Office 365 License Management: Tips to Reduce Office 365 License Spend
It may come as a surprise to you that 69% of companies reported over-spending on their cloud...
Many businesses have been existing within the Microsoft 365 ecosystem for years on its ever-changing journey and ongoing transformation.
For many, 2020 drove a need for rapid progress to enable business continuity during the pandemic. We saw potentially years of transformation in mere months or even weeks. During this, we certainly were not thinking 'is the cost of licensing worth it?', rather most likely, we were focusing on the urgent shift to remote working, access to work or information, and just keeping the lights on and staff employed. As the dust settles and we explore hybrid working, many will begin to explore the platform setup and staff ways of working to now refine and adjust. With this begs that question that, for around a decade, hasn't necessarily been solved with a simple solution - how do we calculate ROI for Microsoft licenses?
When I think of reviewing the value gained from the Microsoft platform, 2 key things come to mind - financial investment and also business value. Let's take a moment to dive in to each area to explore the question of ROI.
Firstly, we have the question of financial investment.
How do we establish if the license structure and overall cost is providing any return, and how can a business review any data to assess this area?
Take an example organization, let's say one with 1,000 employees, made up of average corporate knowledge workers on an E3 license.
Now at the time of writing this article, the E3 license for Enterprise is $46.40AUD per user, per month. So that organization is spending $556,800AUD annually on the platform.
This platform is made up of many apps and services for which it is possible to review adoption data to see the usage. You could for example review apps enabled and percentage uptake. A basic equation could be to see how many apps have significant use and calculate the percentage of the annual spend. However, this is more focused on, of the annual spend what is the uptake, not about financial return. It would be reviewing “are we using what we are paying for?” rather than the more complex question you are trying to solve.
While it may feel easy to question “we are paying xx for licenses, are we using them?", it is not that clear cut.
While you can see the apps staff are using across their day and adding great value to how they work, the license also adds platform features that are behind the scenes and not as easy to review. Also, you need to look beyond the apps as things are not 'like for like' and to only look at the cost is being short sighted.
From a financial perspective, there are benefits to your business from spending more on licensing which provide huge value beyond the dollar increase.
For example, some organizations remain 'on-prem' to save dollars, however don't realize the loss of high value features. While you can have mailboxes, archive, DLP (Data Loss Prevention), if you remain on-prem you lose modern features such as the briefing emails, Power Automate, Forms and Planner, and even the Productivity Score.
Many organizations have implemented Microsoft Teams to enable communication and collaboration or improve meetings, but have on-prem file shares. While they think they are saving money, this needs maintenance and loses all the modern features. What is hard to factor into the ROI equation here, and to be frank in every situation, is the human time for maintaining the platform.
What I am providing here is a taste of how complex this area can be, and that there is no easy calculation or number to measure ROI. What we do have is a lot of data, dashboards, analysis and understanding required to get a feel for the benefits realization for an organization.
It can feel more straight-forward to review the perceived business value, and analyze with qualitative data.
Value and priorities will differ across organizations, however the ability to review the apps and services provided for the licensing and set organization goals can at times seem more clear-cut. And if you simply ask the business "do these tools provide any value?" I have no doubt there will be a very direct answer!
For some organizations, priorities could be moving to the cloud and access from anywhere, others it is the collaboration features and apps. Many gain great value from security and compliance features, and regardless of how many people use specific apps, the protection of company information and data is the big win. For others it is innovation and automation, as reducing time on process and having the tools remind people to do things, or remove steps in a process, provides great value.
A lot of true ROI is the hidden value which requires understanding of things like the Productivity Score, what the adoption data is really showing, and qualitative data from staff.
How can we measure the business value across the Microsoft platform?
Some key example measures could be:
· Adoption data - are things changing and are ways of working being embedded?
· Process improvement - does the business report innovations and positive outcomes or problems being solved?
· Automation - have business areas found ways to automate to reduce time or error?
· Employee satisfaction - do staff like the tools they use in their day-to-day job?
Driving value in these areas can lead to positive experiences, money well spent and even increased employee retention. And, happy staff are productive which drives more hidden ROI with motivated positive employees.
So, when reviewing your financial investment in the Microsoft platform, it is important to consider how you will measure value. You cannot sign up, roll out, and measure later. To make this process work well, think before you enable. Or if you are already deep in the platform, pause and set some goals. Look at the apps, your key challenges, and set priorities.
Do you want to save money?
Do you want to increase security?
Is there a need to move documents off of servers and be more accessible?
Do staff have obstacles to work that need to be reduced for greater productivity?
Or, are you on a transformation journey and improving the general operations of your business?
Microsoft 365 provides great benefits across any organization. Setting goals, steps and a stronger journey for your organization will help realize any benefits easier in the long run to head you towards answering the ROI question.
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My passions are Microsoft Office 365, organization change strategy and user experience. It’s been my core focus for 8+ years helping organizations plan for, implement, and adopt the technology. I have spent over 14 years combining my Psychology degree, Prince2/ITIL accreditation and Agile experience to drive project success. I focus on the Change Management Strategy across an Office 365 implementation and ongoing roadmap, establishing readiness and redesigned ways of working. At the center of all my work is the impact and experience of people, along with the bigger picture and value of Office 365 for an organization. My consulting roles have a major engagement element, whether leading the technical delivery, or consulting solely on change strategy and user experience, managing delivery and also leading key conversations and being a leader in those challenging times.