Overview

Microsoft launched the New Commerce Experience (NCE) purchasing model for the Cloud Solution Provider (CSP) program in November 2019.  Microsoft's goal with NCE is to give customers greater choice and flexibility in how and where they purchase Microsoft online products, while giving partners like Evolve IP more opportunities to sell to a growing base of existing and new customers.

With this new release Microsoft has made significant changes to the rules surrounding the purchase of Office 365, Microsoft 365, and Dynamics 365 subscription products. 

This article covers those changes, and how they affect you as a customer under the Microsoft NCE purchasing model.

Subscription Commitments

Microsoft has 3 types of commitments for their subscription products:

• Annual (1 YR) Commitment
  • You should choose an annual (1 year) commitment for subscription products that will have little change in quantities (e.g. full-time employees).
  • The commitment starts on the date the subscription licenses are added to your 365 tenant, not when you sign your XTIUM (Evolve IP) sales order. 
  • There are two billing options: Annual billing (subscription's base price) and Monthly billing (5% price uplift from the base price)
  • The commitment locks in current pricing for 1 year.  If Microsoft increases the price of a subscription, your price won't increase until the renewal date.
  • You must commit to a base quantity for 1 year.  
  • The base quantity can be increased at any time, and changes will be prorated for the commitment term (1 year).
  • Increasing a base quantity does not change the renewal date. 
  • The base quantity can only be decreased, or cancelled, on the subscription's renewal date (once a year).
  • If you want to cancel or decrease the quantity of a subscription on its renewal date, you must notify XTIUM (Evolve IP) 30 or more days prior to the renewal date.  All changes are final on the renewal date.
  • If XTIUM (Evolve IP) is not notified of any changes, your subscription will auto-renew the 1-year commitment with the current quantity on the renewal date.  No action required.

• Monthly (Month to Month, MTM) Commitment
  • Subscriptions with a monthly commitment have a 20% price uplift from the subscription's base price.
  • You should consider a monthly commitment for subscription products that will have a lot of quantity changes (e.g. temporary or seasonal workers).
  • Not all subscription products have a monthly commitment option.  If a monthly commitment is not available, then an annual commitment must be purchased.
  • The commitment starts on the date the subscription licenses are added to your 365 tenant, not when you sign your XTIUM (Evolve IP) sales order.
  • The commitment locks in current pricing for 1 month.  If Microsoft increases the price of a subscription, your price will increase on the renewal date.
  • You must commit to a base quantity for 1 month.
  • The base quantity can be increased at any time, and will be prorated for the commitment term (1 month). 
  • Increasing a base quantity does not change the renewal date.
  • The base quantity can only be decreased, or cancelled, on the subscription's renewal date (once a month).
  • If you want to cancel or decrease the quantity of a subscription on its renewal date, you must notify XTIUM (Evolve IP) 7 or more days prior to the renewal date.  All changes are final on the renewal date.
  • If XTIUM (Evolve IP) is not notified of any changes, your subscription will auto-renew the monthly commitment with the current quantity on the renewal date.  No action required.
  • Note: A Monthly commitment can be converted to an Annual commitment on the renewal date.  If you wish to switch from monthly to annual, please contact your XTIUM (Evolve IP) account representative.

• 3 Year (3 YR) Commitment
  • Currently not available for any 365 subscription products.
  • Currently only available for some Dynamics 365 (D365) subscription products.
  • 3 year commitments require upfront, annual payments for the subscription product.  There is no monthly billing.
  • The commitment locks in current pricing for 3 years.
  • You should choose a 3-year commitment for subscription products that will have very little change in quantities (e.g. full-time employees).
  • The commitment starts on the date the subscription licenses are added to your 365 tenant, not when you sign your XTIUM (Evolve IP) sales order.
  • You must commit to a base quantity for 3 years. 
  • For some 3-year commitment products, the base quantity cannot be increased.  Increasing a base quantity requires a new purchase order with a new 3-year commitment. 
  • The base quantity cannot be decreased, or cancelled.
  • For most 3-year commitment products, they will automatically renew on the renewal date.  However, some products will expire on the renewal date.  To continue the subscription, you must notify XTIUM (Evolve IP) 30 or more days prior to the renewal date.
  • If XTIUM (Evolve IP) is not notified of any changes, your subscription will auto-renew or cancel on the renewal date.

Renewal Date Alignment for New Subscriptions

If you have existing NCE subscriptions, a new subscription purchase will have its end date (renewal date) aligned with your other subscriptions.

For example, you have an existing Microsoft 365 E3 (annual) subscription with a renewal date on 15-Nov, and you want to purchase an annual subscription for Visio Plan 2.  The renewal date for the Visio Plan 2 subscription will be aligned with the Microsoft 365 E3 subscription, and the cost for the Visio Plan 2 subscription will be prorated.

Subscription Transfers

Subscription Upgrades

The Microsoft NCE purchasing model provides upgrade paths, which means upgrading from one paid subscription to another qualifying, higher-level, paid subscription. This allows you to upgrade to a subscription with added services. 

• Microsoft does not allow for subscription downgrades.
• Upgrading the entire quantity of a subscription is recommended, but a partial quantity can be upgraded.
• Multiple/Rolling partial upgrades are not supported.
• Contact your XTIUM (Evolve IP) account representative to find out if your subscriptions are eligible for an upgrade.

There are 2 types of upgrade paths:

• For Both Types of Upgrade Paths
  • The new subscription's commitment & renewal date will be the same as the current subscription, and any additional charges will be prorated for the term of the commitment.
  • You must coordinate with XTIUM (Evolve IP), and you must be available at the time of the upgrade in case there are any issues.
• For the Full Upgrade Path
  • This is an in-place upgrade of all licenses (seats) from the current subscription to the new subscription.  The quantity will not be changed.
  • All user accounts assigned to the current subscription will be assigned to the new subscription automatically.
  • Entra ID groups used for license assignments, or 3rd party tools used for license assignments, are not supported.  The full upgrade path only works with manual license assignments performed in the M365 admin center.
  • If the current subscription is provided by another Microsoft CSP partner, those licenses (seats) will not be included in the upgrade and the automatic user account assignments.  Be aware that this may produce unintended consequences to your user account license assignments.
• For the Partial Upgrade Path
  • This is not an in-place upgrade for all licenses (seats) in the subscription because the quantities are being changed.
  • None of the user accounts assigned to the current subscription will be assigned to the new subscription.  It must be done manually.
  • If the current subscription is provided by another Microsoft CSP partner, those licenses (seats) will not be included in the upgrade, and there may be unintended consequences.

Small Business (SMB) Subscription Limits

Microsoft has a quantity limit of 300 licenses for each Small Business subscription in your 365 tenant.  However, Microsoft applied this limit at the channel level (CSP Partners, Resellers, Web Direct, etc.).  Therefore, a Microsoft customer could engage multiple channels, or multiple CSP partners, to circumvent the limit of 300 licenses.

With Microsoft's NCE purchasing model, the above circumvention is being blocked.  Microsoft will be auditing the quantity of Small Business subscriptions in your 365 tenant, and will only allow 300 licenses across all purchasing channels and partners.  If you have more than 300 licenses for any Small Business subscriptions, you will need to reach out to all of your Microsoft partners to get this resolved.  If you choose not to do anything, you may experience service disruptions in your 365 tenant.

Microsoft's Small Business Subscription Products

• Microsoft 365 Business Basic
• Microsoft 365 Business Standard
• Microsoft 365 Business Premium
• Microsoft 365 Business Voice
• Microsoft 365 Business Voice without a Calling Plan
• Microsoft Defender for Business

Subscriptions for Service Migrations

Whether you are migrating your on-premise services (or other cloud services) into a new 365 tenant, or you are migrating from one 365 tenant to another 365 tenant, you need to carefully consider your subscription commitments, and budget for the costs incurred while doing a migration.

The most common on-premise migration (or other cloud service) to Office 365 is email.  When you migrate your mailboxes to Exchange Online, you have to pay for the subscriptions in your 365 tenant during the migration.  If you are doing a 365 tenant-to-tenant migration, you have to pay for the subscriptions in both 365 tenants while doing the migrations.