Are you ready for the changes coming to the Microsoft CSP program for seat-based offers from January 2022? In this article you will find all details of the New Commerce Experience and important dates to note.
In August 2021, Microsoft announced important changes are coming to Microsoft seat-based offers (Office 365, Microsoft 365, Dynamics 365 and more). This is the largest and most important update to the CSP program since the launch of CSP in 2015, and the change will impact the way, you do business in CSP today and make the foundations for new business opportunities in the future.
The update includes:
- Enforcement of no-cancellation policy. You can no longer cancel or reduce seats during annual term, only at renewal of term.
- New monthly subscription option. Customers, who require more flexibility to adjust seats may choose the new monthly term offers with a premium price.
- New options to manage subscriptions, including upgrading products and schedule upcoming changes for renewal.
- Easier to understand billing data and less administrative work.
The New CSP Commerce Experience will be general available from January 2022, and is already available in Technical Preview in Tech Data StreamOne Cloud Marketplace.
Microsoft Partners can take a phased approach to adopt the new commerce experience, and can continue to renew existing subscriptions in the original CSP experience until June 30, 2022.
Join our webinar to learn more
This is a big update to the CSP program and may impact your business.
To help you understand the details of this update, please see our recorded webinar. In this webinar, we go through the changes, important dates and what the impact may be for your business and your customers.
Important dates to notice
Partners can take a phased approach to adopting new commerce and can continue to renew existing subscriptions in the original CSP experience until end of June, 2022.
Key upcoming milestones (subject to change):
- October 14, 2021: Office 365, Microsoft 365, Dynamics 365, Power Platform, Windows 365 will be available in the New Commerce Experience as Technical Preview only. You can choose to transact this offer in Tech Data StreamOne Cloud Marketplace, but the promotion offer will not apply.
- January 2022: General release of seat-based offers in the New Commerce Experience. To support partners adopt the New Commerce Experience offers, Microsoft will offer a promotional discount on 5% on annual term subscriptions. The promotion is valid for any new order in New Commerce Experience until end of March, 2022. Microsoft may choose to extend the promotion.
- March 1, 2022: Microsoft will increase the price on a selection of Office 365 and Microsoft 365 products. For any new order on annual term you place before, you will lock the current price for 12 months. This is a great incentive for your customers to renew subscriptions before the price increase.
- March 10, 2022: New orders will only be available in the New Commerce Experience. It will no longer be possible to place new orders in the original CSP experience. Existing subscriptions can continue to renew in the original CSP experience until June 30, 2022, but we recommend to renew in the New Commerce Experience before to leverage the Microsoft promotion offer and minimize your operational workload. Placing your existing subscriptions in New Commerce Experience in the same month, will also offer you the option to align renewal date and ease your operation of future renewals.
- July 2022: Renewal of subscriptions will only be available in the New Commerce Experience. Any subscriptions in the original CSP experience will expire at the anniversary date, if not renewed in the New Commerce Experience before.
- October 2022: Microsoft incentives are available only for transactions in the new commerce experience. If you have any subscriptions still active in the original CSP experience, you will no longer earn incentives.
Save 5% on annual term versus current legacy pricing
To support partners adopt the New Commerce Experience offers, Microsoft will offer two time-bound promotions beginning in January 2022:
- Annual Term promotion. This promotion gives a 5% discount off the CSP pricelist. The promotion will be applied the original purchase and any seats added to the subscription during the following 12 months. The discount will be applied to both annual payment and monthly payment options. The promotion is available for orders placed from early January 2022 through March 2022. Microsoft may choose to extend the promotion.
- Monthly Term Promotion. For customers, who will desire the flexibility of monthly term, Microsoft will apply a promotion of 20% to the new monthly term pricing from early January 2022 through June 2022. By doing so, customers will not see the new higher price point until July 2022.
These promotions apply to all new commerce commercial offers except Windows 365 and to subscriptions of up to 2,400 seats. Subscriptions ordered during the promo period will renew after June 30, 2022 at the price in effect at the time of each renewal.
At this time, no promotions are announced for the three-year term offers.
The timeline help you remember key dates for adopting the New Commerce Experience for seat-based offers in CSP.
Transition to the new commerce experience
Of course, this update to the CSP program may be a significant change to the way, you do business with Microsoft. And certainly we will have some work together to land the change well with our existing customers and help them upgrade from the previous CSP-offers to the new offers.
The good news; we are ready to support you.
- Tech Data Sales Teams, Solution Experts and License Desk are ready to support you find the best solution for your customers and help you upgrade from previous offers to the new offers.
- StreamOne Cloud Marketplace is ready to support the new commerce offers and billing logic. Since October 14th 2021, you has been able to place orders in the New Commerce offers in the Technical Preview from StreamOne Cloud Marketplace. Use this opportunity to prepare yourself for the general availability and promotion offer available in January 2022.
- We will host multiple webinars and trainings to help our partners and their sales-staff understand the changes and how to navigate the new commerce offers.
And please remember, any change from Microsoft is a good opportunity to engage with existing customers and new prospects.
- Use the opportunity to do a right-sizing assessment of their licensing.
- Inform your customers how to benefit from choosing Microsoft 365 to address security concerns.
- Maybe your customers needs help to adopt Microsoft services like Teams.
- Or maybe you will identify a cloud migration project.
Use the opportunity to engage with your customers and identify opportunities to assist with your services
What will change with seat-based offers in New Commerce Experience?
With new commerce, partners can address the spectrum of customer scenarios. We can also lock in subscription pricing in advance of the recently announced price increases for Modern Workplace. Partners get better revenue predictability (and price predictability for customers) by selling annual or multiyear term offers.
Among the benefits of the new commerce experience in CSP:
- Easier adoption of new products such as Viva Insights, including streamlined trial conversions and add-ons available separately in the CSP catalog.
- New offers for Microsoft 365 and Dynamics 365 exclusive to new commerce.
- New monthly-term offers with a price premium for customers who need term and seat-count flexibility.
- Annual term offers with competitive pricing for stable, long-term customers.
- The option to blend short- and long-term offers for customers with seasonal or business-volume fluctuations.
- Three-year term offers for Dynamics 365 similar to the existing experience in CSP. New Three-year term offers for Microsoft 365 from March 2022.
- Consistent cancellation policies for seat-based offer terms in new commerce (limited to the first 72 hours of the term with prorated refund.)
- A new set of communications offers that provide telco service consumption billed in arrears, as a precursor to rolling out this option for other new offer types in later releases.
- Tooling that streamlines the transition of existing subscriptions to new commerce.
- Easier processing of subscription and billing data and enhanced subscription-management capabilities.
- Subscription ownership enforcement that prevents multiple purchases of free trials and small-to-medium business (SMB) offers from different partners.
The new commerce journey isn’t finished with the January general availability release. Later in 2022, additional features and new offers will launch exclusive to new commerce. For example, current plans for Microsoft 365 include:
- Three-year term offers for seat-based offers in addition to the current Dynamics 365 three-year term offers.
- Home Use Program (HUP), which allows a customer’s employees to receive a discount on purchases of certain Microsoft 365 consumer offers.
- Multi-region add-ons so a user on a subscription can tap into the Microsoft data center nearest to the user’s location.
These new features enable Microsoft to bring some popular capabilities and offer types from other licensing programs to new commerce and to deliver an end-to-end set of features, rounding out the suite of Microsoft cloud offers in new commerce.
Price change announcement on Office 365 and Microsoft 365
In fact, the price change announcement on selected Office 365 and Microsoft 365 offers is independent from the New Commerce Experience announcement. The price change will happen in any licensing program, including Microsoft Web-Direct and the original CSP experience at time of renewal.
Nevertheless, the price change announcement open the door for you to engage with your customers and renew the subscription in the New Commerce Experience before the price change March 1, 2022. Doing so, you can assist your customer lock the price for 12 months at current price and even offer your customer the 5% discount on annual term offers.
The local prices are not yet available; only the US pricing:
- Microsoft 365 Business Basic – 20% increase (from $5 to $6 per user)
- Microsoft 365 Business Premium – 10% increase (from $20 to $22)
- Microsoft 365 E3 – 13% increase (from $32 to $36)
- Office 365 E1 – 25% increase (from $8 to $10)
- Office 365 E3 – 15% increase (from $20 to $23)
- Office 365 E5 – 9% increase (from $35 to $38)
There are no changes to pricing for education and consumer products at this time.
Selling Windows 365 in the new commerce experience
Windows 365, announced in July 2021 and launched as a product in August 2021, is the world’s first cloud PC for every organization, securely streaming the Windows experience, including desktop, apps, processing power, storage, and more, to any customer device.* The cloud PC experience can scale to fit customers’ needs and is easy to deploy without the need for virtualized desktop infrastructure (VDI) expertise.
Windows 365 will be available in the new commerce experience in CSP in October 2021. The new commerce experience in CSP will offer Windows 365 only through the new monthly term offer, which will enable customers to experience this new product with no long-term commitment and to adjust the number of users monthly with per-user pricing. Lastly, new Windows 365 features and future enhancements will only be made available on the new commerce offer in CSP.
Azure in the New Commerce Experience
Also Azure in CSP is moving to the New Commerce Experience. Do you still have active subscriptions in the original Azure offer in CSP, now is the time to move to the new, modern Azure Plan in the New Commerce Experience.
Starting February 1, 2022, partners will no longer earn margin and incentives in the original Azure offer in CSP. Any consumption on the original Azure offer will be invoiced at Microsoft ERP price + Tech Data fee.
Partners will continue to be eligible to earn partner earned credit (PEC) on the new Azure plan in New Commerce, and partners with Silver or Gold Cloud Platform competency will continue to be eligible for incentives related to the new Azure Plan offer.
Again; this is a compressive update to the CSP program, and the change may impact the way, you do business in CSP today and make the foundations for new business opportunities in the future.
Things to consider:
- Make sure, you have read and understood the changes to the CSP program and the important dates. And make sure to check in again for any future updates or changes to be announced.
- Make a plan to engage with your existing customers and plan the shift from the original CSP offer to the New Commerce Experience. Will your customer prefer the annual term commitment offer or the new monthly term offer with more flexibility at a premium price? Or a mix of those?
- The program update will have impact on commercial terms, margins and incentives calculations. Will this impact terms and conditions in your customer agreements, and do you need to notice a change?
- Review the risk. With Annual Term, you can choose to divide the bill into monthly payments. But you will be accountable for the full term even your customer stop payments or files bankruptcy.
- The program update include changes in billing and cancellation policies, logic and dates. How will this impact your operational workflows and established automation?
- Are your staff ready for the change? Make sure, your commercial sales agents are aware of the new capabilities and changes policies, and are ready to engage and advice your customers.
- Place your first order. The New Commerce Experience is ready as Technical Preview in StreamOne Cloud Marketplace, so you can place your first order and prepare your processes before general availability in January.
- Prepare your policies and processes for renewals in New Commerce. Tech Data will make it easy for you to see and manage upcoming renewals in your new Renewal Dashboard in StreamOne Cloud Marketplace.
- Be fast and agile. As Microsoft has announced a price increase on selected Office 365 and Microsoft 365 products from March 1, 2022, you have a golden opportunity to engage with your customers now and lock the current pricing delaying the price increase for 12 months. Combined with the 5% promotion on annual term offers, this may be a good deal for your customer.
- Use the opportunity to right-size your customers licensing and add on your own support and services. Is this a good opportunity to discuss security needs, and upsell to Microsoft 365 Business Premium or Microsoft 365 E5 plans?
- Get it done. You will have the option to renew subscriptions in the original CSP experience until June 2022, and can delay the enforcement of New Commerce until June 2023. But you will loose any incentives from October 2022, and will need to maintain multiple billing logics and invoices. The pain will not disappear by waiting; get it done.
- Maximize your incentives. Are you Silver or Gold Partner? Consider annual term with the annual payment option. Not only will this remove the financial risk of monthly payments; you will also maximize your incentives payments. We know the incentives rates will remain as current until October 2022, but most likely we will see changes coming then. Also note; currently the incentives in New Commerce is paid as 100% rebate.
All the way, Tech Data Experts are here to assist you in your planning.
Microsoft resources related to Microsoft New Commerce:
- Microsoft: Optimizing our purchasing motions for customers and partners
- Microsoft: Partner investments and incentives: upcoming portfolio changes
- Microsoft: The essential role of partners: serving our customers better, together
- Microsoft: Transitioning from Open License to the Cloud Solution Provider program
- Microsoft: Evolving the Azure offer in the Cloud Solution Provider program
More intuitive purchase experience for partners making it easier to meet the diverse needs of customers
The update to the Microsoft CSP program for seat-based offers is a part of the modernization of Microsoft Commerce options aligning Microsoft licensing programs, tools and services designed to make it more simple for customers to do business with Microsoft and partners. Microsoft has named this “The New Commerce Experience”, or in short “NCE”).
During the last two years, we did see Microsoft making changes to the partner and customer agreements, and introducing new services in the CSP program. The new commerce experience was launched in CSP for Azure plan, Server Subscriptions, and Azure reserved instances in 2019, and now in January 2022, Microsoft will introduce a new set of offers in the new commerce experience for Microsoft 365, Dynamics 365, Power Platform and Windows 365.
Simultaneously, as part of this launch, an array of new features and functionalities will be introduced to CSP, in response to partner requests and customer needs. These efforts will result in a more intuitive and streamlined purchase experience for partners, making it easier to meet the diverse needs of customers and reducing the complexity of the overall sales process between partners and their customers. The revisions and additions to policies, functionalities, offers, processes, and billing included in this release have two goals:
- Introduce a set of new offers, policies and functionalities that will replace the current experience for partners in CSP. In new commerce, customers have a consistent set of policies, agreements, and procedures across all purchase motions, regardless of how the purchase happens (through a partner in breadth (CSP), through a Microsoft seller in enterprise or directly on one of Microsoft’s commercial marketplaces or online portals).
- Complete the foundation in new commerce for transforming the way partners sell and customers buy in the cloud, and enable partners to expand their cloud business, offerings, and services in the years ahead.
The January general availability of seat-based offers in the New Commerce Experience provides partners in the CSP program with new sales capabilities, delivers operational efficiencies, and drives long-term customer commitment with multiple term options.
The change to the New Commerce Experience may be painful to all Microsoft partners, but I am sure, as we in a few years look back, we will all be happy of the change, and the new business opportunities we all have with Microsoft as partners.
Microsoft is simplifying the customer purchase experience, making it easier to choose the right path for your Microsoft business.