Pax8 Hints It Will Help Microsoft Partners With NCE Credit Risk

‘While we don’t have a solution today on how we help support you on the credit risk, there are a number of scenarios and solutions that we are looking into,’ says Nikki Meyer, vice president of global vendor alliances at Pax8.

Pax8 is looking for 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 that we have to play in this space is really making sure that we’re partnering with you, guiding you through this process and coming up with the right resources and tools to be able to accomodate this,” said Nikki Meyer, vice president of global vendor alliances at Greenwood Village, Colo.-based Pax8, a cloud distributor with a strong focus on Microsoft. “So while we don’t have a solution today on how we help support you on the credit risk, there are a number of scenarios and solutions that we are looking into. We are fairly early in the [process] and looking into this.”

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

Microsoft’s NCE is set to incorporate annual seat-based licenses and premium pricing for montly subscriptions for Microsoft 365 and other offerings. Partners that want to protect customers from paying a 20 percent premium for monthly subscriptions can absorb the cost of the annual subscription themselves and extend montly payment terms to their customers. But that creates a risk for the solution provider in the event the customer goes out of business or stops paying their bills, solution providers said.

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

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

“It’s not that prices were going up, it’s did we have to make it this complex?” Essayian told CRN. “It would have been nicer if this had been a little more cut-and-dry so we weren’t having these conversations and we weren’t worried as much. Some of this can be a ... risk to a company.”

Essayian said he’s glad Pax8 is stepping up and looking to assist their partners.

“When we think about the digital transformation journey that we’re on, there is no finish line,” Meyer said. “This is going to be an evolution as we continue to meet the demands of ever-evolving technology.”

And NCE has been a journey, she said.

“What we’re facing today is nothing new,” she said. “The heavy lift-and-shift that we had from moving to NCE was when Microsoft launched the evergreen Microsoft Partner Agreement. We all remember the pain that we went through in terms of making sure that by the certain deadline, everyone had signed the agreement.”

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 this before, so nobody has any type of mechanism available to it.”

He said he and MSPs he has been speaking to have concerns about the financial impact of NCE.

“I know Microsoft says, ‘These are the rules.’ But I’m going to tell you, if there is an MSP that has this all figured out, I’d like to meet them,” he said. “I know vendors are doing a very good job on educating us but it’s shifted. Where are we going to end up?”

He is also concerned that the terms and conditions of NCE could continue to shift as Microsoft determines what works and what doesn’t once it’s widely in use.

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

Pax8’s Meyer said the recipe to navigate it is all around education and enablement. To help MSPs on that journey, Pax8 said it offered multiple webinars, blog posts and office hours “to help you deliver that message to the customers and to be able to remove some of the complexity.”

“We’ve been staring down the barrel of it and [thinking about] what we need to do to reassess our credit risk with clients and what does that mean,” Esssayian said. “Is Microsoft going to hold the line in the sand on this and say, ‘You must do this.’”

He’s concerned about if a client goes bankrupt or wants to move to another MSP.

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