Microsoft Licensing Changes

Microsoft have announced that starting in October 2021 through to March 2022, all customers of their cloud services (such as 365) will be migrated from their existing agreements over to a new framework.

For IT support businesses such as The Technologies Group, the change is not welcome because it reduces flexibility and increases our customer’s costs.

The “New Commerce Experience” will apply to all new customers and renewals, and in summary, it means one of two changes:

  1. Stick with monthly billing, and pay at least 20% more per 365 license (Office 365, Microsoft 365 and Windows 365 etc) or
  2. Switch to an up-front annual contract, and while the cost will be 20% less, you cannot cancel or lower the number of licenses during the term.

There are more complex changes within the NCE, but that’s it in a nutshell. We are waiting until March 2022 before we are forced to pass the change onto our customers.

TTG is one of tens of thousands of Microsoft Partners who have complained bitterly that the changes will impact businesses greatly; at present Microsoft customers can reduce their license count at any time, as well as increase it, for example during seasonal demand, and then reduce it again. Now, the only way to get that flexibility is to pay considerably more.

We are hoping in the next few months that Microsoft will reduce the rigidity of the new licensing arrangements, but we don’t hold out a lot of hope, and are therefore suggesting businesses plan to take a sensible approach based on the number of licenses required:

  • For very small businesses where the number of staff rarely changes: Pay upfront and save 20%.
  • For larger businesses, or those that flex numbers, including businesses with projects that come and go: Pay upfront ONLY for your core members of staff, saving 20%, and then pay monthly for the remaining licenses. You would only pay more for the additional licenses if your non-core team members were with you for more than nine months of the year.

It will be possible to switch from monthly to annual, if your circumstances change, but you cannot change from annual to monthly except at the anniversary of the agreement.

We’ll bring you more information as we have it, including pricing information, which is still to be published.