How to Re-evaluate Microsoft 365 Licenses for Your Enterprise

eWEEK DATA POINTS: Here are five steps to take for evaluating an organization's M365 license strategy, how to realize hard dollar cost-savings and how to gain a better return on investment.


The growing global movement to remote work has pressured many companies to re-evaluate numerous IT expenses, including their organizational Microsoft 365 (M365) licenses, along with other collaboration productivity tools.

This is a fairly new exercise for organizations that had previously been focused on just “getting to the cloud” and enabling crisis-driven work from home scenarios. Companies now find themselves unfamiliar with the number and types of licenses used across their business, and the associated wasted license scenarios.

This eWEEK Data Points article uses industry information from Curtis Johnstone, distinguished engineer for Quest Software’s Microsoft Platform Management business. Johnstone shares five steps to take for evaluating an organization's M365 license strategy, how to realize hard dollar cost-savings and how to gain a better return on investment.

Data Point No. 1: Identify who’s using M365 and how it’s being used. 

M365 and Azure AD licenses typically consume a large amount of a company’s IT budget and are a source of significant unnecessary cost when left unmanaged and not actively measured. Organizations frequently and unknowingly waste money on licenses that are being used minimally or not at all, because they aren’t paying attention to usage trends, which enable the most cost-effective license renewal. This lack of insight into managing licenses can be costly, and many can’t afford to waste budget where it’s not needed.

Data Point No. 2: Educate employees on all M365 capabilities to ensure it’s leveraged to the fullest.

If M365 licenses are being underused by employees, it is likely they are not aware of the capabilities of the full suite and how to use it. If they aren’t aware of the core products offered by M365, then an organization's licenses will not be fully taken advantage of, and, in turn, ROI will be severely limited. One benefit of using an M356 suite is that the platform is streamlined, so products work better together. By fully adopting the suite, ROI can be improved twofold: by enabling users to make the most of what they’re already paying for and by increasing their productivity.

For successful adoption campaigns, companies need to know what specific products in the licenses are underutilized, and what users and groups need to be targeted. Having trending product usage data for users and business units enables even basic adoption campaigns, which can be surprisingly effective.

Data Point No. 3: Figure out how many M365 licenses are actually in use.

Every company has some form of licensing provisioning and deprovisioning. This process is usually automated and integrates with their identity solution to ensure that each business unit has an adequate number of license types to meet the functional needs of end users. The ongoing fluid nature of companies (organizational reorganizations and employee churn) makes it very difficult for the automated process to ensure the right amount of license types are available for a specific business unit (e.g., HR or sales). The result is a significant unnecessary cost to maintain large pools of multiple license types.

Regularly confirming how many of each type of M365 and Azure AD license each business unit (e.g., department, office or team) is consuming, and—more importantly—the multi-month assignment trends, provides the insight required to maintain the most cost-effective pool of licenses.

By taking this essential step, you can negotiate license agreements that minimize the number of M365 licenses while safely meeting the demand as employees join, leave or evolve within business units. Without this insight, this unused pool of licenses is sometimes as high as 15% or 20% of the total number of licenses purchased. This is a huge cost that can easily be avoided by taking a quarterly pulse check of the organization’s licensing needs.

Data Point No. 4: Put processes in place to regulate licenses and keep them in check.

While there are free six-month subscriptions being offered right now to enable work-from-home scenarios, those licenses will have to be paid for eventually. To avoid budgetary surprises, regularly monitor the number of licenses you're paying for and the assignment trends in all your organizational units and the associated costs.

To ensure existing licenses are being used to their full extent, monitor usage of the products included in each license. Underused products are targets for a more cost-effective license downgrade, or adoption campaigns to boost product usage and ROI. Other easy cost-saving targets include users with multiple licenses that include overlapping product functionality and licenses assigned to users who are disabled.

Crisis-driven work-from-home implementations have accelerated license assignments—and with it the number of license-wasting scenarios. Having current and easy-to-access data that drills into license assignments and the associated costs is the best way to realize savings and boost ROI.

Data Point No. 5: Take advantage of users purchasing their own licenses without losing central control.

Every organization should establish basic guardrails when it comes to self-service purchase of the Microsoft Power Platform licenses (Power BI, Power Apps, Power Automate). While the approach will vary depending on the business, this self-service license purchase capability is on by default per Power Platform product, so organizations need to keep a close eye on whether it’s enabled or not in their Office 365 tenant.

If the capability is turned on, organizations will need ongoing oversight into which licenses have been purchased and which team or department is responsible for them. Visibility and transparency are invaluable throughout the process; when organizations understand how their employees are using these capabilities, they’ll have more confidence in how employees are following boundaries.

Data Point No. 6: Summary

By following these five points for proper management of M365 licenses, organizations will save money and boost ROI. This is a powerful survival combination in this time of uncertainty. As the infamous American-Austrian consultant Peter Drucker coined: what gets measured gets managed. The inverse is just as true. If you aren’t measuring license usage and getting a full understanding of what you have in place, it won’t be managed. Save IT budget and ensure productivity by keeping M365 licenses in check.

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