24 hours. This impacts both operational efficiency for CSPs by freeing them from keeping track of refunds and enables better cash flow and customer experience.

Thus, from a CSP lens, NCE brings about greater operational efficiency of managing and keeping track of subscriptions, facilitating better visibility of revenue streams and fostering better cash flow management.

Add-ons, licensing and premiums

The final set of changes are visible in add-ons, licensing options and premiums. According to the earlier CSP program, add-ons could be integrated as attachments to a base subscription. However, with NCE, they can be purchased as separate products, augmenting the choice and flexibility for customers and business opportunities for CSPs.

On the licensing front in the earlier program, customers were expected to buy a separate license for different products. This often resulted in multiple invoices leading to confusion and chaos along with an administrative nightmare for CSPs. In NCE, different product licenses can be seamlessly combined under one purchase motion. Invariably, this considerably reduces the friction of managing multiple licenses, both for the customers and CSPs. Furthermore, multiple purchase licenses have been vulnerable to slippage and revenue leakage which NCE seeks to bridge to facilitate a more accurate revenue stream.

Finally, the introduction of premiums is a major change coming along with NCE. In the earlier program, there was no premium to be paid by the customers based on their plan term. However, NCE has introduced a premium of 20% for monthly subscriptions. This suggests that customers will have to pay a 20% higher amount if they choose a monthly term. From a CSP lens, this will result in long term commitments from customers from the very beginning. Instead of increasing subscriptions on the go, customers will be pushed to engage in longer commitments, giving CSPs a clear picture into their revenue cycle.

Thus, for CSPs, NCE has brought along new business opportunities, greater operational efficiency and customer experience, as well as more predictable revenue streams. Furthermore, long-term plans are likely to attract discounts and offers as well for customers, reinforcing the benefits of longer commitments.

Benefits of New Commerce Experience

Now with the changes that NCE has brought along are clear, it’s time to move to the benefits which make it an attractive transition for CSPs. While the broad benefits of operational efficiency, customer experience, and healthier revenue streams can be identified from the impact mentioned above, let’s take a closer look at some of the top benefits.

Predictable revenue stream

The NCE has several benefits for those who commit to long term contracts. As mentioned above, monthly subscriptions will attract a 20% premium. Furthermore, multi-year agreements will enable customers to lock-in their price for up to three years and a 5% discount would be offered on annual term plans till March 2022 . Both these combined will push customers to engage with their CSPs for a long term.

Naturally, long-term contracts will help CSPs to predict their revenue more accurately and give a realistic picture of the month on month/ year on year cash flow. A predictable revenue stream can enable CSPs to manage their expenses accordingly and work on their investment and scale up plan more strategically, thus, impacting the bottom line and opening new business avenues.

Seamless subscription management

Taking cue from the inclination towards long term contracts as well as the shift to a single purchase motion for all licenses, subscription management is likely to become a lot easier.

On the one hand, long-term contracts will ensure a relative uniformity in subscriptions through the year, barring seasonal fluctuations. This will invariably remove licensing complexities and reduce any major instances of confusion. On the other hand, one-time payment options and single purchase motion will take the friction out of multiple invoices, billing mistakes and unnecessary administrative overheads. Thus, NCE along with some external support from automation partners can help CSPs focus on factors that can help increase business value than focus on internal finance and license management.

Additionally, Microsoft Partner Agreement and Microsoft Customer Agreement that have come with NCE will considerably simply terms of engagement for CSPs to improve customer experience and enable managing customers with a single agreement.

Greater incentives

Incentives form a core part of what attracts most CSPs to join the Microsoft run program. However, under the earlier program, CSP business was subject to a minimum threshold to reap core benefits. This suggests that CSPs had to pass the revenue threshold of $25,000 over 12 months to enjoy substantial and meaningful benefits.

However, with the NCE, CSPs have become free from any minimum revenue threshold. In simple words, there is no minimum revenue that CSPs need to achieve to be eligible to leverage the attractive incentives that come with the program. This is especially beneficial for CSPs who are just starting up and might have a tough time meeting the threshold. Additionally, an accelerated transition can help avoid any incentive loss. Invariably, NCE has brought better business outcomes for CSPs in both direct and indirect ways in the form of incentives.

Reduced revenue volatility

Finally, CSPs stand to gain not only from increased revenue streams and indirect incentives, but also from reduced revenue volatility. There are two major facets to this benefit. On the one hand, the attractiveness of long-term contracts can save CSPs from revenue volatility that comes along with monthly contracts. On the other hand, the reduced time for cancellation also brings along avenues for revenue resilience. CSPs no longer have to be apprehensive about potential cancellations for 30 days, anticipating revenue reduction. Within 72 hours, CSPs have a clear picture and no customer will be able to pull out post that. This clearly indicates that CSPs will no longer be dependent on customer decisions for frequent license reductions which is a key source of revenue volatility.

Thus, it is quite evident that the transition to NCE comes with several advantages and benefits for CSPs that can help you scale your business to the next level. By encouraging longer engagement, efficient processes, addressing customer centric purchase needs and revenue predictability, NCE stands to unleash powerful business and growth opportunities for CSPs.

Next Steps for Cloud Solution Providers

As we come to the last section of this article, it is time to understand how to put these benefits and impact areas to action. Based on our work with major CSPs across the globe, expertise on everything cloud and robust engagement with Microsoft network, we have prepared a list of next steps you should follow to start your journey towards NCE.

Familiarize yourself with NCE

Understand all the nuances of NCE. While we have covered the impact and benefits of NCE in this paper to a large extent, there are other factors like the move to universal currency, etc. that you can learn more about. More importantly, you need to stay updated on the latest announcements and changes, including revision of dates, enhancements, promotions, etc. Do check out the Microsoft Partner Network for the latest news and updates to ensure you do not miss out anything that might be a boost for your business. You can also stay tuned to C3’s blog section as we will keep sharing more insights and updates on NCE regularly.

Educate your team members

As the force behind a successful CSP business, not only you but your team members also need to understand and align with NCE. The best way to educate yourself is to sign up for and attend webinars on transition to NCE. Microsoft has been regularly conducting various sessions for a seamless adoption and you and your team members can learn a variety of best practices for a smooth transition. Not only will you be able to learn the secret to a seamless transition, but you will also gain knowledge on the latest promotions, ways to simplify licensing, increase revenue, serve customers better, etc.

Create a strategic transition plan

Based on the webinars you attend and brainstorming with your team members, you need to create a transition plan. Start by finalizing the dates. We have shared the phased approach that Microsoft is offering. There is a significant overlap when you can transact through the initial program as well as NCE. Just make sure all your transition is complete before the cut-off date. Furthermore, you need to educate and create awareness amongst your customers as well on this transition. Share with them your broad plan, how the transition will impact their business and create a dedicated support line to address their queries and concerns. You may want to focus on part transition with a few customers at a time. The key is to chalk out all your stakeholders and create a plan to ensure a smooth transition for all.

Unleash the potential of automation

Finally, you can leverage the potential of billing automation with a partner like C3. Supporting CSPs across the globe, C3 can help you transition to NCE in a smooth and seamless manner. By enabling you to automate billing and invoicing along with offering customer self-service, you can exclusively focus on insights to better customer experience and create greater business outcomes. With C3, you can be assured of accurate billing, automated itemized invoicing, automated usage reconciliation, consolidated invoicing with clear timelines and much more.

Kickstart your New Commerce Experience with C3

C3 is the perfect partner for you to leverage the key benefits and incentives that NCE has brought along. While NCE’s features will help you take your customer experience to the next level with more customer centric purchase options, our extensive capabilities can enable you to:

• Streamline your internal business processes via pure-play automation
• Empower customers with self-service portal to manage purchase and increase/decrease in license count, monitor their cloud consumption, receive digital invoices, and pay invoices online via CC/ACH
• Enable customers to manage their own purchase lifecycle and cut down hundreds of work hours invested in addressing customer purchase, reporting, invoice, etc.

As the customer expectations are changing, Microsoft is constantly innovating and reinventing its Cloud solutions. Leverage C3’s capabilities to stay on top of the latest updates and drive success for your customers.

C3 or CSP Control Center is a cloud platform purpose-built for Microsoft CSP partners, enabling them to distribute, sell, bill, and provision cloud solutions, built and managed by Spektra Systems. C3 helps Microsoft CSPs to facilitate customer success by streamlining the price management, billing, and provisioning of Azure, Office 365, and other services.