Pax8 Advocates For Partners, Expects Microsoft Channel Program Changes In October

Pax8 Chief Commerce Officer Nick Heddy says he expects Microsoft to announce NCE changes in October that will ease partner ‘fear’ and ‘tension’ and at the same time ‘reduce risk’ as partners bring on new customers.

Pax8 Chief Commerce Officer Nick Heddy

Microsoft NCE Changes Will Help Partners Grow, Be More Efficient And ‘Reduce Risk’

Pax8 Chief Commerce Officer Nick Heddy told CRN he is looking forward to expected Microsoft New Commerce Experience (NCE) changes in October that will put the focus squarely back on helping partners grow their business.

“Pax8 has been working behind the scenes with Microsoft to advocate on our partners’ behalf,” Heddy told CRN in an interview at CRN parent The Channel Company’s XChange 2022 conference in Denver. “Our three core messages are: How do we help you grow? How do we help you optimize? How do we help you reduce risk? I believe the announcements in October will do all three of those things: help partners grow, help partners become more efficient and reduce risk.”

The NCE rollout has sparked an outcry from some partners frustrated with new annual software licensing commitments that they say have put an unfair burden on them and their customers. With NCE, customers are required to make an annual commitment to Microsoft software offerings like Microsoft 365 or pay a 20 percent premium on month-to-month commitments.

Heddy, for his part, said the changes were necessary but placed an enormous burden on partners and Pax8 as MSPs scrambled to meet the new NCE commitments.

“I think at the heart of NCE the spirit was to help partners with predictability of revenue,” Heddy said. “But when you make these big sweeping changes, it is hard to model out what the impact is going to be. There is no doubt there was a distraction as we all worked through this. It was also necessary as the current systems had been in place for around a decade and it needed that refresh.”

When the NCE changes required for Feb. 28 hit the channel, Pax8’s system processed 168,000 transactions over an eight-hour period. “Our platform did not go down, which is something we are really proud of,” said Heddy. “But the way it was received by the market there is no doubt that it was a distraction from growing your business.”

With the October changes, Heddy said Pax8, which received three awards from Microsoft this year—Modern Workplace for SMB, Indirect Provider and Customer Experience—is looking forward along with its partners to getting back to “business as usual.”’

Here is an edited transcript of the CRN discussion with Heddy.

What kind of relief do you think Microsoft partners grappling with NCE issues will see in October?

Microsoft is listening to partners and they are working on a plan that will offer relief in October. The final details are not released yet, but they will be announcing something.

Pax8 is doing what it always does: We aggregate, we amplify, we advocate for our partners. We are the voice that communicates to many of the Microsoft partners. Microsoft has 600,000 partners. We’re serving 23,000 of those. We are helping partners to navigate program changes and incentive changes that we expect to land in October.

What’s the message to partners from Pax8 on how this is going to help them with some of the NCE issues?

Pax8 has been working behind the scenes with Microsoft to advocate on our partners’ behalf. Our three core messages are: How do we help you grow? How do we help you optimize? How do we help you reduce risk? I believe the announcements in October will do all three of those things: help partners grow, help partners become more efficient and reduce risk.

What are some of the pain points with NCE you have been hearing from partners?

It came to market as flexible and perhaps it was not perceived or received that way in the marketplace. There were some business challenges that partners needed to take on; some partners didn’t have the ability to adjust contracts midterm. So they needed to go back and get some new agreements signed with their customers.

It’s hard for Microsoft to predict some of these challenges as they serve all partner types around the world. But Pax8 has been fighting behind the scenes on partners’ behalf and I expect relief soon.

How big a distraction has NCE been for partners that would rather be focused on increasing sales rather than dealing with licensing issues?

There are some silver linings to this as well. As the revenue is flowing through our [Pax8] marketplace, there is no doubt that it is a good thing for our partners that customers can’t stop that contract and decrease those license counts. But it has been a little bit of a distraction and it has slowed down new tenant acquisition.

I think if there was a program to be released in October the best thing it could do is to ease some of that friction and ease some of that risk and burden.

Is this a watershed moment for partners grappling with this NCE issue?

Microsoft is absolutely listening. In October I expect there will be a lot of great announcements that will ease the fear, ease the tension, reduce risk at the partner level as they bring on new customers.

What was the initial intent with NCE that somehow seemed to get lost in the shuffle?

I think at the heart of NCE the spirit was to help partners with predictability of revenue. But when you make these big sweeping changes, it is hard to model out what the impact is going to be. There is no doubt there was a distraction as we all worked through this. It was also necessary as the current systems had been in place for around a decade and it needed that refresh.

So Microsoft is listening. We are working behind the scenes on behalf of our partners and I expect relief in October in some form. I don’t have the specifics of what that is going to be.

How did Pax8 hold up as the deadline for the NCE changes hit the channel?

On NCE day, which was Feb. 28, [2022]—the deadline for partners to move their business to NCE—our [Pax8] platform saw 168,000 transactions over an eight-hour period and our platform did not go down, which is something we are really proud of. But the way it was received by the market, there is no doubt that it was a distraction from growing your business. Now sometimes you need to slow down and slow is smooth and smooth is fast.

I do agree that it was necessary, but adjustments will be made. We call it ‘Bruno’ because the amount of work, the amount of people going 24x7 behind the scenes to work on this was immense. But I expect in October everyone will be able to get back to business as usual.

How do you feel about the future of Microsoft and NCE?

I have a monthly recurring meeting with the gentleman [Microsoft Corporate Vice President, Sales Enablement, Partner Ecosystem and Supply Chain Mazhar Mohammed] who runs the team of 3,000 [Microsoft] engineers and who has been working on the NCE platform for the last two and a half years. Microsoft is listening so I expect this to get back to business as usual in October.

How excited are you that Microsoft has listened and responded to partners?

I don’t know how else you could do it besides roll out the changes, listen and respond as quickly as possible. With the amount of employees Microsoft has, it is impossible to understand that scale. We are a 1,400-person company. They are150,000 employees.

How important was Pax8 acting as an advocate in this case for Microsoft partners?

What Microsoft expects out of an indirect provider is to provide that reach. That means aggregating the voice of 23,000 partners and prioritizing the feedback from partners to Microsoft. That process is wrapping up and relief is coming.