Office 365 License Management Considerations
With more employees working remote than ever before, the reliance on collaboration technology such...
Best Practices to Reduce the Complexity of Microsoft 365 Licensing
Large organizations, as well as mid-market companies to SMBs, are faced with some important buying decisions when investing in Microsoft 365 licensing. These decisions must be strategic, because they will directly influence whether those investments will increase user productivity - or expend capital on licenses that will not be utilized to their potential, having no impact on the bottom line.
Therefore, Microsoft 365 licensing optimization presents two major opportunities for an organization. First, for procurement to optimize costs and purchase only what is needed; Second, for IT to ensure end-users are adopting and utilizing what is purchased through ongoing license management techniques.
I frequently see an unnecessarily wide delta between what is purchased and what is assigned to users. There’s another delta between what is adopted and then actually used. These expensive deltas are typically the result of over-purchasing, under-utilization, or both. Underutilization usually happens when there’s a lack of clear understanding of what users want, and what they need in the first place.
However, over-purchasing is often the result of funding and purchasing cycles and has historically been an acceptable practice - but there’s no need for it in the cloud now. It’s important that organizations realize there’s absolutely no need to keep surplus licenses on hand anymore, as the industry has evolved to allow more flexibility and accuracy with buying. Licenses can be turned off and on very quickly, enabling procurement and IT to cater to end-user requirements with licenses that are ‘shrink-wrapped’ and mapped correctly to the functional needs of their role.
With the right system of internal checks and balances in place, an organization can easily prevent themselves from overspending on licenses in the first place. Over the years, I’ve developed the following six steps an organization can follow for efficient, effective licensing optimization.
It’s important for an organization to understand “where you are now” – what you currently own and what you’re paying for it. You’ll need to take a thorough inventory of the current technology stack and its cost to the organization. You’ll also want to review the terms of the contract(s) you’re bound to because the parameters can influence how you’ll be able to manage your technology portfolio. Quickly identifying licenses that have been purchased but not assigned can be a quick win, depending on the purchase model and renewal dates.
Ask yourself, how well have you identified the functional needs of the organization? Then compare that data to the technology you currently possess. By undergoing this license review, you are building a roadmap to identify the delta between what is purchased, what is adopted and what is used. It’s crucial to ensure that licenses being purchased also match the needs of the workforce, and this can be accomplished by building out these functional user profiles per role.
These user profiles will help to identify under-utilized workloads in base licenses, so in some cases you can reclaim and repurpose high-cost licenses, overlapping or duplicated licenses, and downgrade users where necessary. You’ll want to ensure these profiles are built out before you proceed to Steps 3 and 4.
Do you have a proper way to monitor user needs on an ongoing basis? Make sure you have one, because end-user needs definitely change over time and you must capture their needs and behaviors effectively. You must have accurate visibility around this to determine what you’ll need in the future, otherwise you will most certainly over purchase.
Additionally, it’s imperative to have an accurate, granular reporting mechanism in place to monitor end-users’ license utilization. This will help you quickly and efficiently capture the data needed to inform your licensing strategy. You’ll need to keep a pulse on things such as the licenses you have, who is assigned what and disabled users who still have licenses.
This step enables you to determine whether the licenses you purchased were adopted and are actively used across all workloads and can help you harvest any unused subscriptions. When performing licensing reviews such as these, some of my clients have found savings ranging from $26k for a mid-market organization, to an enterprise organization who saved almost $16M!
Monitoring is also important because it can illuminate certain workloads an end-user should be using but isn’t. Which brings us to Step 4, where utilizing the data obtained from proper a monitoring and reporting solution can propel an adoption campaign to accelerate usage, where needed.
Maximizing user adoption is typically driven by education. Before you make a move to right-size your licenses, you want to ensure your end-users really understand the technology at their fingertips and how it delivers features relevant to their role. This involves educating them about the functionality included with certain licenses, how to use it, and then checking in regularly in an engaging way to help deliver that education.
After completing steps 1-4, you should by now have a good grasp on whether you’re getting the full value of your investment and have the knowledge to act in reclaiming and downgrading where necessary.
For example, let’s say you have an E3 user who only makes use of Exchange – they could be downgraded to a less costly E1 license. When it comes to high-cost licenses like PowerBi, Visio, and Project we find that around 11% of these are unused and can be reclaimed. For an average 10,000-person organization using Project, you could see savings of approximately $40,000.
Last but not least, we want to adapt the procurement process to meet a new buying strategy that provides more flexibility around managing your licenses, equips procurement to support efficient licensing, and moves away from transactional-based behavior. The procurement strategy must sync with a new buying strategy – which is to only buy what is needed, and not depend on bulk “discounts” that eventually will end up wasting a lot of money for your organization. This requires a silo breakdown where IT provides better information to procurement, and then IT and the business side collaborate more effectively together.
Achieving success with those steps requires somebody on your team with a good understanding of licensing. This could be a team member or an outside consultant, but it needs to be someone who understands how the levers of the licensing world work, and the implications of pulling each lever. In the past, responsibilities like this were rarely assigned to IT, as they didn’t have the time and IT departments were relying on sparse information provided by native Microsoft tools.
Therefore, having the proper Licensing Optimization Monitoring and Reporting Solution in place is key to enable IT professionals to get in front of the issue and work with procurement to manage the purchasing strategy moving forward. The upside here is so large, however, that it is well worth the effort. With the proper tools, these six steps will allow you to take back control of your Microsoft 365 licenses, and largely eliminate the costly over-purchasing or under-utilization that so many organizations experience today.
Ben is the Global Product Lead for Microsoft Licensing at HP Inc. where he oversees the direct and indirect licensing business through Microsoft’s CSP Program. Ben and his team work with end-customers and resellers alike to improve IT spend while providing a documented return on investment.