Microsoft Rolls Out NCE Discount, But Controversy Remains
Wade Tyler Millward
‘We just would like for Microsoft to give us portability for customers,’ Lane Shelton, director of licensing for Core BTS, tells CRN in an interview. ‘And we‘re more than happy to risk losing our customers to our competitors to have that benefit.’
Microsoft launched a 16.7 percent discount valid until June 30 for customers new to Microsoft 365 and existing customers who want to upgrade to a more premium product – a help to some partners still dealing with the rollout of the “new commerce experience” platform, while still leaving in place some issues partners have with NCE.
The discount – aimed at small and midsize customers and called the “Microsoft 365 SMB and New Customer Upsell Promotion for Cloud Solution Provider (CSP) Customers” – is for customers who buy “a low-risk monthly commitment” for a variety of Microsoft 365 plans, Microsoft Teams Essentials and Microsoft Defender for Business, according to an announcement by the Redmond, Wash.-based tech giant.
The valid M365 plans are Business Basic, Business Standard, Business Premium and Apps for Business. The discount does not work on “legacy” subscriptions – ones made off NCE.
Did Microsoft Change NCE?
CRN has reached out to Microsoft for comment. The company announced the promotion on Sept. 1.
In a document explaining the 16.7 percent discount, Microsoft said it created the discount “to enable partners to pitch how Microsoft 365 can help prospective and existing customers ‘Do More with Less’ by consolidating vendors or improving their security and productivity posture with a more premium product.”
For new customers to M365, “This promotion creates immediate cost savings both in product value and price point for new customers while allowing customers and partners to retain the flexibility of a monthly commitment,” according to Microsoft.
For customers interested in upgrading to a higher subscription type, “This promotion is a fantastic opportunity for partners to explore with their existing customers how upgrading to products like Microsoft 365 Business Premium – or expanding their Microsoft 365 investment with standalone products like Microsoft Defender for Business – can save existing customers money through vendor consolidation while providing necessary productivity and security value,” according to Microsoft.
Lane Shelton, director of licensing for Core BTS – an Indianapolis-based Microsoft partner and member of CRN’s 2022 Solution Provider 500 – told CRN in an interview that the promotion helps his business because he upgrades a lot of customers to the Business Premium subscription.
At the beginning of the NCE roll out, Core BTS used the conversations with customers to try to upsell them on Microsoft products.
“We‘ve had a lot of customers transition up, which I don’t think they would have done if NCE didn’t force them to talk to us,” Shelton said. “Especially back in the early days, when they had the discounts on the annual SKUs (stock-keeping units), we’d be like, ‘Hey, you have got to talk to us in the next 30 days, because maybe we can save you some money.’”
He continued: “Every customer would talk to us. And then they ended up upgrading. And so it was great because they got extra discounts. They got to upgrade. We got more revenue. The customer was happy. So there was a lot of that stuff. We would like for that to continue.”
But Microsoft still has not fixed one of the main issues with NCE – when customers buy an annual commitment, customers are unable to change managed service providers until the contract ends, which can result in partners taking on a customer and forgoing revenue until the end of the contract with the original MSP.
“We just would like for Microsoft to give us portability for customers,” Shelton said. “And we’re more than happy to risk losing our customers to our competitors to have that benefit. Because we just think that that’s the biggest gap that they have right now. … (Dropping the 20 percent monthly premium) would mean that we could still do monthly SKUs with the vast majority of our customers.”
The 20 percent premium on month-to-month commitments also punishes customers with seasonal businesses that like to change license counts month to month, Microsoft partners have told CRN.
And if customers buy annual commitments to M365 packages, partners may be on the hook paying out the rest of the contract should the customer go out of business or need fewer licenses.
In July, Microsoft rescinded a policy that encouraged partners to move legacy subscriptions under its Cloud Solution Provider program to NCE by January – providing an indefinite delay to when partners need to move existing subscriptions to NCE.
However, partners selling new subscriptions for M365 packages have to sell them through NCE – and thus with the 20 percent premium for monthly commitments – unless the customer is upgrading to a higher subscription type or is new to M365. Then, they get the 16.7 percent discount.
More On The Discount
The discount ends for customers on the first monthly anniversary date after June 30, according to Microsoft. The discount ends automatically.
Or, “[p]artners can work with their customers to transition to a standard NCE annual commitment from the monthly commitment promotional offer,” according to Microsoft. “This can be done at any time during the promotional period. Cancellations and adjusting automatic renewal can be scheduled in advance as well.”
Microsoft continued: “Partners should decide with their customers whether an annual or monthly commitment makes most sense based on customer need and credit risk.”
Microsoft encourages partners to lead upselling conversations with the tech giant’s security offerings, according to the document explaining the discount. Partners can also use the uncertain economy as a talking point because “pressures from the evolving global economy are requiring organizations to reduce costs and optimize operations as they continue to shift to a world of hybrid work.”
Features in Partner Center can help partners determine if customers are eligible for the promotion. Customers with annual commitments cannot change existing subscriptions to monthly. Customers can cancel monthly subscriptions during the first 168 hours after renewal for a pro-rated refund, according to Microsoft.
NCE isn’t the only major change Microsoft has announced for partners in 2022. In August, the company unveiled changes around virtual core licensing and outsourcing certain licenses on Google Cloud and Amazon Web Services data centers.