Microsoft doesn’t need your charity. The world’s second-largest company has a market capitalization of about $2.5 trillion, and some analysts believe it will soon become the world’s first $5 trillion company. However, if you are among the millions of Microsoft 365 users, you’re probably giving the company more money than you should.
With 345 million monthly active users, M365 has become a business essential. Gartner analysts estimate that one in five corporate employees currently use the suite of cloud-based productivity and collaboration tools. However, many organizations spend too much on M365 due to Microsoft’s notoriously complex licensing options.
M365 is available through a dizzying array of licenses. There are different subscriptions for enterprise organizations, smaller businesses, education and government entities, and they all have different licensing tiers with varying features and capabilities. There are also volume licensing options, platform- and device-specific plans, and regional licensing variations. What’s more, Microsoft offers many different add-ons and additional services that can be attached to existing licenses.
Losing Track
This complexity can make it difficult to select the most appropriate and cost-effective licensing options for everyone within an organization. Different employees have different roles and responsibilities that require different types of software and services. For example, power users might need access to the full suite of M365 applications while many frontline workers may only require email and communication tools.
License management also becomes more convoluted over time as organizations grow and change. Growing companies may need to purchase additional licenses while others may need to reduce their license count due to downsizing or restructuring. Additionally, upgrading or downgrading licenses often becomes necessary as employees’ roles and responsibilities change.
A recent CoreView study illustrates the challenges. Health-check analysis of more than five million users revealed that 56 percent of M365 licenses are inactive, underutilized, oversized or unassigned. The report cites three common mistakes that most organizations make:
- They err on the side of caution and purchase more licenses than they need.
- They continue to pay for inactive licenses instead of canceling them or assigning them to new users who join the organization.
- They purchase licenses with applications and features that employees don’t need or use. In some cases, users have add-on licenses for features already included in their base license.
Gaining Control
M365 license management often goes off the rails because companies don’t regularly revisit their licensing agreements. Too often, they simply renew their existing licenses and add new ones to cover any workforce expansion. Over time, this can create compliance issues that result in hefty true-up fees to reconcile licensing usage with the actual number of licenses they have purchased. True-up costs can range up to millions of dollars depending on the size of the company.
There are a number of steps you can take to improve M365 license management. First and foremost, you must assess your organization’s requirements to identify the services and features that different user groups require. Once you’ve used that assessment to select the right licensing plans, you need to establish a regular schedule for reviewing and adjusting license allocations.
Navigating Microsoft 365’s complicated licensing options can be a full-time job in some organizations. That’s why many organizations choose to work with certified Microsoft Partners such as Verteks to help them select the right licenses, understand costs and ensure compliance with Microsoft requirements. With a thorough understanding of M365’s licensing options, our team can help ensure you’re not making unnecessary “donations” to Microsoft’s bottom line. Call us to learn more.
