Microsoft 365 has become an indispensable suite of productivity tools for businesses of all sizes. However, managing licenses efficiently can be a daunting task, often leading to unnecessary expenses. By implementing a strategic approach to Microsoft 365 licensing optimization, organizations can unlock two benefits. First, it helps procurement save costs and buy only what is required. Second, it helps IT make sure end-users are using what is bought through continuous license management methods.

As a long-standing Microsoft partner and Cloud Solution Provider (CSP), Softlanding has developed five steps that an organization can follow to improve licensing and cost savings in a quick and efficient manner.

1. Assessing Your Current Licensing Landscape

The first step towards optimizing your Microsoft 365 licensing is to gain a comprehensive understanding of your current licensing situation. This involves conducting a thorough audit to identify the licenses you currently possess, their associated costs, and the terms of your existing contracts.

Inventory Your Licenses and Review Costs

Begin by creating a detailed inventory of your technology stack, including the number of licenses you have purchased for each Microsoft 365 application or service. Examine the costs associated with these licenses and review the terms of your contracts, as they may influence how you manage your technology portfolio.

During this process, you may uncover licenses that have been purchased but remain unassigned. Depending on your purchase model and renewal dates, these unassigned licenses could present an opportunity for immediate cost savings.

Evaluate User Needs and Identify Gaps

Once you have a clear picture of your current licensing situation, compare it with the functional needs of your organization. This exercise will help you identify the delta between what you have purchased and what is being actively adopted and utilized by your users.

To bridge this gap, create detailed functional user profiles based on job roles and responsibilities. These profiles will help you determine whether the licenses you have purchased align with the actual needs of your workforce.


2. Monitoring License Utilization and User Behavior

Gaining visibility into how your users interact with Microsoft 365 applications is crucial for optimizing license usage and ensuring you are not overspending.

Establish a Monitoring and Reporting Mechanism

Implement a robust monitoring and reporting solution that can provide granular insights into license utilization. This solution should enable you to track key metrics, such as the licenses you have, who they are assigned to, and whether there are any disabled users still holding licenses.

By continuously monitoring user behavior and application usage, you can identify underutilized workloads within base licenses. This information can help you reclaim and repurpose high-cost licenses, downgrade users to more appropriate license tiers, or eliminate unnecessary subscriptions altogether.

Analyze Usage Patterns and Adapt

As user needs evolve over time, it is essential to have a process in place to capture these changes. Regularly analyze usage patterns and adapt your licensing strategy accordingly. This proactive approach will help you avoid over-purchasing licenses and ensure that you are investing in the tools your workforce truly needs.


3. Optimizing License Assignments and Driving Adoption

With a clear understanding of your licensing landscape and user needs, you can take actionable steps to optimize your Microsoft 365 license assignments and drive adoption.

Right-Size Your Licenses

Armed with the insights gained from your monitoring and reporting efforts, you can now make informed decisions about right-sizing your licenses. For instance, if you have users assigned to an E3 license but they primarily use Exchange, consider downgrading them to a more cost-effective E1 license.

Similarly, high-cost licenses for applications like Power BI, Visio, and Project often go underutilized. Industry reports suggest that around 11% of these licenses are typically unused and can be reclaimed, potentially saving an organization with 10,000 users approximately $40,000 annually on Project licenses alone.

Maximize User Adoption Through Education

Maximizing user adoption is crucial for ensuring that your organization is getting the full value from its Microsoft 365 investment. Develop an engaging education program that focuses on helping users understand the functionality and features relevant to their roles.

Provide training on how to effectively use the applications and services included in their licenses, and establish regular check-ins to reinforce this education. By empowering your users with the knowledge and skills they need, you can drive increased adoption and minimize underutilization.



4. Adapting Procurement Processes for Agility

As you optimize your Microsoft 365 licensing, it is essential to adapt your procurement processes to support a more agile and efficient buying strategy.

Collaborate Across Silos

Break down the silos between IT, procurement, and business stakeholders to foster better collaboration and information sharing. Ensure that IT provides procurement with accurate and up-to-date information about user needs and license utilization, enabling procurement to make informed decisions.

Embrace Flexibility and Avoid Bulk Discounts

Move away from the traditional approach of bulk purchasing licenses to take advantage of discounts. Instead, embrace a more flexible and targeted approach such as pay-as-you-go or CSP, where you purchase what is needed at any given time.

By aligning your procurement strategy with your organization’s evolving needs, you can avoid the pitfalls of over-purchasing and ensure that your Microsoft 365 licensing investments directly contribute to increased productivity and cost savings.


5. Leveraging Expertise for Successful Implementation

Optimizing your Microsoft 365 licensing requires a deep understanding of licensing intricacies and the implications of various decisions. Consider involving a dedicated licensing expert, either from within your organization or through an external provider, to guide you through this process.

These experts can provide invaluable insights into the levers of the licensing world and help you navigate the complexities involved in negotiating with vendors, interpreting licensing terms, and making informed decisions that align with your organization’s goals.


Conclusion: Unlocking the Full Potential of Your Microsoft 365 Investment

By implementing a strategic approach to Microsoft 365 license optimization, you can unlock significant cost savings while ensuring that your workforce has access to the right tools to drive productivity and innovation. Embrace a proactive mindset, leverage the power of data-driven insights, and foster collaboration across your organization to maximize the return on your Microsoft 365 investment.

If you need some help to optimize your Microsoft licenses, Softlanding can help. Reach out to us and our Microsoft licensing expert will get back to you to schedule a call.

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Softlanding is a long-established IT services provider of transformation, professional services and managed IT services that helps organizations boost innovation and drive business value. We are a multi-award-winning Microsoft Gold Partner with 13 Gold Competencies and we use our experience and expertise to be a trusted advisor to our clients. Headquartered in Vancouver, BC, we have staff and offices in Toronto, Montreal and Calgary to serve clients across Canada.

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