O365 License Management Best Practices
- Conduct Regular License Audits: Quarterly checks for efficiency.
- Utilize License Pools: Allocate by the department for better control.
- Implement Chargeback Systems: Assign costs to departments for accountability.
- Recycle Inactive Licenses: Reassign licenses as roles change.
- Leverage Management Tools: Use admin tools, scripts, and automation.
O365 License Management Best Practices
Office 365, now known as Microsoft 365, has become a critical productivity tool for businesses worldwide. The software provides various collaboration and productivity tools, including Microsoft Teams, SharePoint, and OneDrive.
However, efficiently managing these licenses is critical to ensuring that businesses derive the full value of their investment while controlling costs.
License management in Office 365 involves strategically managing licenses to ensure cost-effectiveness, avoid compliance issues, and guarantee full utilization of the suite’s resources.
This article discusses O365 License Management Best Practices that will help organizations use their Microsoft 365 subscriptions more effectively.
Regular License Audits
One of the best practices for effective license management is conducting regular audits. Organizations should schedule quarterly license audits to assess how each license is used.
The goal of these audits is to:
- Identify Inactive Licenses: Employees leave or change roles, making some licenses inactive. Organizations can conduct audits to identify these licenses and reallocate or deactivate them.
- Assess Underutilized Licenses: Users assigned higher-tier licenses, like E5, may not need all the advanced features. An audit helps determine whether users fully utilize the features they can access. If not, they can be reassigned to a lower-tier license.
- Enhance Cost Efficiency: Regularly auditing your licenses ensures that you only pay for what you use, avoiding unnecessary costs.
Regular license audits can be performed manually or using specialized tools to automate the process. A comprehensive audit process ensures compliance with Microsoft’s terms and maximizes the cost-effectiveness of license usage.
Utilize License Pools
Utilizing license pools is another effective best practice for managing Office 365 licenses. This involves assigning specific license pools to departments or business units.
By doing this, organizations can create a more organized approach to license allocation:
- Department-Level Control: By assigning license pools, departments can independently manage their licenses. This ensures that those closest to the users’ needs control license distribution.
- Accountability: License pools help instill a sense of ownership at the department level. Departments can better manage their requirements, preventing both underuse and overuse of licenses.
- Prevention of Overuse: With limited license pools, departments are more likely to think strategically about their license usage, minimizing waste and avoiding overrequisition.
License pools are especially effective for large enterprises with multiple departments and divisions that require different levels of services. Allocating licenses at a granular level ensures better cost control.
Implement Chargeback Systems
Implementing a chargeback system is a powerful way to promote the prudent use of licenses while improving overall transparency.
A chargeback system involves assigning a cost to each department for the licenses they use:
- Promotes Fiscal Accountability: Departments will be more inclined to use their licenses efficiently when they are financially responsible for the costs.
- Improves Transparency: Each department can see the costs associated with the licenses, which leads to better budgeting and planning.
- Encourages Optimization: When departments bear the cost, they will be more likely to assess whether each user needs a high-tier license like E5 or a lower-tier option.
Chargeback systems are particularly useful for companies looking to improve their overall cost structure and create internal accountability for software usage.
Read our o365 Optimization strategy.
Recycle Inactive Licenses
One common cause of wasted expenditures in Office 365 is inactive licenses that remain assigned after an employee leaves or changes roles.
Recycling these licenses is crucial:
- Identify Departing Employees: When employees leave, their license should be reassigned or deactivated. Failure to do this leads to unnecessary spending.
- Reassign Licenses Promptly: Create a procedure for quickly reallocating licenses when an employee leaves, or a role change occurs.
- Reduce Costs: Effectively managing inactive licenses can significantly reduce unnecessary costs and ensure licenses are allocated where needed.
Many organizations find working with HR teams to identify employees leaving or changing roles effective, allowing them to plan license reallocations accordingly. Automating this process with PowerShell scripts or third-party tools can reduce manual intervention.
Leverage License Management Tools
Microsoft provides several built-in tools for managing licenses more effectively. Additionally, third-party tools can provide even more flexibility.
Here are the primary tools to consider:
- Microsoft 365 Admin Center: This is the central platform where admins can manage, assign, and track licenses. It provides insights into usage and helps identify underutilized licenses.
- PowerShell: Admins can use PowerShell scripts to automate many aspects of license management, such as retrieving license usage reports or reassigning licenses to new users.
- Third-Party Optimization Tools: Tools like CoreView, Syskit Point, or AdminDroid can help automate tasks and provide more detailed insights than the default admin center. These tools can be useful for organizations looking to minimize manual labor and gain better visibility over license usage.
Using a combination of these tools helps businesses manage their licenses in an automated and cost-effective manner.
Monthly Employee Transition Reports
Collaboration with the HR department is essential for effective license management. Implementing monthly employee transition reports can help IT administrators make timely adjustments to the license inventory:
- Track Incoming and Outgoing Employees: Monthly reports help track employees joining or leaving the organization and those switching roles. This ensures licenses are either assigned or deactivated promptly.
- Avoid License Gaps: By receiving up-to-date employee information, the IT team can prevent unnecessary expenses by preventing periods where a license remains assigned to someone who no longer needs it.
- Proactive License Planning: Knowing about incoming employees beforehand helps allocate licenses to ensure new employees have immediate access to the necessary tools.
Integrating HR data into license management processes reduces inefficiencies and helps prevent licenses from becoming inactive without prompt attention.
Additional License Management Strategies
Besides the core best practices outlined above, several other strategies can help optimize Office 365 license usage:
1. Right-Sizing Licenses
Right-sizing refers to ensuring that each user has the appropriate license type based on their specific needs. Some users may only need basic collaboration tools like Teams and Exchange, while others may require the full range of features available in E3 or E5.
Therefore, it is important to regularly evaluate each user’s specific needs and adjust licenses accordingly.
- Lowering License Tiers: Consider downgrading a user’s license if they do not need the advanced features of their current plan.
- Upgrading When Necessary: If a user’s role changes and needs more advanced tools, upgrade their license to avoid productivity bottlenecks.
2. Automation of License Management
PowerShell scripts or third-party tools to automate the license assignment and removal process can save time and minimize human error.
Automation ensures that tasks like adding new employees to Microsoft 365 or deactivating licenses for departing employees are done systematically.
- Onboarding Automation: Automate license assignments during onboarding to ensure new employees have the right tools from day one.
- Offboarding Automation: Automate the removal or reassignment of licenses when employees leave to ensure no license is left idle.
3. User Training and Awareness
Licensing waste is often caused by end-users lack of awareness of which features and tools are available.
Offering user training on the available tools helps with productivity and reduces the risk of purchasing additional licenses when the features are already available.
- Training on Available Features: Educate users on the features included in their licenses to ensure they are fully utilizing the tools provided.
- Awareness Campaigns: To maximize the value derived, regularly update users on new features included in their licenses, especially those using higher-tier licenses like E5.
FAQ: O365 License Management Best Practices
What is the purpose of regular license audits in O365?
Regular license audits help identify inactive or underutilized licenses, ensuring cost efficiency and reallocation where necessary.
How do license pools improve O365 management?
License pools assign licenses to specific departments, encouraging accountability and efficient usage of licenses.
What is a chargeback system in license management?
A chargeback system assigns licensing costs to each department, promoting fiscal accountability and cost-efficient license usage.
Why is it important to recycle inactive licenses?
Recycling inactive licenses prevents wasteful spending by reallocating licenses from former employees or those who no longer need them.
Which tools are best for O365 license management?
Microsoft 365 Admin Center, PowerShell scripts, and third-party tools like CoreView or Syskit Point can help automate and track license management.
How often should O365 license audits be conducted?
Quarterly audits are recommended to ensure licenses are used effectively, and any inactive licenses are reassigned.
How can automation help in O365 license management?
Automation with PowerShell scripts can speed up tasks like assigning or deactivating licenses, ensuring accuracy and saving time.
Why involve HR in O365 license management?
HR collaboration helps track incoming and outgoing employees, allowing prompt license assignment or deactivation.
What are the benefits of using a chargeback system?
A chargeback system promotes transparency and accountability, as departments are directly responsible for the cost of their licenses.
How does right-sizing help in O365 licensing?
Right-sizing ensures each user has the appropriate license type based on their needs, preventing overpayment for unused features.
What are third-party optimization tools for O365?
Tools like AdminDroid or CoreView help analyze license usage, optimize allocations, and provide detailed reporting.
What is PowerShell’s role in managing licenses?
PowerShell can automate many tasks, such as reporting license usage or reassigning licenses, making license management efficient.
How can monthly HR reports improve license allocation?
Monthly HR reports on employee transitions help IT ensure that licenses are assigned or removed promptly, avoiding idle licenses.
What are the key advantages of using license pools?
License pools allow departments to independently manage their licenses, ensuring licenses are allocated based on real needs.
Can departments share licenses under O365?
No, licenses cannot be shared. Each license is assigned to a specific individual and must be managed accordingly.
