March 27, 2020

7 Steps to Maximize Office 365 Licensing

Large organizations who invest in Office 365 are faced with many decisions, specifically around purchasing. The decisions they make when buying O365 licenses directly influence whether a.) they see an increase user productivity or b.) they expend capital on licenses that will not be used and that have no impact on the bottom line.

Put another way, Microsoft licensing presents two major opportunities for an organization:

  1. For procurement to buy only what they need.
  2. For IT to ensure that their end users adopt all that they buy.

Often, I see an unnecessarily wide delta between what is purchased and what is assigned to users. I see another between what is adopted and used. These expensive deltas are the results of over-purchasing or underutilization, or both. Historically, over-purchasing was acceptable and, most often, caused by funding and purchasing cycles. Now, as a result of the cloud, underutilization is usually due to lack of understanding about what users want vs. what they actually need.

It’s important to know that as an organization, you don’t need to keep a surplus of licenses on hand anymore. The industry has changed, allowing more flexibility and accuracy in buying – licenses can be quickly turned on and off, so that you can cater to users’ needs with licenses ‘shrink-wrapped’ to the functional requirements of their role.

With the right system of internal checks and balances in place, an organization can prevent themselves from sliding down this slippery slope in the first place. The way I think about this is a set of seven steps an organization can follow for optimum licensing.

Step One: Take an inventory of your licenses and review costs

Start with what you already have by taking thorough inventory of your technology and its cost to the organization. You’ll also want to review what kind of contract you’re bound to because those parameters will influence how you manage your technology portfolio. Licenses that have been purchased but not assigned can be a quick win, depending on the purchase model and your renewal dates.

Step Two: Evaluate how well your licensing reflects user needs

Ask yourself, how well have you identified the functional needs of the organization? By doing this, you can identify the delta between what is purchased, and what is adopted and used. You can ensure that the licenses you purchase match the needs of the workforce.

This is easily accomplished by building out functional profiles for user roles.These functional profiles will help to identify underutilized workloads in base licenses, so in some cases, you can reclaim and repurpose high-cost licenses and downgrade users where necessary. You’ll want to make sure you build out these profiles between Step Two and Three.

Step Three: Determine how to capture user needs effectively, even as they change

What processes do you have in place to identify user needs on an ongoing basis? This is important because user needs change over time. You must have visibility into this in order to figure out what you are going to need in the future. Otherwise, you will definitely over purchase.

Step Four: Establish a way to see what end users are using

Determine how well you can monitor license utilization, if at all. You’ll need to find a reliable, granular reporting mechanism to capture the data to inform your licensing strategy. This reporting mechanism needs to help you keep tabs on things like the number of licenses you have, who is assigned what, and the number of disabled users who still have licenses.

This step enables you to determine whether the licenses you purchased are adopted and / or being used actively used across all workloads. Not only will this help you harvest unused subscriptions, but be used to determine if you need to accelerate adoption via targeted user campaigns.

Step Five: Right-size your licenses to meet the needs of the organization

After completing Steps One through Four , you will now have a good grasp on whether you’re getting the full value of your investment and have the knowledge to reclaim and downgrade, where necessary.

For example, let’s say you have an E3 user who only makes use of Exchange – they could be downgraded to a less costly E1 license. When it comes to high-cost licenses like Power BI, Visio, and Project we find that around 11% of these are unused and can be reclaimed. For an average 10,000-person organization using Project, you could see savings of approximately $40,000.

Step Six: Educate your users

The next step is to maximize user adoption, which is driven by education. You want to make sure your users understand the technology they have access to and how it is relevant to their role. You will want to educate them about the functionality that their license provides and how to use it. Likewise, you will want to check in with them regularly, delivering ongoing training / education in an engaging manner.

Step Seven: Adapt procurement to provide flexibility

In Step Seven, the goal is to adapt your procurement process to give you the flexibility you need to manage your licenses in an efficient and cost-effective way. This requires effective collaboration between procurement and IT. Armed with the information acquired in Steps One through Six, IT should have that data needed to work more effectively with procurement.

Achieving success with those steps requires a good understanding of licensing. This could be a team member or an outside consultant, but it needs to be someone who understands how the levers of the licensing world work, and the implications of pulling each lever. With a little expert guidance, these seven steps will help you stop over-purchasing and / or underutilizing Microsoft licenses. It will open the doors to increased adoption and cost-predictability.

If you need assistance walking through these steps at your organization, consider reaching out. I (and the rest of my Blue Chip team) am here to help.

A version of this post originally appeared on the Practical 365 blog.

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