It's not easy to navigate the world of licensing for any software platform or subscription, and recent changes from Microsoft can make it even more of a challenge.
The IT department must properly manage and monitor licensing costs. Microsoft 365 and Office 365 subscribers have recurring fees linked to the number of subscribers. With the frequent staffing changes, it's difficult to maintain control over these costs. Microsoft's New Commerce Experience (NCE) promises to improve licensing management -- but there are caveats to go with the benefits.
What is the New Commerce Experience?
New Commerce Experience is a subscription model that focuses on a per-seat model that Microsoft started in 2019 with its Azure cloud platform. Microsoft recently expanded New Commerce Experience for customers that use Office 365, Microsoft 365, Windows 365, the Power Platform and Dynamics 365. New Commerce Experience gives tools to customers and partners to centralize and manage their subscriptions.
What pricing changes come with New Commerce Experience?
The Microsoft New Commerce Experience payment model ushers in new subscription terms. Clients who want to avoid price increases will have to commit to long-term subscriptions. Customers have full control of their licensing purchases without the need to wait for their cloud service provider (CSP) to make adjustments. Microsoft offers the following subscription plans:
- Monthly subscription. In this plan, companies can add and remove licenses on a month-to-month basis. This option can benefit companies that see frequent staffing changes, such as a nonprofit or an accounting firm that adds and removes a significant number of seasonal employees. The feature to reduce licenses could be compelling for companies that need more flexibility with licensing.
- 12-month subscription. This plan requires customers to lock their price for their selected SKUs for 12 months. The subscription can be paid in full or with monthly payments. Customers on this plan can add additional licenses or reassign them with the portal, but they cannot remove or request to cancel them. At the end of the commitment, if Microsoft increases its licensing price, then the customer will sign up at the newer pricing.
- 36-month subscription. The three-year contract is similar to the 12-month plan regarding the restrictions on removing licenses. However, customers can lock in the price for the term of the contract. This plan accepts monthly, annual and full upfront payments.
The impetus for companies to consider the yearly plans is the discount. Organizations that subscribe to a monthly plan will pay 20 percent more on licensing compared to the 12-month and 36-month subscriptions and possibly delay any additional increases.
How New Commerce Experience affects license handling
In the past, some companies paid via credit card in the Office 365 portal where they could self-manage licenses, removing or adding at will. Many enterprises use a CSP, in which the vendor obtains a quote and then outlines the additional costs and handles the license purchase after customer approval.
Microsoft NCE gives administrators full control of licenses through the portal and without a credit card on file. This makes it easier for IT to add -- but not remove -- additional SKUs of their choosing.
How to manage subscriptions with the New Commerce Experience
Managing licenses and finding cost leaks is always top of mind for IT. But with the New Commerce Experience, not having the option to reduce licenses when they are no longer needed requires more attention to planning and learning how to align licenses to the appropriate roles.
Here are a few considerations for IT during the license planning process in the New Commerce Experience:
- Define the list of SKUs needed based on job functions or application requirement.
- Determine the projected change in staff.
- Ensure HR has standard operating procedures so new hires receive existing licenses from terminated users.
- Confirm there is an approval process to evaluate the increase in licenses.
- Adopt licensing reporting tools to help with reviewing license usage.
- Understand the benefits of New Commerce Experience and the support provided by the CSPs.
Dealing with licenses is not new for IT, but the popularity of Microsoft 365 and all other subscriptions coming under the Microsoft NCE platform increases the burden on IT to avoid unassigned license costs. However, given the flexibility of self-management, additional Microsoft resources and the CSP support, there are certain advantages to this change that could benefit the organization, provided more effort is put into the planning phase.