Microsoft NCE Transfer Policy Change: 5 Things To Know

‘This flexibility is crucial for adapting to business dynamics like mergers, acquisitions or shifts in customer preferences. It allows us to be more responsible and agile in how we manage our client relationships,’ Jean Prejean, president of Guardian Computer, tells CRN.

Microsoft has confirmed that it is changing one of the most controversial parts of its already controversial New Commerce Experience program: The tech giant will allow partners in its Cloud Solution Provider program to transfer end customer NCE subscriptions from one partner to another midterm.

NCE garnered controversy when the Redmond, Wash.-based vendor began enforcing it in March 2022, putting a premium on month-to-month commitments of popular Microsoft offerings.

Microsoft partners have told CRN that some customers prefer to make annual commitments, which are 20 percent less expensive than month-to-month commitments. This, however, could leave partners paying out the remainder of the commitment should the customer go out of business, get acquired or no longer need the subscription.

The inability to transfer subscriptions from one partner to another meant that if a Microsoft MSP won a new customer from an old MSP it might have to work out a deal with the old MSP to take the customer, even forgoing months of revenue until the subscriptions ended.

Microsoft NCE Update

After CRN learned about the changes from a document shared with it, Microsoft confirmed the changes.

“This change was made based on partner feedback and will provide greater flexibility, creating a smoother experience for both partners and customers,” according to the documents.

Even with the transfer policy change, continued criticism of NCE by some Microsoft partners shows how the program has had a continued effect on their business even two years after enforcement began.

Some partners have told CRN that another welcome change to NCE would be the extension of the cancellation window from seven days to as many as 30 days to give customers more time to select the right number of subscriptions and the right types.

Read on for what else partners need to know about the transfer policy change.

Original And New Partner Sign-Offs

In an email to CRN, a Microsoft spokesperson confirmed that the policy change will allow two separate MSPs and two separate distributors to transfer NCE subscriptions if the original MSP and distributor agree to it.

“The future partner is responsible for payments to Microsoft for the remainder of the subscription term,” according to the spokesperson. “If a current partner is being billed monthly for an annual term subscription, the current partner will no longer receive further invoices upon transfer. If the current partner made an up-front payment to Microsoft for the entire subscription term, they would receive a pro-rated refund.”

The change applies to direct bill and indirect providers, according to documents shared with CRN and confirmed by a Microsoft spokesperson. The NCE cancellation policy of seven days still applies after the transfer and the changes only apply to CSP license and seat-based subscriptions.

Partners Praise Change

The inability for Microsoft partners to transfer end customer NCE subscriptions before they’ve ended has caused issues for some partners when bringing on a new customer in the midst of a subscription with a separate partner, partners have told CRN.

Some partners have had to work out deals leaving revenue to the old partner, for example, until the subscription ends, partners have told CRN. This could mean months of lost revenue if the end customer opted for an annual commitment. Under NCE, annual commitments are 20 percent less than monthly terms.

Jean Prejean, president of Metairie, La.-based Microsoft partner Guardian Computer—a member of CRN’s 2024 MSP 500 who previously discussed facing such a difficulty after NCE’s debut—told CRN that midterm transfers are a “highly beneficial change.”

“This flexibility is crucial for adapting to business dynamics like mergers, acquisitions or shifts in customer preferences,” she said. “It allows us to be more responsible and agile in how we manage our client relationships.”

The Microsoft spokesperson confirmed that M&As are among the scenarios partners cited for needing to transfer licenses.

More Work To Do

For future NCE adjustments partners are interested in, solution provider executives including Prejean have told CRN that a longer cancellation window than seven days—such as at least a month—would give customers more flexibility without financial consequences.

A blog post on distributor Pax8’s website about the “change of channel” policy said that transfers do not “open a new seven-day modification window” for the subscription. The current and new indirect provider or direct bill partner both need to approve the transfer.

Bobby Guerra, CEO of Jacksonville, Fla.-based Microsoft partner Axiom, told CRN that the rollout of NCE despite vocal criticism from some partners looked as if Microsoft didn’t understand the value of CSP partners and MSPs in grassroots implementation of the Microsoft 365 suite.

“[It] is exciting news to see Microsoft moving in the direction we have been begging for since NCE’s inception,” Guerra said.

He took to Microsoft-owned social media network LinkedIn on Wednesday to share more thoughts on NCE, saying that “the program should be scrapped, and the old system reinstated.”

“The old system added value to MSPs and gave them the flexibility to support their clients and be ambassadors for more Microsoft adoption,” Guerra said. “I’m glad that Microsoft is making moves to correct some of the issues, but the program is so bad they can’t fix them all.”

Azure Changes

The Microsoft documents revealing the policy change also said updates are coming for Azure solution providers.

The vendor said it is updating the current Azure plan and per-user subscription transfers “to allow for new commerce subscriptions” and “enable CSP partners to move their customers’ subscriptions to either new or different partners, primarily by enabling NCE subscriptions to transfer from one partner to another,” according to the documents.

“This enhancement also covers transferring Microsoft 365 with Teams subscriptions for existing customers,” according to the documents.

Other NCE Updates

Other NCE changes include Government Community Cloud (GCC) offers becoming available in CSP new commerce on April 1, according to Microsoft.

On March 1, NCE license-based public sector product SKUs became available in partner center. However, Microsoft continues to address some errors that happened in the CSP NCE public sector price list. Some of those issues will be fixed May 1, according to the vendor.

In June and September, Microsoft will retire select NCE APIs that retrieve billed and unbilled daily rated usage reconciliation. Newer APIs are generally available, according to the vendor.