Microsoft Introduces Major Changes to CSP Licensing – Starting in March 2022
Microsoft requires either a one-year commitment or a significant premium on monthly terms starting in March 2022. Learn more about this change and how to best prepare now!
***Note: Microsoft continues to actively make changes to this new program and release more details. Please connect with Interlink to receive the most up to date information for your specific scenario.***
Microsoft is Changing CSP Licensing:
Any organization utilizing CSP licensing needs to be aware of Microsoft’s changes, which go into effect in March 2022. Microsoft will be offering Monthly, Annual, and Three-Year subscriptions. All subscription terms will only be able to be canceled or reduced within 72-hours after purchase, and customers will be stuck with license counts until the end of their subscription term.
- Yearly Term: We expect the yearly term to be the most popular. Pricing is similar to what customers are paying today, and most CSP providers already require a one-year term – even when Microsoft allowed for monthly changes.
- Monthly Term: If an organization wishes to retain the ability to decrease seat counts/downgrade licenses at frequent intervals, then they will need to put those seats on a Monthly subscription. However, Microsoft will charge a massive premium for this option of 20%.
- Three-Year Term: The current plan is to only offer three-year terms for a limited set of offerings, including Dynamics 365 and Microsoft 365. The potential benefit here is that customers get locked into the pricing for three years to avoid potential future price increases across that term.
CSP Partners, like Interlink, will be able to continue transacting new CSP licenses without these changes until March 2022. We can also work with your organization to take advantage of pricing models, licensing structures, and promotions when applicable. Further promotional pricing details are still to come and will help mitigate Microsoft’s general price increase, which will also occur in March 2022.
How Your Organization May Be Affected:
Customers are encouraged to purchase the monthly term option at the 20% premium markup if they have seats that are not able to commit to an annual term. This allows organizations to cancel at the end of the monthly term with no further payment obligation. Monthly subscriptions are encouraged for organizations with seasonal workers or if downgrading/changes to subscriptions are anticipated. Some businesses will also want to select the monthly term for a portion of their workers and one-year terms for the remainder. For most organizations, we believe that the one-year term options will be the most popular.
After March 2022, for new CSP transactions, organizations are not able to decrease licensing (outside of the 72-hour cancellation window). Conversions between different types of licenses are possible but limited, and organizations must confirm with their CSP partner about the upgrade and downgrade paths. Organizations will be able to utilize partial upgrades, full upgrades, and seat additions:
- Partial Upgrades: Only some of the seats are being upgraded within the same license. The end date is coterminous with the original subscription end date. An example of this would be adding a new M365 E5 for phone system functionality for a subset of users like a particular branch office.
- Full Upgrades: All seats are being upgraded. An example of this would be wanting to move from E3 to E5 type functionality.
- Seat Additions: Seat additions mid-term of the same license will be prorated and co-termed to your original subscription end date. An example of this would be hiring a new set of incremental employees who need licenses.
Interlink’s experts have put together a few strategies for organizations to help minimize cost and headaches with this transition:
- Make Licensing Changes Before March 2022: If you have a current subscription, you can modify or turn down licenses without penalty before March 2022 if you are on an annual contract. Your CSP provider, like Interlink, can work out a plan to optimize savings for your specific environment moving forward.
- Licensing Structure: Committing to annual licenses after March 2022 will save your organization money compared to monthly subscriptions. Minimize your monthly licenses to only users who are seasonal or temporary. Some CSP Partners will offer monthly billing even when you commit to an annual subscription, although other partners may not be able to offer that. Our experts can help discuss different options and structures for your specific environment.
- Connect with Interlink: There are numerous paths available, and Interlink’s experts are able to discuss which is best for your organization moving forward to optimize licensing and save money.
Value of the CSP Changes:
Microsoft’s changes will include several new features, including the following offers and options for Microsoft 365 (subject to change):
- Home Use Program (HUP): Employees of organizations on the new licensing options after March 2022 can receive a discount on the purchase of certain Microsoft 365 consumer offers as an employee benefit that they can use on their personal devices.
- Unlike Enterprise Agreements (EA), which are paid one year in advance, CSP partners can offer a monthly payment option on annual or three-year subscriptions. This will enable organizations to manage cash flow and have predictable monthly spend.
Promotions for this change are scheduled to be released in January 2022. More details will follow.
How Interlink Can Help:
Interlink’s experts are ready to help discuss how to optimize your organization’s licensing and save money. Comparing licensing options and knowing which will be best for your organization can be confusing - view Interlink’s Microsoft 365 Enterprise Suites guide for clarity.
We can discuss strategy, leverage promotions, and offer monthly billing for annual subscriptions to help your organization save money and reduce headaches. Contact us today!
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