On Time Renewal

This document relates to the following:

• Minimum three-point discount reduction for late renewals 
• EPT invoice enforcement 

Minimum three-point discount reduction for late renewals 

Introducing Conditions for On-Time Renewals:

The on-time renewal of all Microsoft agreements, especially Enterprise Agreement (EA), Enterprise Agreement Subscription (EAS), and Server and Cloud Enrollment (SCE), is a critical factor in securing business that enables Microsoft to report revenue and bookings in line with prior forecasts. Reporting accuracy, in turn, reduces uncertainty in the market. From a customer perspective, on-time renewal ensures that there are no gaps in licensing coverage and that services continues uninterrupted.

Definition of on-time Renewal

On-time renewal is the renewal or extension of an EA enrollment on or before its expiration date.

Setting Expectations for Proposal Expiration and Discount Decrease

On-time renewal expectations and the consequences of late renewal should be set at the first proposal discussion and reinforced in all future discussions with the customer.

Criteria for Completing the Deal Before Proposal Expiration

A fully executable signed contract and purchase order (PO) must be received by Microsoft Operations no later than the current enrollment or agreement expiration date. Partners should always aim to submit valid executable cases that can be processed without breaks before the enrollment expiration. They should target the guaranteed cutoff (GCO) date to allow time for addressing any issues.

The GCO date applies, and account teams should plan to submit the completed renewal deal package to their Regional Operations Center (ROC) by GCO to provide the best chance for the deal to be processed. The clause in the channel price sheet (CPS) is aligned with customers’ contractual terms. Partners should keep operational considerations for GCO in mind to ensure that the deal is received, executed, and revenue recognized per GCO requirements

Clause Added to the Quote

To support the messaging that all offers to customers and partners are time-bound and based on the on-time renewal of the agreement, from April 15, 2022, any renewal quote generated from Microsoft Quote, Partner Quote, and/or Volume Licensing (VL) Central will include the following clause in the Notes section of the customer and channel price sheet:

"This renewal proposal is valid through the expiration date of your current enrollment. If the renewal agreement is signed and the PO is submitted to Microsoft processing center after the expiration date, the negotiated overall discount on this agreement will be decreased by at least three percentage points."

This clause is aligned with the contract terms of the customers’ Enterprise Agreement, according to the Renewal section in the enrollment paperwork. Refer to your customer’s prior (expiring) agreement to ensure understanding and alignment. The clause is being added to provide customer visibility to the guidance from Microsoft and help sales teams use the guidance as a negotiation tool to drive on-time renewal. Include this clause in all decks or scenario spreadsheets, from initial renewal discussion all the way through to the final CPS.

Discount Reduction for Future Pricing Table (FPT)

The discount reduction applies to future pricing table if the FPT is discounted.

Discount Reduction for Late Extensions

The three-percentage-point discount reduction applies to late extensions (one-page renewals).

Application of Discount Reduction

The commercial executive on the deal is expected to apply the discount reduction to the CPS. This applies to both direct and indirect markets.

Scope of the Guidance

In scope are all Commercial EA, EAS, and SCE deals with a negotiated discount in both indirect and direct markets. The following are out of scope:

• Deals for which the final quote has been sent to the customer as of April 1, 2022. Thereafter the guidance will apply.
• Deals for which the final renewal offer has already been made to customers.
• Deals with 0 percent negotiated discount or being offered at list price to the customer.
• Public sector deals for all countries (GOV, PUBSEC, and SOE).
• Nonprofit organizations in EA and EAS.
• Education deals for all countries (CASA and EES).
• EA deals scheduled or quoted for transition to the new commerce purchasing motion.
• Azure deals in competition with AWS (price match commitment).
• Non-Enterprise deals (No other programs are included).

While PubSec deals are excluded from field guidance, Deal Desk-led PubSec deals are in scope for discount reduction.

Application of Discount Reduction

Work with the partner commercial executive (P-CE) and LSP contacts on the deal. The guidance also applies to indirect EA deals, so any existing guidelines and execution steps that are applicable to discounting indirect EA deals are applicable.

Partner's Role in Extending Discount Reduction

Microsoft will apply the minimum three-percentage-point discount to appropriate late deals and this will be reflected on the CPS offered to the partner. Microsoft, however, doesn’t dictate the terms of the relationship between the end customer and the partner, and it’s up to the partner to extend the reduction to the end customer.

Discount Transparency Disclosure Form (DTDF) in PubSec

Where the DTDF is currently required, it is maintained as required. Public sector is out of scope for field guidance on discount reduction, but in scope for discount reduction with Deal Desk-supported deals.

More Information and Partner Actions

Microsoft has communicated this change to affected partner groups through partner operations communications. Work with your partner development manager (PDM) or CE on the deal to clarify the impact. The best way to avoid any impact from this guidance is to ensure that your deal is renewed on time.

Escalation Process for Customer Resistance

The partner should engage their local subsidiary account team early to ensure the best possible result.

Additional Incentives for On-Time Renewal

No, renewing on time is a contractual obligation under the customer’s enrollment so there’s no extra incentive being provided to renew on time.

EPT invoice enforcement

• Microsoft enables EPT by default for commercial customers to provide continuity of service. It bills customers monthly after the enrollment’s expiry at their current price list level, plus a 3 percent admin fee.EPT pricing is designed to encourage customers and partners to renew on time.
• Canceling and crediting an EPT with the submission of a late renewal which is then backdated is a common practice. This negates the intent of the EPT pricing impact (list price plus 3 percent admin fee) which is designed to drive on-time renewal.
• The combination of backdating with EPT credits creates an artificial "grace period" and unintended customer expectations, with no direct consequences for a late renewal.
• This drives admin overhead for both the partner and Microsoft (Field Ops and GTFS).
• As a tool to drive on-time renewal, Microsoft is enforcing a stricter policy on EPT credits that are requested after late renewal.

Changes in EPT Invoice Credit Requests

For customers opted in to EPT who delay their EA renewal until after the expiration date, Microsoft will enforce an EPT invoice payment for applicable products if the enrollment is renewed more than one month after the expiration date. To drive on-time renewals, the following changes are being made for EPT invoice credit requests:

• For deals that are submitted late to ROC for processing but within their renewal month, the ROC processes the EPT invoice credit in full.
• For deals that are submitted to the ROC more than one month late, ROC won't process an EPT invoice credit request.

Non-Azure Online Services (OLS) products that were in EPT from the prior enrollment, when renewed, will have their effective coverage start date aligned to the first of the month of renewal processing. The CPS will be processed with a usage start date equal to the first of the month of renewal processing. Late renewal orders for OLS are backdated to the first of the processing month for existing or new products. Any on-premises product billing will commence from the effective start date of the renewal (which is the day after the expiry of the current enrollment) to maintain continuous Software Assurance (SA) coverage per program rules and policy.

Effective Date of EPT Enforcement

This change is effective for all renewals from June 1, 2022 (May 31 expiration).

Scope of EPT Enforcement

This affects all customers who are opted in to EPT and are more than 30 days (one month) late with their renewal.

Communication with Customers

Microsoft field and partners should engage customers in discussions about on-time renewal as early in the renewal discussion as possible to ensure that the customer is aware of the impact of a late renewal.

Customer Payment for EPT

For non-Azure OLS products that were in EPT from the prior enrollment when the enrollment renews, the effective coverage start date is the first of the month of renewal processing. ROCs only have the power to credit the one month of EPT invoices aligning to the month the renewal was processed. The customer won't pay double in the following scenarios:

• For deals that are submitted to the ROC for processing late but within their renewal month, the ROC will process the EPT invoice credit in full if created.
• For deals that are submitted to the ROC more than one month late, the ROC isn't empowered to process an EPT invoice credit request.

The CPS is processed with a usage start date equal to the first of the month of renewal processing. Late renewal orders for OLS are backdated to the first of the processing month for existing, additional, or new products. Any on-premises product billing will commence from the effective start date of the renewal (which is the day after the expiry of the current enrollment).

Renewals under the Cloud Solution Provider (CSP) Program

Moving to CSP isn't a renewal but a migration. As an exception, if the ROC receives documentation such as a screenshot of the portal or an invoice that shows an enrollment start date or order date aligning with or overlapping the coverage of the earliest EPT invoice, the invoice may be credited. Any EPT invoice that has even one day of overlapping coverage with the CSP enrollment start date or order date can be credited. EPT invoices that don’t have an overlap with the dates listed in the documentation won't be credited.

Renewal CPS and Late Submission

If the late renewal is submitted without an amendment to backdate, the ROC will prorate the OLS coverage dates to the month of processing, thus reducing the invoice accordingly.

Example of Backdating or Prorating for OLS SKUs

If a renewal that’s more than one month late is submitted with an amendment, the ROC will backdate the renewal CPS as indicated and credit the EPT invoices in full (no line-item adjustment required). If a renewal that’s more than 30 days late is submitted without an amendment, the renewal licenses will only be backdated to the first of the processing month. If there’s an EPT invoice already generated for that same month, it iscredited to remove the overlap, but no previous month EPT invoices is credited.

Sample Case

• Previous enrollment expired on December 31, 2021.
• The renewal is submitted to the ROC on February 18, 2022, but there’s no backdating and there are no EPT amendments in the renewal package.
• EPT invoices have already been generated for January and February 2022.
• The renewal order will have a usage start date of February 1, 2022, for all OLS licenses. The February EPT invoice will be credited in full. The January EPT invoice isn't altered at all. Result: The customer renewal is only for an 11-month term, but revenue is captured from the January EPT, which equates to a 12-month term and continuous licensing coverage for year 1.

Note: This case applies to OLS only because on-premises with SA needs to be from the first or renewal date to ensure continuous SA coverage.

Customers Opted Out of EPT

The customer will still retain access to the OLS services for a grace period from the opt-out processing date or enrollment expiry date (whichever is later). The grace period is eventually disabled and then deprovisioned usually after about 90 days and all data is purged.