Microsoft 365 Add-On Licenses
- Phone System: Allows calling features in Microsoft Teams.
- Audio Conferencing: Enables dial-in for meetings.
- Microsoft Defender for Identity: Advanced security features.
- Power BI: For business analytics and reporting.
- Exchange Online Archiving: Extra storage for email retention.
Microsoft 365 Add-On Licenses
Microsoft 365 is a versatile suite of cloud-based productivity tools that provides organizations with a wide range of collaboration, communication, security, and productivity features.
While the base Microsoft 365 plans—such as Microsoft 365 Business and Enterprise offerings—include a core set of functionalities, organizations often require additional features to meet their specific needs. This is where Microsoft 365 add-on licenses come into play.
Add-on licenses allow organizations to enhance their base subscriptions by adding specific functionalities, features, or capabilities not included in the standard plans. Whether it’s advanced security, compliance tools, or expanded features for Microsoft Teams, add-on licenses provide flexibility without the need to upgrade to a more expensive tier.
This comprehensive guide will explore the core concepts of add-on licenses, the different types available, cost considerations, best practices for implementation, and tips for optimizing license management.
Core Concepts of Add-On Licensing
Microsoft 365 add-on licenses supplement an organization’s base subscription with additional capabilities. These licenses are typically offered per user and can be purchased as needed, allowing businesses to customize their Microsoft 365 environment according to their specific use cases without unnecessary upgrades.
One primary benefit of add-on licenses is cost optimization. Rather than paying more for a Microsoft 365 plan to access advanced features, organizations can add only the functionality they need, helping to control costs.
Add-on licenses also provide scalability, as organizations can add or remove licenses based on their evolving requirements.
Types of Add-On Licenses
Several types of Microsoft 365 add-on licenses enhance security, compliance, communication, and more. These licenses can be mixed with different Microsoft 365 plans to meet the organization’s needs.
1. Security Add-Ons
One of the most important categories of Microsoft 365 add-ons is security, essential for safeguarding data and ensuring business continuity.
Some of the key security add-ons include:
- Enterprise Mobility + Security (EMS): EMS provides advanced security and mobility management capabilities for organizations using Microsoft 365. This suite includes tools for identity management, data protection, mobile device management (MDM), and advanced threat protection (ATP). For example, EMS helps businesses secure user access and protect sensitive data, especially in a mobile or remote work environment.
EMS is particularly useful for organizations using Microsoft 365 E3 or E5 licenses that want additional security features without upgrading to higher-tier plans. EMS can be added to any Microsoft 365 plan to provide enhanced identity protection, compliance management, and mobile device security. - Microsoft Defender for Endpoint: This add-on provides advanced threat protection for endpoints such as computers, smartphones, and tablets. It helps prevent, detect, and respond to security threats on devices connected to your network. It includes capabilities such as threat and vulnerability management, attack surface reduction, and automated investigation and remediation.
Defender for Endpoint is available in two tiers:- Plan 1: $3.00 per user/month
- Plan 2: $5.20 per user/month
- Microsoft Defender for Cloud Apps: This add-on helps organizations secure their cloud applications by providing visibility into app usage, controlling data sharing, and detecting risky activity across cloud services.
- Azure Information Protection: This add-on allows organizations to classify and protect data based on sensitivity. It integrates with Microsoft 365 apps like Outlook, Word, and Excel to help ensure the protection of confidential information.
- Advanced Threat Protection (ATP) adds a layer of security to help organizations detect and respond to advanced threats, such as phishing attempts, malware, and ransomware. ATP features include real-time protection, automated threat investigations, and security alerts.
2. Teams Add-Ons
Microsoft Teams is included in many Microsoft 365 plans, but certain advanced features require additional licensing. Common Teams add-ons include:
- Phone System: This add-on adds business-class phone system capabilities to Microsoft Teams. It enables organizations to replace traditional phone systems with Teams-based voice calling, allowing users to make and receive calls, set up call routing, and use features like voicemail and call forwarding. The team’s Phone System is especially useful for organizations that want to consolidate communication tools into one platform.
- Audio Conferencing allows users to dial into meetings via a phone line, which is useful for participants who may not have access to a computer or the Internet. This add-on is typically included in business or enterprise plans to enhance collaboration in hybrid or remote work environments.
- Advanced Communication Features include advanced meeting capabilities such as live events, webinar hosting, and broadcasting. These add-ons are valuable for organizations that need to host large-scale meetings or events with hundreds or thousands of participants.
3. Compliance and Security Bundles
As data security and regulatory compliance become increasingly important, Microsoft offers several specialized add-ons to enhance compliance management and security posture:
- Microsoft Purview (formerly Compliance Manager): This comprehensive suite of compliance tools helps organizations manage regulatory and legal requirements, such as data retention, privacy policies, and legal holds. Microsoft Purview includes features like eDiscovery, advanced auditing, and information governance, which are essential for organizations handling sensitive data or operating in regulated industries.
- Advanced eDiscovery: This add-on is specifically designed for organizations that collect, search, and analyze large volumes of data for legal purposes. It integrates with Microsoft 365 services, including Exchange, SharePoint, and Teams, to provide a unified platform for eDiscovery across the organization.
- Azure Information Protection P2: This add-on provides even more advanced information protection features than the basic Azure Information Protection add-on. With P2, organizations can implement advanced labeling and encryption policies, automate classification, and integrate data loss prevention (DLP) tools.
4. Microsoft Defender for Office 365
This add-on protects users from email-based threats, including phishing, malware, and business email compromise. It includes threat detection, policy enforcement, and security reports to safeguard against malicious activity targeting emails and attachments.
Cost Considerations
Add-on licenses are typically priced per user, with costs varying depending on the specific features included.
Below are some common pricing examples for security and compliance add-ons:
- Enterprise Mobility + Security E5: $16.40 per user/month
- Microsoft Defender for Endpoint Plan 1: $3.00 per user/month
- Microsoft Defender for Endpoint Plan 2: $5.20 per user/month
- Microsoft Defender for Cloud Apps: Pricing varies based on the number of users and features required.
When adding these licenses, it’s important to carefully consider your organization’s specific needs to avoid overprovisioning. Purchasing add-ons for features that are not being used or required can unnecessarily increase licensing costs.
Best Practices for Add-On Implementation
To optimize the value of Microsoft 365 add-on licenses, organizations should follow these best practices:
1. Purchase Exactly the Number of Licenses Needed
It is critical to only purchase the licenses your organization needs. Many businesses make the mistake of overbuying licenses in anticipation of future needs. Instead, starting with fewer add-ons and scaling up as needed is better.
2. Combine 12-month and Monthly Licenses for Flexibility
If your organization’s needs vary seasonally or project-based, consider using a combination of annual and month-to-month add-ons. Annual licenses often come with discounted rates, but monthly licenses offer more flexibility. Mixing the two can help your organization meet immediate needs without committing to long-term costs.
3. Monitor Usage Patterns to Optimize Licensing Costs
Regularly review your license usage and remove unused or unnecessary add-ons. For example, if certain advanced features are no longer needed or used by employees, these licenses should be removed to avoid unnecessary charges. Microsoft 365 provides tools for administrators to monitor license consumption and adjust accordingly.
4. Regularly Audit and Adjust Licenses
Perform periodic audits to assess which licenses are still required and which can be downgraded or removed. This is particularly important for businesses that experience fluctuating employee numbers or changing operational requirements.
Read about differences in Microsoft 365 E3 and E5.
Common Licensing Scenarios
There are several common scenarios in which organizations typically add Microsoft 365 add-on licenses:
1. Security Enhancement
Organizations starting with Microsoft 365 E3 plans can enhance their security posture by adding licenses to protect devices and data, such as Microsoft Defender for Endpoint, Advanced Threat Protection, or Enterprise Mobility + Security.
2. Compliance Requirements
For businesses operating in highly regulated industries, Microsoft 365 add-ons like Azure Information Protection P2, Microsoft Purview, and Advanced eDiscovery provide the tools needed for compliance management and legal data management.
3. Communication and Collaboration Expansion
Organizations using Microsoft Teams for communication may want to add Phone System or Audio Conferencing licenses to facilitate more robust communication features.
Making Informed Decisions
To maximize Microsoft 365 add-on licenses, organizations should evaluate their current and future needs before committing to additional features. Here are some key steps in the evaluation process:
- Assess Current Licensing Needs: Identify gaps in functionality that add-on licenses could address.
- Compare Costs of Add-Ons vs. Full Upgrades: Determine if purchasing a more comprehensive Microsoft 365 plan (such as upgrading to E5) would provide better value than adding specific features.
- Consider Scalability: Ensure that the add-ons you select can scale as your organization grows.
License Compliance and Management
Maintaining compliance with licensing terms is crucial to avoid penalties and ensure that your organization uses the right number of licenses. Consider implementing regular license audits and monitoring to ensure compliance.
Key Considerations:
- Maintain an accurate inventory of licenses.
- Review usage patterns regularly.
- Remove unused licenses to prevent over-licensing.
Future Considerations
Microsoft frequently updates its offerings and adds new features to its licensing models. Organizations must stay informed about licensing terms and features changes to ensure they get the most value out of their Microsoft 365 subscriptions.
FAQ: Understanding Microsoft 365 Add-On Licenses
What are Microsoft 365 add-on licenses?
Add-on licenses provide extra features not included in the base Microsoft 365 plans, like advanced security tools or calling features.
Do I need an add-on license for Teams calling?
Yes, you need the Phone System add-on to enable calling in Teams, along with a Calling Plan.
Can I use Power BI with Microsoft 365?
Power BI requires a separate add-on license for advanced data analytics and reporting capabilities.
Are Microsoft Defender add-ons available?
Yes, Microsoft Defender offers several add-ons like Defender for Identity and Defender for Office 365.
What is the cost of add-on licenses?
The costs vary depending on the add-on and your specific Microsoft 365 plan. For current rates, check Microsoft’s pricing page.
Do add-on licenses work with any Microsoft 365 plan?
Yes, most add-ons can be added to any Microsoft 365 plan, but compatibility depends on your desired feature.
How do I add or remove add-on licenses?
You can manage add-ons through the Microsoft 365 admin center or by contacting your Microsoft reseller.
What is the Audio Conferencing add-on?
Audio Conferencing enables dial-in access to meetings hosted on Microsoft Teams, which is useful for those without internet access.
Can I add more storage to OneDrive or SharePoint?
Yes, you can purchase additional storage through add-ons if your current plan’s limits are exceeded.
Are all add-ons available for Business plans?
Some add-ons are available only for Enterprise plans, especially advanced security and compliance tools.
Can I purchase add-ons without a Microsoft 365 subscription?
No, an active Microsoft 365 subscription is required to purchase add-on licenses.
What are the benefits of Microsoft Defender add-ons?
Defender add-ons offer enhanced security features like threat detection, data loss prevention, and protection against phishing attacks.
How do I enable the Phone System in Teams?
You must purchase the Phone System add-on and a Calling Plan to enable calling features in Microsoft Teams.
Can I integrate Power BI with SharePoint or OneDrive?
Power BI integrates with SharePoint and OneDrive for advanced reporting and business analytics.
Are Microsoft 365 add-ons refundable?
Add-on licenses are typically non-refundable. Check with Microsoft or your reseller for specific refund policies.
