Eliminating Redundant Microsoft Software — Stop Paying Twice for the Same Functionality

The Hidden Cost of Software Redundancy in Microsoft Environments

Enterprise organisations routinely maintain software portfolios that have grown organically over years — accumulated through departmental purchases, M&A activity, vendor-driven upsells, and the natural tendency to add tools without retiring the ones they replace. When Microsoft 365 E5 enters this environment, the problem intensifies: E5 is the most feature-rich enterprise productivity bundle available, encompassing security, compliance, analytics, telephony, identity management, and collaboration capabilities that directly overlap with standalone products many organisations already own.

The financial impact of this redundancy is consistently underestimated. In our advisory practice across 500+ enterprise Microsoft engagements, we find that the typical organisation running M365 E5 maintains $500,000–$3,000,000 annually in third-party software licences that duplicate capabilities already included in their Microsoft bundle. This is not a rounding error — it represents real budget that could be redirected toward strategic initiatives, reduced from the IT cost base entirely, or used as negotiation leverage to secure better terms from both Microsoft and third-party vendors.

The 8 Most Common Overlap Categories

Software redundancy in Microsoft environments follows predictable patterns. The following eight categories represent the most frequent and financially significant overlaps we identify in enterprise environments.

Detailed Analysis: The Four Critical Overlaps

Endpoint Security — Microsoft Defender for Endpoint vs. CrowdStrike/SentinelOne/Symantec. This is the highest-value overlap in most enterprises. Dedicated endpoint detection and response (EDR) products from CrowdStrike, SentinelOne, and Carbon Black typically cost $40–$80 per endpoint per year at enterprise scale. Microsoft Defender for Endpoint, included in E5, provides functionally comparable EDR capabilities — endpoint detection, automated investigation and remediation, threat analytics, and integration with Microsoft's broader security stack (Defender for Identity, Defender for Cloud Apps, Microsoft Sentinel). In independent evaluations, including MITRE ATT&CK assessments, Defender for Endpoint now ranks alongside the leading dedicated EDR vendors. The key differentiation question is not whether Defender is "good enough" in general, but whether your specific security operations centre (SOC) has built workflows, custom detections, threat hunting playbooks, and SIEM integrations that depend on features unique to the incumbent EDR vendor. If the answer is "our SOC could operate effectively on Defender," the redundancy cost — typically $300K–$750K annually for a 5,000-user organisation — is difficult to justify.

Telephony — Teams Phone System vs. Cisco UCM/Avaya/RingCentral. Voice telephony is often the single largest redundancy by dollar value. Legacy PBX systems (Cisco Unified Communications Manager, Avaya) carry substantial ongoing maintenance and licensing costs — $150–$300+ per user per year including hardware amortisation, trunk lines, and support contracts. Cloud PBX alternatives (RingCentral, Zoom Phone) are less expensive but still represent $120–$200 per user annually. Microsoft Teams Phone System, included in E5, provides cloud PBX calling, auto-attendants, call queues, voicemail, and PSTN connectivity (via Calling Plans or Direct Routing). For organisations already on E5, the marginal cost of adopting Teams Phone is the PSTN connectivity — typically $8–$15 per user per month for Calling Plans or the cost of a Session Border Controller for Direct Routing. The migration complexity is real (number porting, analog device handling, contact centre integration), but the financial case is compelling: eliminating a parallel telephony platform saves $400K–$1.2M annually at 5,000 users.

Email Security — Defender for Office 365 vs. Proofpoint/Mimecast. Many enterprises deployed Proofpoint or Mimecast when Microsoft's native email security was insufficient. Microsoft Defender for Office 365 Plan 2 (included in E5) has since matured considerably, offering anti-phishing protection, safe attachments and links, automated investigation and response, attack simulation training, and threat explorer. For organisations that do not have specialised email threat requirements (financial services with advanced impersonation protection, organisations handling highly targeted nation-state threats), Defender for Office 365 now provides comprehensive email security. The annual cost of maintaining a parallel email security gateway is typically $30–$80 per user ($150K–$400K for 5,000 users). Before consolidating, verify that your Defender configuration matches the policy granularity and reporting capabilities your security team requires.

Business Intelligence — Power BI Pro vs. Tableau/Qlik. Power BI Pro is included in every E5 licence. If you are also paying for Tableau or Qlik licences, you are funding two analytics platforms simultaneously. The decision here is more nuanced than security or telephony: Power BI excels at self-service analytics, Microsoft ecosystem integration (Excel, Teams, SharePoint, Dynamics), and cost-effective deployment across large user populations. Tableau provides superior data visualisation capabilities, more flexible data preparation, and stronger support for non-Microsoft data sources. The practical approach for most enterprises is to consolidate the majority of business users onto Power BI (eliminating 60–80% of Tableau licences) while retaining Tableau for specialist data analysts and teams with advanced visualisation requirements. This hybrid approach typically reduces BI licensing costs by 50–70%.

Cost Quantification Framework

Before making rationalisation decisions, build a precise cost model that quantifies the redundancy in your specific environment. This framework prevents both over-consolidation (eliminating a tool that provides genuine unique value) and under-consolidation (leaving redundant spend in place because the magnitude is unclear).

Step 1: Map Your Complete Software Inventory

Create a comprehensive catalogue of every software product in use across the eight overlap categories. For each product, document the annual licence cost (total and per-user), the number of active users, the contract term and renewal date, the specific capabilities used (not just the capabilities available), and the business processes or teams dependent on the tool. This inventory must include not just centrally procured enterprise software but also departmental purchases, SaaS subscriptions managed by individual business units, and shadow IT tools discovered through network monitoring or expense report analysis.

Step 2: Map Microsoft E5 Feature Coverage

For each third-party tool identified, determine the specific M365 E5 feature that provides equivalent functionality. Assess the degree of overlap: does the Microsoft capability fully replace the third-party tool (100% overlap), partially replace it (50–80% overlap with some unique features in the third-party tool), or merely overlap in a narrow area (less than 50%)? This assessment requires technical input from the teams that use both tools — marketing's view of Tableau versus Power BI will be different from finance's view, and both perspectives matter.

Step 3: Calculate the Redundancy Cost

For each overlap, calculate the annual cost of maintaining the redundant capability. This includes the third-party licence cost for the overlapping functionality (not the entire contract if only part of the product overlaps), the internal support costs for maintaining two parallel tools (help desk, training, integration, administration), the user productivity cost of context-switching between two tools that serve similar purposes, and the opportunity cost of not fully leveraging the E5 investment. Sum these costs across all overlap categories to produce your total annual redundancy figure — the "double-payment" that your organisation is making.

Three Strategic Decision Paths

For each overlap category, one of three strategic paths will deliver the optimal outcome. The right choice depends on the specific category, the maturity of the Microsoft capability, and your organisation's risk tolerance.

Path 1: Consolidate onto Microsoft

This path maximises the return on your E5 investment by fully adopting the Microsoft capability and eliminating the third-party tool. It is the right choice when the Microsoft capability meets or exceeds your functional requirements, when the switching cost (migration, retraining, integration changes) is manageable relative to the savings, when the organisation benefits from a unified platform (single pane of glass for security, integrated analytics, unified communications), and when the third-party contract is approaching renewal, creating a natural exit point.

Best candidates for consolidation: Cloud storage (OneDrive/SharePoint replacing Box/Dropbox), conferencing (Teams replacing Zoom/Webex for most use cases), basic BI (Power BI replacing Tableau for standard reporting), and email security (Defender for Office 365 replacing Proofpoint/Mimecast for organisations without highly specialised email threat requirements).

Path 2: Retain the Third-Party and Downgrade Microsoft

This path is appropriate when the third-party tool provides genuinely superior capability that Microsoft cannot match for your specific use case. Rather than paying for both, downgrade the Microsoft licence to remove the overlapping component. In practice, this often means moving affected users from E5 to E3 (which excludes the advanced security, compliance, and analytics components) and retaining the third-party tool that provides those capabilities.

Best candidates for retention: Endpoint security (CrowdStrike or SentinelOne for organisations with mature security operations centres that depend on the third-party EDR's specific detection capabilities and threat intelligence), advanced analytics (Tableau for organisations with complex visualisation and data preparation requirements that exceed Power BI's capabilities), and identity management (Okta for organisations with complex multi-cloud identity federation requirements beyond Entra ID's current capabilities).

Path 3: Hybrid Approach — Segment by User Population

The most common optimal strategy is a hybrid that assigns different licence profiles to different user populations based on their actual needs. Not every employee requires E5's full feature set, and not every employee needs the third-party tool either. Segmenting your user base enables precise cost optimisation.

Implementation example: A 10,000-user enterprise might assign E5 to 3,000 users who need advanced security, compliance, and analytics features (and consolidate those users onto Microsoft tools), assign E3 to 5,000 standard knowledge workers (with third-party security tools maintained centrally), and assign F3 (Frontline) to 2,000 operational employees who need basic productivity only. This segmented approach can reduce total licence cost by 25–40% compared to deploying E5 uniformly, while maintaining the specific capabilities each user group actually requires.

Negotiation Leverage From Redundancy Analysis

Your redundancy analysis is not just an internal cost-reduction tool — it is a powerful negotiation asset that can be deployed in three directions simultaneously.

Leverage with Microsoft. If your analysis reveals that significant E5 features are unused because third-party tools serve those functions, use this to negotiate better E5 pricing. The message to Microsoft is clear: "We are evaluating whether E5 delivers sufficient value over E3 given that we use [third-party tool] for [capability]. To justify maintaining E5, we need pricing that reflects the portion of the bundle we actually use." This positions you for either a deeper E5 discount or a negotiated downgrade with selective add-ons — both of which reduce your Microsoft spend. Additionally, if you commit to consolidating onto Microsoft tools (retiring third-party alternatives), use that commitment as leverage: "We will adopt Defender/Teams Phone/Power BI fully, which increases our E5 utilisation and Microsoft's platform stickiness — this deserves recognition in pricing."

Leverage with third-party vendors. If you decide to retain a third-party tool, use the Microsoft alternative as competitive pressure. Every third-party vendor in the overlap categories knows that Microsoft includes a competing capability in E5. Approaching Cisco, CrowdStrike, or Tableau with "we are evaluating whether Microsoft's included capability can replace your product" creates genuine pricing pressure. Third-party vendors facing potential loss of an enterprise customer to a bundled Microsoft tool will often offer significant discounts (20–40%) to retain the business.

Leverage in EA renewal negotiations. The aggregate redundancy cost figure is a powerful data point in your EA renewal. Present it as a total ecosystem cost: "Our combined Microsoft E5 plus third-party overlap spend is $10.4M. We need to bring that below $8M. Either Microsoft helps us get there through better E5 pricing, or we downgrade portions of our EA and retain the third-party tools at their discounted renewal rates." This framing forces Microsoft to compete not just on E5 pricing but on the total cost of your software portfolio.

Governance Framework: Preventing Future Redundancy

Eliminating current redundancy delivers one-time savings. Preventing its recurrence requires governance structures that embed overlap awareness into ongoing procurement and technology decisions.

Pre-purchase overlap check. Establish a mandatory review process: before any new software purchase or SaaS subscription is approved, the requesting team must document whether equivalent functionality exists in the current Microsoft 365 suite. If it does, the purchase requires explicit justification explaining why the Microsoft capability is insufficient and a cost comparison including the "already paid for" Microsoft alternative. This single governance control prevents the most common source of new redundancy — departmental purchases made without awareness of existing enterprise capabilities.

Renewal-triggered rationalisation. Attach an overlap audit to every major software renewal event — both Microsoft EA renewals and third-party contract renewals. When a third-party contract approaches renewal, evaluate whether the Microsoft alternative has matured sufficiently to replace it. When the Microsoft EA approaches renewal, evaluate whether the current licence tier is justified by actual usage or whether overlapping third-party tools have made portions of the bundle unnecessary.

Centralised software portfolio visibility. Maintain a live catalogue of all enterprise software that maps products to functional capabilities. When any team requests a tool for "file sharing," "threat detection," or "business intelligence," the catalogue immediately surfaces the existing enterprise tools that serve that function. This visibility prevents accidental redundancy from information gaps — the most common and most avoidable source of duplicate spend.

Annual software rationalisation review. Conduct a formal annual review of the complete software portfolio against current Microsoft 365 capabilities. Microsoft updates its platform continuously — features that were insufficient 18 months ago may now be fully competitive with the third-party tool you retained. This annual review ensures that rationalisation decisions are revisited as both Microsoft's capabilities and your organisation's needs evolve.

Rationalisation Playbook: Step-by-Step Implementation