Microsoft New Commerce Experience: understanding the changes and overcoming the challenges
Microsoft is currently redoing how companies handle charges for the Azure cloud services and the Microsoft 365 licenses. With an emphasis on long-term contracts, the CSP model is gradually eliminated and replaced with the New Commerce Experience. With this transition, some challenges may arise and Exivity is here to break them down and help your business.
While Microsoft 365 products are charged per Microsoft number of licenses, Azure services are based on a pay-as-you-go model. However, some of these services are sold under Reservations, which may help you save money by committing to one-year or three-years plans for many Azure resources.
Here are some of the most significant changes in the new commerce experience in Azure and Microsoft 365:
- The available subscription terms will be changed as follows:
- 1-month term option; clients who want a month-to-month contract will pay a premium of 20%
- 1-year (12-months) term option; upfront or monthly payments
- 3-year (36 months) term options; upfront, annual, or monthly payments
- The standard discount obtained by CSP partners is transitioned to a Partner Earned Credit (PEC) model.
- Azure NCE merges together Microsoft and third-party apps and services into a single unified catalogue, which can incorporate anything from cloud services ( e.g: an Azure subscription) to services added by the partner (e.g: specialized software development).
- While Azure CSP offers separate invoicing for marketplace items, the new Azure NCE offers bundled billing. With the New Commerce Experience, partners gain access to Azure services at a pay-as-you-go rate for customers under the Microsoft Customer Agreement, through an Azure plan. This plan enables the creation of multiple Azure subscriptions. There is no longer a need to submit a separate order per Azure subscription in the Partner Center.
- License subscriptions can be paid in advance. If customers cancel the subscription after 7 days of purchase, they will be charged for the full term. Previously, the CSP model offered the option to cancel within 30 days and get full reimbursement of the charges for any product they no longer wanted to use.
- If you purchase Microsoft products on a monthly subscription, you can decrease users/seats monthly or at renewal. Previously with CSP, both mid-term upgrades and mid-term downgrades were available.
From March 10, 2022, NCE became the only avenue for new business. And from the 1st of July 2022, renewal orders made by existing customers must be made within the New Commerce Experience.
As these changes are being implemented globally and will impact every Microsoft reseller, there are also some challenges arising with Azure NCE:
Massive daily rated reconciliation files
- With the New Commerce Experience, the monitoring of PEC tends to get skipped by financial teams, because the files are too large. We merge the Daily-rated usage reconciliation and the One-time purchase reconciliation files to keep the detail granularity while eliminating the hassle of manipulating massive files manually.
- Exivity reports day by day, generating a monthly dataset. Whereas with the daily-rated files generated by the new NCE model, you need to filter the raw data in order to figure out your daily usage.
- Exivity can be a financial feature set that Microsoft does not provide to Tier 2 partners hosted by Multi-Tier partners.
💡Did you know you need a billing automation platform to become a Tier 1 Azure reseller? We can help you meet that requirement.
- PEC influences the COGS (Cost of Goods Sold), not the charge (sales price). In case the requirements for PEC are not met, then the COGS and charge are identical, resulting in not having a net profit. Exivity provides advanced pricing visibility in PEC.
- Microsoft provides either 0% or 15% credit for partners. You don’t have to follow Microsoft’s list prices with your invoices when using our powerful rating engine. You can apply category-based discounts and uplifts.
Layout Transformation and Coordination
- We interrogate the data to match what is represented in the actual Azure Portal (i.e.: Azure Plan subscriptions are split out into Entitlements). Exivity lists these Entitlements as subscriptions.
- We can manipulate the outputs and the formats to fit the needs of different ERP systems. In contrast, NCE has a standard format or the reconciliation files with data which is not enriched (for example with customer information), which potentiates the amount of manual labor and adjustments needed in order to achieve successful ERP integration.
Exivity is a leading platform for advanced consumption reporting, rate card management and billing automation for public and private clouds. With a dedicated team of experts, we help you smoothen the transition of migrating from the CSP model to the New Commerce Experience.
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