Credit risk

Pax8 Hints It Will Help Microsoft Manage NCE Credit Risk

Pax8 is looking at ways to help partners manage credit risk as they grapple with new subscription terms offered through Microsoft’s New Commerce Experience (NCE).

“At Pax8, the role we have to play in this space is really to make sure that we partner with you, to guide you through this process and to offer the right resources and tools to be able to deal with it,” said said Nikki. Meyer, vice president of global vendor alliances at Greenwood Village, Colo.-based Pax8, a heavily Microsoft-focused cloud vendor. “So while we don’t have a solution today on how we help you manage credit risk, we are looking at a number of scenarios and solutions. We are quite early in the [process] and looking at that.

Meyer and Pax8 COO Ryan Walsh spoke at CRN’s parent company, The Channel Company, XChange 2022 event in Dallas last week.

Microsoft’s NCE is expected to incorporate annual per-seat licenses and premium pricing for monthly subscriptions to Microsoft 365 and other offerings. Partners who wish to prevent customers from paying a 20% premium for monthly subscriptions can absorb the cost of the annual subscription themselves and extend monthly payment terms to their customers. But it creates a risk for the solution provider in case the customer goes bankrupt or stops paying bills, the solution providers said.

There’s “general frustration” with Microsoft over the complexity of NCE that didn’t need to be there, said Mark Essayian, president of Lake Forest, Calif.-based MSP KME Systems Inc.

[Related: Microsoft Channel Chief Rodney Clark’s Boldest Statements From XChange 2022]

“It’s not that the prices were going up, it had to be so complex?” Essayian told CRN. “It would have been nicer if it had been a little simpler, so we didn’t have those conversations and we weren’t as worried. Some of that can be a… risk to a business.

Essayian said he was happy that Pax8 stepped in and sought to help its partners.

“When we think about the digital transformation journey we’re on, there’s no finish line,” Meyer said. “It will be an evolution as we continue to meet the demands of ever-changing technology.”

And NCE has been a journey, she says.

“What we face today is nothing new,” she said. “The daunting task we had in moving to NCE was when Microsoft launched the evergreen Microsoft Partner Agreement. We all remember the pain we went through to make sure that within the allotted time, everyone had signed the deal.

But Essayian said Microsoft putting partners “on the hook” is new.

“It’s a new bridge to cross,” he said. “We’ve never had to worry about that before, so nobody has a mechanism at their disposal.”

He said he and the MSPs he spoke with had concerns about the financial impact of the NCEs.

“I know Microsoft says, ‘These are the rules.’ But I’ll tell you, if there’s an MSP who’s got it all figured out, I’d like to meet them,” he said. is staggered. Where are we going to end up?”

He’s also concerned that the NCE’s terms and conditions could continue to change as Microsoft determines what works and what doesn’t once it becomes widely used.

“What will Microsoft do to help its partners? he said. “I hang my hat on the fact that Microsoft, for the most part, has been a friendly partner to us and they’re going to understand what we’re up against and work with us.”

Pax8’s Meyer said the recipe for navigating it is all about education and empowerment. To help MSPs on this journey, Pax8 said it has offered multiple webinars, blog posts, and office hours “to help you get that message out to customers and be able to remove some of the complexity.”

“We looked at the barrel of it and [thinking about] what we need to do to reassess our credit risk with customers and what does that mean,” Esssayian said. “Will Microsoft keep the line in the sand on this and say, ‘You have to do this’.”

He worries if a client goes bankrupt or wants to move to another MSP.

“There’s going to have to be some recognition of business processes here, and I love that Pax8 is stepping up to do that,” he said. “I think all suppliers are going to have to come up with something. You’re going to have to mitigate risk, that’s what it’s all about.