Microsoft licensing optimisation – are you paying too much?

This week’s Microsoft licensing announcement is the first time Microsoft has increased licence costs for M365 and O365 plans in 10 years.

Effectively this will mean that, from 1st March 2022, M365 and O365 plans will increase between 10% and 20% per user per year. Microsoft 365 E5 will remain at the current price. Azure licensing is also untouched.

These price hikes add up significantly when you have high volumes of users. Enterprise organisations with 10,000 users could be faced with finding over £260,000 per year to maintain the same level of Microsoft services.

Already IT teams are under pressure to save money and make their IT budgets go further. This news from Microsoft will not be welcome.

Microsoft licensing – are you over-provisioned?

With demand for cloud services rocketing because of the pandemic, spending on Microsoft 365, O365 and Azure AD has seen substantial growth. But Microsoft licensing is complex and often it’s not clear exactly what you’re buying.

Our free Microsoft licence health check helps you identify cost optimisation opportunities and ensures you’re on the right plan. Book here >

In the scramble to deploy remote and hybrid work strategies, some organisations are now finding they’re over-provisioned or under-utilising the services they have available. As Microsoft licensing is already consumes a huge chunk of annual IT budget in many organisations, ensuring you’re on the right plan and not over licensed is a top priority.

How to optimise your Microsoft 365 and Azure AD licensing

If you suspect that you’re wasting money on licences you don’t need, the following steps will help:

Step 1: Remove or reassign licences assigned to users that have left your organisation

When we perform a Microsoft licence health check it often surprises our customers how many users still have licences assigned to them, even though they’ve left the company. Many organisations don’t have robust software asset management (SAM) processes in place, or simply a process where HR informs IT when someone is due to leave.

Ask your HR department for a report on all employees who have left your organisation since you last reviewed your licence pool, then export a report from the Admin Portal for all licensed users. Cross reference the two reports to identify licensed users that have left the organisation and either remove those licences completely or reassign to new recruits. 

While you’re at it, set up a process with HR to ensure you’re notified of leavers and new starters so you can better manage your licence pool.

Step 2: Review your Microsoft licence pool

Best practice is to keep a licence pool to manage the ebb and flow of leavers and new starters, or spikes in demand such as when contractors need licences for specific projects. However, a high percentage of licences in your pool can mean a lot of unnecessary cost. 

By understanding your organisation’s licence usage by department, location or business function, over a period of time, you will get a better idea of how big your licence pool needs to be. 

Step 3: Identify unused licenses assigned to current users

We often find users within an organisation that have been assigned a licence for a specific project and 12 months after the project has closed, they still have the licence. A licence usage report will help you analyse what has been assigned but is not in use. 

Similarly, there may be users who have been assigned a full E5 or E3 licence who have no need for all the services included. We see this particularly in manufacturing and retail where many users ‘on the shop floor’ only need email. An Office F1 license bundled with an Exchange Online Plan, could be much more cost effective.

Having identified unused licences, you can now work with different areas of your organisation to understand their usage requirements and potentially remove or reassign licences to users in other areas of the business.

Step 4: Increase technology adoption to get better ROI

Effective Microsoft licence management is not just about slashing costs. It’s also about ensuring you’re getting a positive return on your technology investment. Licence usage reports can help you identify users or areas of the business where cloud services are not being fully adopted and who is not getting the productivity and collaboration benefits of the 365 stack.

Having identified those users or groups you can then target them with a user adoption campaign or training programme. A Day in a Life workshop that highlights the products and services they have available, and how they can transform their working day, is a great way to increase adoption. Another key area to consider is the End User Support services you provide. High quality service desk support has a positive impact on technology adoption.  

Step 5: Review your different Microsoft plans

If your organisation has multiple Microsoft licensing plans you may be paying more than once for the same licences. As well as enterprise plans, Microsoft also allows end users to purchase different plans, which again can mean your organisation pays twice for Microsoft licensing. For example, end users can now purchase the Microsoft Power Platform: Power BI, Power Apps and Power Automate.

Even if you’re not over-provisioned when business users purchase plans directly, it is still problematic. There may be compliance issues, after all it’s effectively shadow IT, and you lose control over costs and licence management.

Another way to reduce your Microsoft licensing costs is to purchase your licensing via a Cloud Service Provider (CSP). They can often offer discounts on the RRP, and they will provide you with licensing management services to drive further cost savings.

More on the benefits of working with a CSP can be found in this blog post >

Beat the price rise

Depending on your current subscription term/s, it may be advantageous to renew sooner rather than later and beat the 2022 price rise. Microsoft offer monthly and annual subscription terms, and has also announced a new 3 year term. While longer terms are not as flexible as a monthly subscription where you can adjust your licence pool month by month, if you’ve optimised your current licensing and don’t expect to need to scale down in the next 12 months, an annual term will be more cost effective. If you would like to discuss these options, please get in touch.

With six months to go before Microsoft effects its price hike, now’s the time to optimise your Microsoft licensing and ensure you’re only paying for what you need. To help you get started, take advantage of our free Microsoft Licence Health Check to find out what you’re currently using. We’ll also make recommendations to save money, and hopefully lessen the impact of this unwelcome news.

How much does Microsoft Azure cost?

Thinking about migrating to Microsoft Azure? Our blog will help you understand how to estimate your Azure costs and use Microsoft’s Azure Pricing Calculator.

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