Last August, Microsoft announced that in 2022, they would introduce a new method of purchasing Microsoft 365 (M365) and Office 365 (O365) licensing, called the New Customer Experience (NCE).    The introduction of the NCE brings both a price increase for several M365 products and also changes to the terms & conditions of purchasing (which are arguably more significant).

Price increase and cancellation changes:

Until now, customers have been able to choose either a monthly or annual subscription for M365 licenses. In fact, Microsoft did not offer a monthly subscription, however customers could cancel their annual subscription at any point and so this operated, in effect, like a monthly subscription. The cost for either option was the same.  Subscribers could choose to pay an upfront annual fee or pay monthly.  Monthly payments have always been popular, they allow businesses to spread costs while having the flexibility to adapt to changes.

Microsoft are now applying a price increase only to the monthly subscription model (for some licenses).  The price increase varies from 9-20%.  To avoid the increase, customers will need to switch to the annual or 3 yearly subscription model.  However, concurrent changes to the cancellation policy mean this decision is not quite as straightforward as you would think.

Up until now, customers could change their seat numbers at any time.  So, if your team reduced, you would simply inform Microsoft and the billing would be adjusted down and pro-rated.   Under the new rules, on an annual subscription, you will not be able to reduce the number of seats during the year. You can only cancel licenses within 72 hours of purchase.  Beyond that, reductions (and license downgrades) can only be processed at the annual renewal date.  Customers can, of course, increase the number of seats at any point throughout the year.

Managers will need to consider how much their workforce is expected to fluctuate during the coming year.  It may be that a hybrid model works for some, leading customers to purchase the same product from Microsoft on different subscription models ie a set amount of annual subscriptions for core staff + an additional number of monthly subscriptions to retain an element of flexibility.

What can you do to delay the changes?

Microsoft has introduced a couple of promotions to help customers with the transition to NCE. If you take action now you may be able to delay the impact of these change until 2023.  We are reviewing all of our IT Support customer contracts at the moment to ensure they are set up on the most cost effective and flexible subscriptions for as long as possible.  Procurement is one of the many advantages of having an IT Support service.  We stay on top of industry changes to ensure our IT Support customers in Glasgow, Edinburgh and throughout the UK are always getting the best deal.