Optimize Microsoft 365 Licensing with Software Asset Management

Have you ever gotten a mystery charge for a subscription service you forgot you were paying for? The unexpected cost brings up questions like, “How much have I been paying for this? And more importantly, what am I paying for?” The cloud-based software that companies utilize raises similar questions around consumption. At such a large scale, it’s critical for companies to understand their licensing and usage of major vendors. Microsoft 365 is one of the most widely used software products in the world, with around 354 million paid seats in use worldwide. As with any major vendor, most companies could save money by optimizing their Microsoft 365 licensing. In this article, we’ll show you how.

Microsoft 365 and Office Pro Plus Licensing for Enterprise Customers: Enterprise Agreements

With Microsoft 365, Microsoft pushes for users to purchase a standardized E3 license, just like they want users to purchase  Office Pro Plus for all users. When you are on an Enterprise Agreement (EA), Microsoft encourages you to purchase Office Pro Plus for either all users, or all computers. This is a standardization they use to ensure Office Pro Plus is licensed across almost all companies. Microsoft has been known to do the same with Core-CAL, Windows, and E-CAL. But when you look more closely, how many employees actually use the Pro Plus functionality in Office, and how many could have used Office Standard instead? When moving from On-Premise to the Cloud with Microsoft 365, the only difference is terminating Exchange On-Premise to transition to Exchange Online. When Microsoft incentivized companies to move all users from Office Pro Plus to suites M3 or E3, the standardization requirement was no longer involved. This presents an opportunity for companies to use to optimize their M365 environments.

The Opportunity  

In essence, with Microsoft 365, users are no longer required by Microsoft to purchase Office Pro Plus for all users/devices. You can now mix and match users between license suites F1-E5. If you are on a perpetual EA and have Office with SA, you can terminate your SA and purchase E1 for most users. Office 2016 Pro Plus is still capable of being used with the cheaper E1 subscription, so you get more or less an E3 experience, for an E1 price. Microsoft doesn’t want this to happen and discounts the transition with a “from SA” license. This will bite you in the next renewal. If someone needs Exchange archiving or any other component that is only available in the higher Microsoft 365 suites, you can purchase that functionality via a standalone SKU. With a perpetual EA, you have invested in stronger assets, and now you have the chance to capitalize on your investment! Microsoft is still using office 2016 Pro Plus.

Managing Microsoft 365 

The biggest difference between traditional EA licensing and modern Microsoft 365 licensing is that before you only needed to know the total amount of users, or devices, for the annual True-Up. Now things are a little different. With Named User licensing and multiple suites, companies must analyze and control their Microsoft users. This can be complex in large global organizations. A good inventory source for analyzing users is the Active Directory. If the user is not in the AD, but has a Microsoft 365 license, it can be a consultant, part time worker, or ex-employee – commonly known as “Zombie users” Do they still have an active Microsoft 365 license? Compare the AD against the Microsoft 365 portal to learn of all potential “Zombie” users.  

You need following to manage your Microsoft 365 licensing: 

1. User information (AD or HR system). 
2. The Microsoft 365 portal with the licensing information.

Then, compare the data to ascertain if you have more licenses than active users.

To optimize your Microsoft 365 you need the following: 

1. User information (AD or HR system).
2. The Microsoft 365 portal with the licensing information.
3. On-Premise consumption data.
4. Web App consumption data.

These data sets can then be compared and optimized based on user profiling. The process should highlight users with low usage who can be downgraded from a higher suite (E3-E5) to a lower suite (E1-F1/3).

Xensam utilizes four sources of trustworthy data to achieve this: 

1. Web App Active Usage Tracking.
2. The AD Connector.
3. Microsoft 365 Connector 
4. On-Premise Active Usage Tracking.

Both the connector to Microsoft 365 and AD are included in Xensam’s platform. Using the power of Xensam’s Active Usage Tracking, it’s possible to get data on consumption down to the minute. This allows you to determine which users should be assigned which license type, illuminating the possibility for significant cost savings on Microsoft 365.

“With Xensam’s Active Usage data, we discovered that our nursing staff under-utilized much of their Microsoft 365 packages and were able to downgrade to E1 licenses instead.”

– Senior IT Technical Specialist, Isle of Wight NHS Trust Case Study

User Profiling 

With accurate software usage data, you can then build your Microsoft license user profiles, outlining which license type is necessary for different user needs. Xensam provides pre-built reports on usage per ProPlus component (pictured below), creating a reliable source of truth to cross-reference against your user profile criteria to upgrade or downgrade user licenses come renewal time. Here’s an example of how you could go about defining your different user profiles by license type: 

• E3 Users: High usage of Excel, Teams and OneNote (need local installation of Office Pro Plus).
• E1 Users: Low usage of Excel, high usage of Word and PowerPoint (They don’t need a local installation, web app is enough) 
• F3 Users: Mainly use Email and SharePoint.

Automated Microsoft Insights with Xensam’s Pre-Built Reports

Xensam offers 271 pre-built reports. In addition to the ProPlus usage per component report pictured above, we also offer reports on important M365 metrics like an overview of all Microsoft 365 users and licenses, Optimization Reports, and reports on Double Assignment and Microsoft 365 users that are not listed in the AD. These pre-built reports can be accessed within seconds, and shared with relevant stakeholder across the organization on a recurring basis via email to make it easier than ever to stay on top of your Microsoft 365 environment. 

Conclusion

Microsoft 365 is one of the most widely used applications around the world. As with any major vendor, a comprehensive understanding of users and usage is critical to optimize your M365 environment. Xensam’s AD connector, Microsoft 365 Connector, and Total Usage and Active Usage Tracking give you a total picture of your license position to enable ongoing optimization.