O365 License Optimization – Updated for 2024


O365 License Optimization – Updated for 2024

O365 License Optimization involves:

  • Efficient Usage Analysis: Assessing current usage to identify underutilized licenses.
  • Cost Reduction: Identifying opportunities to decrease expenses by optimizing license types and quantities.
  • Compliance Assurance: Ensuring license usage aligns with Microsoft’s terms to avoid penalties.
  • Right-Sizing Licenses: Aligning licenses with actual user needs and roles.
  • Upgrade Management: Strategically managing upgrades and transitions between different Office 365 plans.

What is included in the O365 License?

There are three main categories of Office 365 licenses:

  • Business plans which are limited to 300 users
  • Enterprise plans with no limitations on users or features
  • Frontline worker plans are specifically designed for mobile or remote employees.
features in o365 part 1
  • Office apps for PC, Mac, and mobile devices, including Word, Excel, and PowerPoint Office Online, a web-based version of Office for viewing and editing office files
  • Exchange, an email service with inbox, calendar, address book, tasks, and security features
  • Teams, a communication tool with instant messaging, online meetings, file sharing, and collaboration
  • OneDrive for accessing, sharing, and syncing personal files in a browser and on any device
  • SharePoint for building intranets, searching content, and analyzing data
  • Yammer, an enterprise social network for internal communication and reducing email usage
  • Stream, an internal YouTube with high-performance video streaming and mobile access
  • Planner, a task management tool similar to Asana
  • Groups, an enterprise collaboration workspace integrating Exchange, SharePoint, Skype, and Planner, with conversations, files, notes, calendars, and tasks in one place
  • Delve is a tool for searching for files and people using artificial intelligence and Office Graph.
  • Basic data analytics using a free, limited version of Power BI and information about Office 365 usage
  • Advanced data analytics with Power BI Pro, Excel services, and Personal Productivity Analytics
  • Basic security features such as multi-factor authentication
  • Advanced spam and malware filter with Exchange
  • Simple e-discovery, data loss prevention, and document encryption
  • Advanced threat protection with additional configuration options for data loss prevention, conditional access, and advanced malware scanner
  • Customer Lockbox in E5 suites for granting access to data for the support team
features in o365 part 2

What is O365 Business?

o365 business plans

Office 365 Business has three plans: Basic, Standard, and Premium.

  • Basic includes web and online Word, Excel, and PowerPoint versions and 50GB of email hosting.
  • Standard offers all collaboration and communication services and desktop productivity apps.
  • Premium includes all the features of the previous two plans and advanced security capabilities.

What is O365 Enterprise?

o365 enterprise plans

Office 365 Enterprise has three main plans: E1, E3, and E5.

  • E1 includes Office Online and a range of communication and collaboration services, as well as Stream and work management apps like Planner and To Do
  • E3 extends E1 with data analytics, additional security features, and the Office client.
  • E5 is the most comprehensive product suite, including complete protection, Power BI Pro, Advanced DLP, and user activity monitoring.

O365 for Frontline

O365 for Frontline workers
  • Office 365 has Frontline Worker Plans for employees primarily using mobile devices, such as customer-facing workers.
  • These plans include Exchange Kiosk, which provides a 2GB mailbox that can be accessed via a browser or POP3 protocol but does not offer synchronization with Outlook.
  • The F3 options offer access to Power Apps, automation tools, and advanced security features in Microsoft 365 F3.

O365 License Management

o365 license management tips

Microsoft Office 365 offers various license options to meet the needs of different businesses. However, tracking software licenses can be challenging, especially with a high turnover of employees.

This can lead to gaps in coverage and problems such as unassigned licenses, misuse of permits, and ongoing charges for inactive licenses.

As the importance of information and data analytics increases, enterprises must provide employees with reliable solutions that can be quickly reported to upper management.

To address these issues and optimize Office 365 license management, six tips can be followed:

  1. Obtain access to license data using tools that collect and present this information to managers through reports and dashboards.
  2. Conduct health checks regularly to ensure that licenses are being used appropriately and by the company’s licensing agreement.
  3. Assign license pools to specific business units, allowing them to distribute and recover licenses as needed and limiting the number of licenses they can use from the general collection.
  4. Implement a chargeback system to promote fiscal accountability for license management at the department level.
  5. Recycle inactive licenses from old user accounts to save costs and increase efficiency.
  6. Consider using license optimization tools to help identify areas where cost savings can be made.

O365 License Optimization

The first opportunity to optimize the cost of Microsoft Office 365 licenses is to identify all licenses assigned to employees who have left or are leaving the company.

This issue often arises due to a lack of SAM processes, controls, or governance for assigned licenses.

While this can frustrate SAM professionals, it is a simple fix. To address this problem, follow these steps:

O365 Optimization Steps

  • Request an updated employee transition report from HR, including temporary or contracted workers and permanent staff, going as far back as possible. To prevent this issue, consider requesting a monthly report and implementing processes for O365 and offboarding employees.
  • Export a report from the Microsoft Office 365 Admin Portal for all licensed users, focusing on licensable applications within Office 365.
  • Create a spreadsheet with the data from the HR transition report and the report of licensed O365 users, and use a VLOOKUP to identify any licensed leavers. Share this list with the InfoSec team to ensure removing the licenses won’t impact any services or linked accounts.
  • Remove the identified licenses using one of the following methods: manually in the O365 portal, an in-house developed script, or a third-party tool.
  • Document and automate this process, including spot checks to ensure it works properly. This process should be run monthly and included in the employee offboarding process.

FAQ on O365 License Optimization

What is the difference between Microsoft 365 Business and Microsoft 365 Apps?

Microsoft 365 Business includes additional features such as Exchange email and Teams and advanced analytics and security features, depending on the plan. Microsoft 365 Apps only consists of the Office client for working with files.

Is the Office client the only difference between Microsoft 365 E1 and E3?

No, there are several other differences between E1 and E3. E3 includes additional security options like email and document encryption, data loss prevention, and more control over inboxes, mail flow, and data analytics. E3 also includes access to on-premises enterprise licenses, whereas E1 only offers a standard license.

Which Microsoft 365 plan is the best for me?

It depends on your business’s needs and the number of users. For companies with less than 300 users, Microsoft 365 Business may be the best option. For larger businesses, Microsoft 365 Enterprise may be more suitable. It is essential to consider what features and tools your team uses daily to determine the right plan for you.

How can I choose the best Microsoft 365 plan for my business?

The best approach is to identify a business need or problem and explore how the cloud can help solve it. Trying to fit a business’s need for available cloud features may be less effective.

What are the most commonly chosen Microsoft 365 plans?

It is common for businesses to choose a combination of E1 and E3 or E1 and E5. These plans can be mixed and matched to meet the specific needs of a business.

How does Office 365 licensing work?

Office 365 licensing is based on a subscription model, where users pay a monthly or annual fee to access the services. Each user requires a separate license, and different plans are available to meet the needs of different types of users and organizations.

Can I purchase a one-time license for Office 365?

No, Office 365 is only available on a subscription basis, with users paying a recurring fee to access the services. There is no option to purchase a one-time license.

Can I share my Office 365 license with other users?

No, each user in your organization must have their own Office 365 license. Sharing a single license among multiple users is not allowed.

Do I need a separate license for each device?

No, a single Office 365 license allows users to access the services on multiple devices, such as a desktop computer, laptop, and mobile phone. However, each user in your organization will need their license.

Can I use Office 365 on a personal device?

Yes, Office 365 can be used on personal devices if the user has a valid license. However, it is essential to note that the use of Office 365 on personal devices may be subject to additional terms and conditions.

Can I purchase additional licenses for users on an as-needed basis?

Yes, it is possible to purchase additional licenses for users as needed. This can be done through Microsoft or a reseller.

How do I manage Office 365 licenses for my organization?

Office 365 licenses can be managed through the Microsoft 365 admin center. This allows you to assign, reassign, and remove licenses as needed, view usage reports, and track license expiration dates.

Are there any discounts available for volume licensing of Office 365?

Yes, volume licensing discounts may be available for organizations that purchase many Office 365 licenses. These discounts are typically based on the number of licenses purchased and the length of the subscription term.

How can we help

Our Office 365 License Optimization service is designed to help organizations get the most value out of their Office 365 subscriptions.

Our team of experts will analyze your organization’s current usage and identify areas where licenses are underutilized or unnecessary.

Optimizing your Office 365 licenses can reduce your costs and ensure that you are getting the most value for your money.

Contact us today to learn more about how our License Optimization service can help your organization.


  • Fredrik Filipsson

    Fredrik Filipsson brings two decades of Oracle license management experience, including a nine-year tenure at Oracle and 11 years in Oracle license consulting. His expertise extends across leading IT corporations like IBM, enriching his profile with a broad spectrum of software and cloud projects. Filipsson's proficiency encompasses IBM, SAP, Microsoft, and Salesforce platforms, alongside significant involvement in Microsoft Copilot and AI initiatives, improving organizational efficiency.

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