Microsoft wants to bring a new era of simpler software sales and management for customers and partners with its New Commerce Experience (NCE) platform, Channel Chief Rodney Clark told CRN US..
“The customer experience is just better when you look at it,” Clark said while discussing the move from 20 licensing constructs to three with NCE. “It’s a unified purchasing experience. The partner experience as well is more streamlined when you think about them having to traverse across these different licensing constructs. In New Commerce, through things like Partner Center It’s scheduling seat counts, it’s automatic term renewals, it’s improving efficiency. It’s providing flexibility in both monthly as well as annual terms. So it’s customer value, but also a lot of things for partners.”
NCE represents a dramatic change in Microsoft’s complex software licensing sales go-to-market model and the largest shift in its cloud go-to-market model since Microsoft introduced the Cloud Solution Provider (CSP) program in 2015.
The threee go-to-market models are: a breadth motion that includes CSP partners, an enterprise motion and a self-service motion. That’s a more streamlined experience for customers than the 20-plus ways customers previously purchased, through programs including CSP, Open License, Select Plus and directly online, Clark said.
“While we’ve been excited about Nnew cCommerce, we also acknowledge that this has been a pretty significant undertaking for our partners,” Clark said. “We get this feedback all the time. And it’s the rare combination in all my time here at Microsoft – when we talk about change, it’s usually across maybe there’s some technical API set and that said, or there’s some business model change. This one has hit three things. It’s hit technical, and back end, API integration. It’s hit business policy. It’s hit a little bit of business model.”
Here’s what Clark had to say about NCE, paying a premium for monthly Office 365 subscriptions and Microsoft’s long- standing commitment to partners.
What do partners need to know about NCE?
At the centre of it is customer value. And if you go back to 2019 that’s really when we started this push on New Commerce. We actually introduced Azure Planned, Azure Subscription and Azure Reserved Instances.
The announcements that we made in early January are really around taking these 20 licensing constructs that we have had in the business for years and netting it down at three: breadth motion for ease of engagement with our CSP providers and really optimizing for that small and corporate business. And that’s really the heart of this particular aspect of NCE.
And then there’s the enterprise motion, and then there’s a self-service motion. So we went from these 20 licensing constructs down to just a vital few. And the customer experience is just better when you look at it. It’s a unified purchasing experience.
The partner experience as well is more streamlined when you think about them having to traverse across these different licensing constructs. In New Commerce, through things like Partner Center, it’s scheduling seat counts, it’s automatic term renewals, it’s improving efficiency. It’s providing flexibility in both monthly as well as annual terms. So it’s customer value, but also a lot of things for partners in here.
The reason I mentioned partners, for obvious reasons, is that while we’ve been excited about New Commerce, we also acknowledge that this has been a pretty significant undertaking for our partners. We get this feedback all the time. And it’s the rare combination in all my time here at Microsoft, when we talk about change, it’s usually across maybe there’s some technical API set and that said, or there’s some business model change.
This one has hit three things. It’s hit technical, and back end, API integration. It’s hit business policy. It’s hit a little bit of business model.
In recognition of that, I made a decision to actually push the launch of this from October to January just to provide more time for our partners to get ready.
And during that time … we supported our partner ramp with additional resources, technical resource as well as modeling on their business model so that we can, in essence, be ready for where we are now.
And the additional time paid off. We’ve got support from some of our largest partners … the large ones like the Arrows, the Ingrams, the Tech Datas, the Crayons, have all weighed in on ultimately what this is going to do for their business and ultimately where they support Microsoft.
What do you say to partners concerned about the monthly premium?
There are two parts to this. The first is this introduction of monthly terms and that as an option. And the reason I mention that up front is because this becomes a way for partners to protect themselves against any issues, credit or other.
And so the reality is that we’ve always had this notion of annual contracts, but we didn’t necessarily enforce monthly interpretation of those annual agreements.
And so when you look at the business model today, it’s really no different than previous.
A partner has to assess the creditworthiness of a customer. And based on that, if there is a customer that they deem that at risk, then there is a monthly option for that and they can go month to month.
I always think about it – when I talk to partners about this all the time – is businesses come into market and go out of market on a regular basis.
And it really is up to each of us to manage what that looks like.
And we think that that actual monthly term is something that gives partners the ability to look at and say, ‘Hey, if there is a risk, then that’s the place where we want this particular customer.’
And then there are also benefits to an annual term. You get that at a rate that’s affordable and also then allows the partner in this case to make a decision as to who they can extend the annual terms to.
They can collect up front if there is a credit scenario or they can choose to bill a customer on their own terms on a monthly basis.
And so this is part of flexibility as well and one of the ways that we actually see it helping provide and support, but it doesn’t necessarily change the risk profile, which has always been there.
Does NCE put Microsoft more in line with subscription models in the market?
This notion of monthly term is not new to our business.
When you look at subscription models in general, there is a premium for a monthly term.
And then there’s typically some type of value in going to an extended annual term.
And in this case, we’ve built that into our model, and we’re also aligning to other models that are in the market.
You sign up for any subscription today that’s a cloud-based subscription and you get that option. You can pay more monthly or you can go to this annual term.
And in our case, we have an annual and also a three-year term that we’ll talk about and announce shortly.
But it aligns also to web-direct and other business models. So not only just market, but Microsoft has a precedent in supporting monthly premium as well as annual term.
What ’s your advice to service providers as they adopt NCE?
The biggest thing is we now have these indirect providers (distributors) that are on board.
Again, I mentioned Arrow, I was on with Arrow last week. And they are working with this long tail of resellers, there are implications to them, and they’re onboarding them.
We’ve provided enough support and services so that the model that we use to extend scale, which is through these indirect providers, is in effect.
I’ll let them give you the stats, but they more than doubled the number of partners engaging in New Commerce (Experience) month over month.
The one piece of advice that I would give is to really look at the dates that we have lined up so that each of these partners can maximize discounts and offers.
We also made available a five percent discount off of annual terms. And the discount applies to seat-based offer types that extend through Windows and up to 2,400 seats.
And that’s in effect until March with the potential to extend that discount till June. That’s both for monthly and annual.
I encourage these resellers to look at things like that and in this small window, really take advantage of any accelerated savings for them or customers.
Advice and guidance to resellers is to really understand when new subscriptions are available in CSP and when legacy subscriptions end. And that’s again a March date as well as a July date in terms of renewals,
And so really getting a grasp and understanding of just those three things and then leaning on the indirect providers is key.
Should service providers expect more changes to the partner program?
Yeah, we will continue to invest in new commerce.
It is ultimately validating CSP as a motion. As partners want to engage and extend through CSP, ultimately, now we’ve made and created this flexibility in new commerce.
New commerce is a great example of where we’re always looking to make sure that we’re providing the best level of support, the most flexibility and the best value – most importantly – for customers.
And so while change is tough we acknowledged that earlier with some things that we put in place.
As a partner in the ecosystem, we always have to be open and look for ways to create more value for our customers and then, ultimately, how our partners can deliver on that value.
Do the changes in NCE reflect what Microsoft sees as changing trends in consumer purchasing behavior?
That was our whole push to New Commerce, which is serving our cloud business, in essence, and providing the flexibility through minimizing the number of touch points.
In essence, we have these three streamlined motions – in breadth, in enterprise and self-service.
And so regardless of where a customer is, whether or not they’re purchasing a large enterprise agreement or going through CSP or they are going into self-service mode, they have one common platform and experience.
And that is what customers are asking for. And the thing that’s interesting in that statement is it’s an efficiency statement for both our customers and our partners. … Allowing a partner to schedule seat counts to do SKU conversions, to manage subscriptions automatically and assign seats automatically through a dashboard is hugely efficient for our partners as well.
What else can you say about NCE, and does the channel remain an important part to how Microsoft does business?
Yeah, I would say we want to reinforce and stress that there’s a lot of questions around this month-to-month, and annual and the value of each … I want to help all of us move to a point where we recognize that this is a business model that’s been with us and one that will offer, ultimately, partners more choice and flexibility.
The question around the importance of the ecosystem – absolutely critical.
Partners are center to what we do. We talk every year about 85 to 90 percent of our commercial business flowing through partners.
We are building things like Marketplace and enhancements to things like Partner Center.
We are supporting back-end flows to make it easier for our partners to do business with us through digital means as well as through traditional. So we are investing … a big part of our strategy is to continue to deliver on the promise of more value to customers and more flexibility and support for partners.
Think back to our announcements at Inspire last year where we said, ‘Hey, customers want and need more technical capability.’ And so we had a more than 250 percent increase in technical skilling. And the 3 percent Marketplace fee down from 20 percent – announcements that say, not only are we investing in the back end, but we want to make it more affordable and easier for our partners to go there.
You’ll see us continue to make announcements because my goal as the leader of our business and in a role as a channel chief is to simplify. Take some of the moving pieces out and ultimately get us to a point where we can simplify. And again, NCE is a testament to that as well.