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What will the Microsoft CSP changes mean for your business?

If your business is an existing Office 365 or Microsoft 365 licence holder there’s a more than fair chance that your services are currently delivered via the Microsoft Cloud Solutions Provider program, or Microsoft CSP for short.

The CSP program has existed for a number of years without significant alteration, but that is about to change. In a recent announcement, Microsoft have stated that they will be making changes to the way the CSP program runs as it continues to invest into the recently developed Microsoft New Commerce Experience (NCE). Businesses will have until the end of February 2022 to purchase subscriptions under the current CSP program. But from 14th February 2022, Microsoft will be enforcing a switch over to Microsoft NCE.

Ahead of this impending change, it’s important to understand what the switch to NCE could mean for your business and how you provision your Microsoft licences.

A move to more fixed seat-based billing

One of the most notable changes with NCE is the flexibility with which businesses can change their licensing.

Currently, organisations commit to an annual subscription where they are billed either monthly or annually. Within this model, they are also able to freely increase or decrease the number of licences they hold, depending on varying needs. If businesses decide to decrease the number of users they have, they can do this at any point during the billing cycle and will receive a pro rata refund for each user.

The way in which cancelled licences are arranged will be changing in Microsoft NCE. Instead of being able to freely change the scope of the subscription, companies will have a 72-hour window where they can make changes after their purchase. After this window, they will only be able to increase the number of seats they hold. If a reduction in seats is needed, it will have to wait until the next billing cycle to come into effect.

Additional billing options

For some businesses, the change to seat-based billing could prove to be a hinderance when considering unexpected scenarios such as provisions for seasonal stuff, or regular fluctuation in workforce numbers. To assist with this, Microsoft will be introducing a new, low-commitment billing option where companies will be able to pay for their subscription on a month-by-month basis. This will allow them to increase seats daily if needed and decrease seats at the end of each monthly billing period.

However, the caveat to this low-commitment plan is that businesses who take this option will pay 20% more than those who commit to the yearly plans. If companies wish to avoid this extra cost, they can choose to go with longer-term plans instead.

The annual plan still allows for upfront or monthly payments, however a decrease in seats would have to wait until the 12-month period is complete. A similar approach applies to the new multi-year option which locks the price per user for 3 years, meaning the business would not be hit by any price increases further down the line. However, it’s worth remembering that the number of seats cannot be decreased until the end of the 3 years.

First Microsoft 365 price increase since 2011 launch

Since its launch in June 2011, Microsoft has not yet increased the price of its Microsoft 365 service – in March 2022 this is changing.

Over the past decade, Microsoft has introduced 25 new apps to 365, including Teams, Power BI and OneDrive, as well as over 1400 additional capabilities. In a recent announcement, they’ve also shared that they will be adding unlimited dial-in for Microsoft Teams meetings over the next few months. With this is mind, it could be argued that this price increase is to be expected from such a highly evolved service.

From 1st March 2022 the services affected by this price increase will be as follows:

  • Microsoft 365 Business Basic (from $5 to $6 per user)
  • Microsoft 365 Business Premium (from $20 to $22 per user)
  • Office 365 E1 (from $8 to $10 per user)
  • Office 365 E3 (from $20 to $23 per user)
  • Office 365 E5 (from $35 to $38 per user)
  • Microsoft 365 E3 (from $32 to $36 per user)

At this time, these price increases will not affect educational or consumer products. Another thing that’s worth noting is that businesses who commit to the annual billing option before the end of February 2022 can expect a 5% discount on Microsoft NCE, and they will also avoid this Microsoft 365 price increase for the first year.

What does this mean for your business?

These changes bring about a need for all businesses who are currently making use of the Microsoft CSP program to review their licences and consider how Microsoft NCE will impact their strategy for licence provision moving forward. All existing annual licences will continue with the legacy model of the program until the end of the current billing cycle, regardless of the 2022 start date for the NCE.

If you have any questions about these upcoming changes or would like to find out how you can join the new NCE program, you can contact a member of the team.