Strategies To Manage Risk With NCE

The Microsoft New Commerce Experience (NCE) is set to transform the experience partners and customers have with Microsoft. By giving customers greater choice and flexibility in how and where they make purchases and partners more opportunities to sell, NCE is aimed at driving better business results, reducing costs, and accelerating customer satisfaction. But the experience also brings about some risks, which need to be managed efficiently, to achieve the best results from all the new capabilities.

What has created the risk?

The new pricing model is set to substantially increase the price of licenses; and while customers get the benefit of more services, this price increase is likely to create a price war between partners. To overcome this challenge, partners will have to be extremely proactive and begin moving their customers to the new model as soon as possible, to lock them into fixed prices and a new term commitment.
The introduction of annual and monthly commitments with only a 72-hour window to cancel has made it easy for MSP partners to manage customer subscriptions. But this new change also means that if subscriptions aren’t canceled within 72 hours, clients will have to pay the remainder of the entire subscription term. At the same time, if customers want to reduce the number of seats they opt for, they will have to do so within the same 72-hour window.
To ensure customers continue to have a seamless experience with NCE, partners must communicate and drive new commercial contracts; but this could create unnecessary friction with existing customers. Another way around would be to get annual commitments with your end customers but with monthly payment terms, but this puts the partner at risk.
The new cancellation policy also puts partners at the risk of being exposed. Since Microsoft will no longer provide pro-rata refunds for the early termination of any subscription, it will result in enforced cancellation terms. Although customers can get a full refund if they cancel within 72 hours, after the 72-hour window, if the customer doesn’t pay, partners can get a pro-rated refund, but only up to 3 days. Smaller Microsoft partners will feel the repercussions of the limited window the most, as they are less likely to have a robust process to swiftly deal with the backend accounting changes NCE necessitates.

How to increase revenue in your cloud business?

5 quick tips to improve revenue with smarter and
efficient provisioning and subscription management

What are the options?

To manage risk with NCE, here are a few options for partners:

Don’t take the risk

If you do not want to take the risk brought about by NCE, you need to ensure to collect annual payments for annual terms. When you do this, you can tie your customers into a 12-month agreement, and they can increase or decrease their subscriptions if they want to. At the same time, this option also allows you to cancel a subscription at any time, which means there is very little risk involved.

Parallelly, since any pricing change will only affect the customer at the time of renewal, you will be charged with the new pricing later, giving you enough time to communicate the price change to customers – and minimize the risk of non-payment from their end.

Have robust commercial and legal agreements in place

Having robust commercial and legal agreements in place is a great way to manage risk. If there are any issues, you should get them signed and enforced via Self-Service Portals. These portals will allow non-recurring items to be supported on the customer self-service portal while allowing customers to view and manage recurring subscriptions and one-time purchase items as well.

Customers can also add one-time purchase items to an existing contract, schedule a new subscription or additional license quantity with the future effective date, and easily manage and control license changes easily and efficiently through the portal.

Enhance the Credit Qualification Process

With so many products and subscription options offered, pricing management can be a real task for customers and partners alike. To streamline this, partners can enhance the credit qualification process and opt for the single global pricing principles applicable to all motions.

Using this, partners can offer subscriptions at the published prices while delivering greater transparency to customers – helping build trust in the long run. At the same time, partners that provide 24×7 cloud-operations management activity will become eligible for a partner-earned credit and get rewarded for the robust services they provide to customers.

Enforce credit holds and suspension

Another way to effectively manage risk with NCE is by enforcing credit holds and suspensions. Using billing and provisioning tools such as Work 365, partners can enjoy an array of benefits across subscription management, pricing management, and renewal management while also accelerating digital growth via advanced automation and integration capabilities.

Work 365 can also empower MSPs to embrace change – without worrying about configuring changes for end customers – while making the most of streamlined accounting and revenue visibility features to improve relationships with customers.

Automate to ensure compliance

Embracing software solutions like Dynamics CRM can also help in the proper management of risks. By ensuring business process workflows are standardized and adhered to across the organization, partners can not only ensure compliance; they can also more effectively control the direction in which subscription changes are made.

As the NCE becomes comes into force, it paves the way for a novel way to invoice subscription-based cloud solutions. While the experience is set to accelerate digital growth for partners and customers, the risks involved with the price increase, the new 72-hour cancellation window, and monthly and annual commitments are hard to ignore.

Overcoming these challenges requires partners to take a careful and well-thought-of approach, so they can continue to build trust with their customers while also minimizing the impact of these risks on their business and on their customers.