Microsoft’s New Commerce Experience (NCE) contract negotiations for IT buyers and IT departments

For many government agencies and commercial companies, Microsoft cloud has now become the most normal thing in the world. But this was not always so. The Corona crisis has played an important role in the transition for many companies from on-premises to the cloud, as people increasingly had to work from home and so the need grew for a cloud that everyone could access, both at the office and at home. 

But Microsoft wouldn’t be Microsoft if it didn’t regularly change its rules. Unfortunately, this has also happened with Microsoft’s cloud products and cloud licensing models. Many customers are suddenly confronted with high price increases from their Microsoft CSP partner when they are forced to switch to the Microsoft New Commerce Experience (NCE) licensing model. It is therefore important to have a good idea of what your investment as a Microsoft CSP customer is and how smart the Microsoft bundles are put together. 

Mandatory migration from Microsoft CSP to Microsoft NCE 

Cloud Solution Provider (CSP) was Microsoft’s program where Microsoft partners can offer cloud products to their end customers. The best-known examples of Microsoft cloud products are Office 365, Exchange Online, Dynamics and Azure. From January 2024, all existing Microsoft CSP licenses have been converted to the new NCE licensing model. 

Microsoft NCE has three subscription types: per month, per year and per three years. These are the differences: 

• Microsoft NCE per month: if you opt for a monthly subscription, you can reduce and/or increase the quantities per month and you have price protection per month. If you opt for a monthly subscription, you pay about twenty percent more than if you opt for an annual subscription.
• Microsoft NCE per year: if you choose an annual subscription, you have the option to fix the price of your subscription for one year. This way you will not have to deal with unexpected price fluctuations.
• Microsoft NCE per three years: with a Microsoft NCE subscription for three years, you have the option to freeze prices for three years. After these three years you are of course no longer sure of the current prices. The chance that you will pay more than now is quite high. We make this assumption based on recent years in which Microsoft has implemented a price increase almost every year.

Price increase with the arrival of Microsoft NCE 

As just mentioned, prices have also risen considerably with the arrival of the NCE licensing model. We see that many Microsoft cloud users are struggling with this price increase and are looking for ways to reduce their NCE cloud costs. Many of these users therefore contact our cloud optimization team to ease their pain. They are looking for help to optimize their cloud environment and discuss options for contract negotiation about their new NCE contract. When you want to extend your Microsoft NCE agreement or enter into a new agreement, you as an organization must first gain insight into the current status and needs of your cloud environment before you start negotiating or optimizing. 

Insight into Microsoft cloud usage 

How do you get the best insight into Microsoft cloud usage? You do this by making an inventory, which is the process of identifying, registering and documenting all cloud products that are present within the organizations. Also include cloud products that are not in use. 

The purpose of this process is to understand the operational needs of an organization. These needs are not clear in many organizations. Customers often do not have a good overview of which Microsoft cloud bundles their employees use or should use. In addition, it is difficult for customers to maximize the functionalities of Microsoft 365 bundles. Let alone that customers know which bundles their employees can downgrade to. 

Within Q-Advise we therefore use the latest techniques based on artificial intelligence: Q360. 

Q360 is a Microsoft Office 365-focused and Artificial Intelligence (AI)-based Cloud tool that provides insight into the most important facts: 

• What is not in use and what is in use;
• The Microsoft Cloud bundles that best suit the organization;
• The savings potential of the organization

Many customers unknowingly pay far too much for Microsoft cloud products and do not have a good idea of where their optimization opportunities lie. As customers increasingly use Microsoft cloud services, it is becoming increasingly important for companies to negotiate the most favorable terms for their NCE cloud contract in addition to insight and optimizations. 

The Microsoft CSP and NCE negotiation 

If you are going to negotiate an NCE license with Microsoft, you must ensure that you are well prepared. Therefore, evaluate functions and price structures in advance, and also compare the contract you want to conclude with Microsoft with the contract of your competitor. In addition, insight into the subscription options is also useful during a negotiation, so you can be sure that you are negotiating for the best possible deal. 

Short and long-term needs also play an important role during the negotiation in achieving the objective: concluding the most optimal Microsoft NCE agreement for the organization. For example, it is often cheaper to fix prices for a year or three years, but who knows, there might not be that need at all. 

Finally, it is always advisable to have an external party carry out the negotiations. NCE parties are extra sensitive to this. They know that these external negotiators know the Microsoft revenue models and cannot ask for a cent too much. In addition to being the best negotiators, Q-Advise has its Q360 AI-driven cloud tooling to deliver clear reports. With actual cloud use, i.e. with hard facts, we can take strategic steps during the negotiation. 

Virtually all NCE cloud products are easy to negotiate, for example products such as; 

• Microsoft Office 365 E3 or E5
• Microsoft Power BI Pro
• Microsoft Power BI Premium P1
• Microsoft Team Essentials
• Microsoft Azure AD Premium P1
• Power Apps per plan
• Microsoft 365 Business Premium
• Dynamics Sales Enterprise
• Microsoft Azure AD Premium P2
• Windows 10/11 Enterprise E3
• Microsoft Azure

What are the interests of the CSP partners? 

As a selling party, the interests of a CSP partner lie in the sale of Microsoft cloud licenses. A CSP partner’s job is to sell licenses and act as an advisor to their customers. With the arrival of CSP, the CSP partner has more resources to enter into a relationship with their customers. Microsoft rewards them for this.  

In addition to receiving an incentive from Microsoft, they also make a margin on the cloud product they sell to you. Unlike the NCE partners, Q-Advise has no interest other than that of the customer in this process. This is due to the fact that Q-Advise is not a Microsoft partner. We act as an independent Microsoft consultancy. 

As an organization, we believe that an optimal contract can only be achieved when delivery and advice are separated. This allows Q-Advise to provide complete transparency about the process developed by Microsoft in which NCE partners are well rewarded for the choices the customer makes. In many cases it is not your own choice but commercial advice from the NCE partner. We see that many NCE parties deliberately do not optimize cloud services and offer list prices to customers in the hope that customers do not see this. Unfortunately, customers do not have a good idea of the cost structure of Microsoft NCE. When these insights are clear, it gives the customer the necessary control and ammunition to get the optimal NCE / CSP agreement on the table. Q-Advise is the ideal party that can help with this. 

What are your opportunities during the Microsoft NCE negotiation? 

The NCE negotiation process is a process with which Q-Advise has extensive experience, an expertise that we use every week, resulting in interesting savings. Independent and clear Microsoft NCE advice and negotiation.  

Objectives of a Microsoft NCE contract negotiation are: 

• Inventory current and future cloud situation;
• Advise on the NCE contract to be concluded
• Perform a benchmark at NCE providers
• Conduct negotiations with the Microsoft NCE Partner
• Negotiation about the price per cloud product
• Agreement and signing of the new NCE contract

This process does not have to be complicated. It must be done if you do not want to waste money on overly expensive cloud licenses. In our opinion, cloud licenses with NCE Partner A are still the same as cloud licenses with NCE partner B. Why would you want to pay more for the same cloud license? 

Our motivation is not to get you away from your current partner. No, our motivation is to help you understand the savings potential.  

Speak to one of our customers who has made significant savings on their Microsoft NCE contract. 

Would you like to know more about Microsoft NCE negotiation and what it can mean for you? Then you have come to the right place at Q-Advise. As independent Microsoft experts in contract negotiation and optimization, we are happy to assist you with our expertise and expert advice.  

Please feel free to contact us. 

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