When was the last time you closed a video streaming account because you just weren’t using the service? In our world of subscription-based music, television and news sites, most people have at one point or another found themselves paying for content they barely used.

And the same goes for many businesses. If your company is using Microsoft 365, there is a high chance you are paying for licences that are either being underused or not used at all. According to one study, 44% of Microsoft 365 licences are underutilised in this way. Considering that the most fully-featured Microsoft 365 E5 licence is priced at almost £31 per month, it’s easy to see how quickly these costs could add up.

How can procurement teams manage Microsoft 365 licences more effectively?


Why does over-licensing happen?

To solve this problem, we first need to understand why companies over-license in the first place. There are several reasons that your organisation may be paying too much for Microsoft 365 licenses, including:

  • Purchasing licences with more features than needed

There are multiple Microsoft 365 licence types, ranging from simple Microsoft 365 Business Basic, right up to fully-featured Enterprise E5 licences. Many businesses simply bulk buy the most powerful licences available, then assign them to users. Very often however, employees only use a small number of the features that come with these licences, and could do perfectly fine with a downsized licence.

  • People leave the company

If an individual leaves the company and no one remembers to close their account, you will continue to pay for their unused license.

  • Mergers

If two businesses that use Microsoft 365 merge together, it is not uncommon for individual users to be assigned more than one licence. As a consequence, the new business will be paying for more licenses than it actually uses.


How to manage Microsoft 365 licences

Adding, removing, downsizing or upgrading Microsoft 365 licences in itself is relatively straightforward. Assuming you have the correct permissions, you simply need to:

  • Head to the Microsoft 365 admin centre
  • Visit the licences page
  • View the products your company has licences for
  • Assign or revoke licences for individual user accounts or groups

In a smaller organisation, this is a relatively easy task. However, if you have hundreds – or even thousands – of licences to manage it becomes increasingly complex. If so, your IT admin team may decide to write a PowerShell script which can automatically manage licences for large numbers of staff. Alternatively, you may wish to invest in a licence management solution developed by a third-party company.


Confused by licenses? Read our Microsoft licenses explainer


Planning for better licence management will save you money

To avoid the costs associated with underutilised Microsoft 365 licences, it is valuable to have a licence management plan. Here’s what it involves:

  1. Discovery

Find out what apps your colleagues or departments are actually using. For example, you may learn that your frontline staff only need to use the most basic features of Microsoft 365 – so you could put them all on a Microsoft 365 F3 licence. On the other hand, your data analytics teams may benefit from having the full power off PowerApps and other technologies included with an E5 license. You would then only purchase the right license types for specific teams or individuals.

  1. Link licencing to onboarding

Speak with your HR colleagues to find ways of tying your license allocation to the employee onboarding and offboarding process. Perhaps by asking new staff to complete an onboarding survey, you can identify which licence that individual will need and then assign it to them from day one. This means they won’t be given an over- or under-powered license type.

At the same time, revoking a licence when an employee leaves the company should be automatically integrated into your offboarding process.

  1. Keep monitoring how licences are used

There are various ways that you can monitor licence usage – and Microsoft has provided a dashboard in Power BI which lets you view how Microsoft 365 services are being used. Regularly monitor this data to make sure you are getting value for money.


Helping you manage your Microsoft 365 licences with ERA³

Managing your organisation’s Microsoft 365 licence subscriptions can be a time-consuming and complex task. And that’s why we built ERA³.

ERA³ is a tool that actively and automatically monitors your Microsoft 365 licence usage to ensure that you are getting the best deal – and not paying for more than you actually use.

Contact us today to learn more about ERA³.