4 Microsoft Licensing Updates You Need to Know Now

I have been working with Microsoft in the partner ecosystem for over fifteen years and often find myself quoting the Greek philosopher Heraclitus – “change is the only constant in life.” In the world of technology, and especially Microsoft, nothing stays the same for too long. It is easy to lose track of what all the changes are, let alone understand if they impact you and how.

Over the past few years, Microsoft has been taking steps to simplify the buying experience for all customers. This “New Commerce Experience” (NCE) results in a single governing contract, the Microsoft Customer Agreement, and reduces the number of buying motions to just three based on organization size, scale, and support requirements. Those three programs are:

• Cloud Solutions Provider (CSP) through a Partner like Apex Digital Solutions
• Enterprise Agreement (EA) with Microsoft
• Web Direct

In this blog, I will discuss four changes with Microsoft Licensing as part of the new commerce experience taking place over the next few months and what it means to your organization.

Last Fall, Microsoft announced plans to retire the Open Licensing program. The program was created over 20 years ago for small and midsized customers to buy perpetual software licenses at a volume price.  Earlier this year, perpetual software licenses were made available through the CSP program.

Starting January 1, 2022 customers will no longer be able to buy new or renew software licenses or online services through the Microsoft Open License program. Perpetual licenses do not expire; however, customers wishing to purchase software assurance or upgrade will need to purchase through Open Value or CSP going forward.

Impact Summary

• • Who This Impacts: Customers with Microsoft Open Licensing
  • When The Impact Occurs: December 31, 2021
  • Action to Take: Schedule a License Review with Apex to discuss options for new purchases

The new commerce experience for Azure in CSP was announced in September 2019 and a new Microsoft Customer Agreement was rolled out to customers shortly thereafter.

Since July 2021, new Azure business in CSP has been transacted via the new Azure plan. The next phase of the new commerce experience is to transition existing Azure CSP customers to the new plan by January. Benefits of the new plan include simplified management of multiple subscriptions, standardized pricing across sales motions, billing date alignment across providers, and access to Azure Cost Management. 

Impact Summary

• • Who This Impacts: Customers transacting with the legacy Azure plan
  • When The Impact Occurs: Now Through December 21, 2021
  • Action to Take: Ask your current provider how this impacts you. For Apex customers, there is no immediate action; we will be reaching out shortly to begin scheduling transitions for November and December. Feel free to contact your Apex Account Executive or Customer Success Manager with questions.

In an update last month, Microsoft communicated that seat-based offers for Microsoft 365, Dynamics 365, Windows 365, and Power Platform would soon be available through the Microsoft Customer Agreement along with Azure.

New commerce transactions of these seat-based offers will become available starting in January 2022 (this is a change from the original announcement of October 2021). Transitions of existing customers to the new plan will take place through 2022. 

Under the new commerce experience, customers will have a choice between monthly, annual, or multi-year terms. As with any change, there are pros and cons with the new plans. The Monthly terms will carry a premium price, cancellation policies will be enforced for 12-month and 36-month commitments, restricting when licenses can be reduced, and customers will not be able to switch licensing partners mid-term. However, anticipated benefits include price protection for up to 36 months, simplified billing aligned with the calendar month, and availability of traditional Enterprise Agreement (EA) only benefits (Hybrid Use, Communication Credit offers, and Multi-Geo capabilities) for CSP customers.

Impact Summary

• • Who This Impacts: All CSP Customers
  • When The Impact Occurs: Between January – October 2022
  • Action to Take: Ask your current provider how this impacts you. For Apex customers, there is no immediate action; we will reach out starting in November to schedule licensing review sessions for personalized recommendations. If you wish to schedule a conversation sooner, please contact your Apex Account Executive or Customer Success Manager to schedule.

     

New pricing for Microsoft 365 was announced by Microsoft in August. According to Microsoft, the price update reflects the increased value delivered over the past ten years. Key highlights include the introduction of Teams in 2017, enhanced security and compliance, data loss prevention (DLP) and eDiscovery, mobile device management, and enhanced AI capabilities throughout the suite.

As an example of continued value to be provided, Microsoft also communicated unlimited dial-in conferencing was coming soon for Teams meetings across all suites (previously a $4 MSRP add on).

The pricing changes are expected to go into effect on March 1, 2022 as follows:

• • Microsoft 365 Business Basic increase from $5 to $6
  • Microsoft 365 Business Premium increase from $20 to $22
  • Office 365 E3 increase from $20 to $23
  • Office 365 E5 increase from $35 to $38
  • Microsoft 365 E3 increase from $32 to $36

Microsoft 365 E5 will not have a price increase at this time. Price increases do not affect Education or Non-Profit pricing at this time.

Impact Summary

• • Who This Impacts: Customers with the licensing plans listed above
  • When The Impact Occurs: For existing customers, at renewal after March 1, 2022. For all customers purchasing new plans after March 1, 2022.
  • Action to Take: Discuss with your current provider how this price increase will impact you and options available to minimize the impact. Apex will address these discussions with current customers as part of the new commerce experience discussion. If you wish to schedule a conversation sooner, please contact your Apex Account Executive or Customer Success Manager to schedule.

Action Items

Recommendations on the right licensing program and terms for your organization depend on numerous factors including your desired business outcomes, budget, employee count, and growth plans. Make sure you are working with a trusted advisor who understands Microsoft licensing, advises on the impact on your business and technical objectives, and is committed to helping you drive successful outcomes. Take the time working with your trusted advisor to fully understand the different options and their implications to your business not only today but in the future. 

I would caution against making any quick decisions because the new program does not offer the same flexibility. You could find yourself stuck with a plan – and a partner – that don’t meet your long-term objectives.

Conclusion

While simplification is Microsoft’s primary goal with the new commerce experience, the process of getting there is anything but simple. In addition, I can confidently guarantee change will continue to take place, creating more complications and confusion through the transition. It is important to work with a partner like Apex Digital Solutions to thoroughly assess your needs and decide on the best course of action for your organization. 

To learn more about how these updates to Microsoft Licensing may impact your organization, schedule an assessment with our Microsoft experts.

Schedule an Impact Assessment: