Whitepaper

Microsoft Office 365 License Optimization Report

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How Enterprises Are Faring in the Battle Between SaaS Application Enthusiasm and Corresponding License Waste

Introduction

According to Gartner, one in five corporate employees currently use an Office 365 service. In fact, Office 365 is the most widely used cloud service by user count, with research from Bitglass indicating Office 365 users make up over half of the 81 percent of total organizations that have made the shift away from on-premises data to cloud services. What’s more, as of FY20 Q1, Microsoft reported that Office 365 counted over 200 million monthly active users.

office 365 license optimization

Cloud adoption and Office 365 enthusiasm bode well for overall business productivity and employee engagement, however, challenges have arisen during cloud transformation. For instance, many organizations struggle with the fundamental task of optimizing the amount they spend on Office 365 licenses for their workforce. There are three common mistakes enterprises make with their Office 365 licenses:

  1. Err on the side of caution and purchase too many licenses;
  2. Pay for inactive licenses instead of assigning them to new users that join the organization; and
  3. Purchase licenses that contain apps that don’t align with current employee usage.

It’s more important than ever for businesses to strategically manage their Office 365 licenses, maximize productivity by reaping the full value of their purchased licenses, and spend their cloud budget effectively.

Methodology

To understand how enterprises are managing their Office 365 licenses, CoreView analyzed more than five million workers from enterprises that are actively using its SaaS Management Platform (SMP); have undergone a complimentary CoreView Office 365 Health Check analysis; or are using the free CoreDiscovery solution that discovers license optimization and savings opportunities, finds vulnerabilities, and helps IT teams understand what operators and end users are doing with Office 365. Read on for a breakdown of the full report, including three core findings. 

Finding #1: Enterprises Can’t Turn a Blind Eye to Office 365 License Management

Businesses often reduce the value of their cloud and SaaS investments because of unexpected – and avoidable – charges. Enterprises with lax license management often pay for too many licenses, struggle with application adoption due to a misalignment between employee needs and the purchased licenses, and fail to reassign licenses after an employee has left the company or changed roles. CoreView’s research shows that enterprises’ poor license management policies led to more than half (56%) of them being inactive, underutilized, oversized, or unassigned.

CoreView defines inactive, underutilized, oversized, or unassigned licenses as:

  • Inactive licenses are Office 365 licenses that have been previously assigned but have not shown any usage activity in the last 30 days. For example, a user may have been active previously, but has not logged into Exchange during the past 30 days.
  • Underutilized and oversized licenses refer to Office 365 licenses containing productivity apps that aren’t being used by employees because they either don’t need them or haven’t been properly trained how to use them.
  • Unassigned licenses are Office 365 licenses that are available to the company but haven’t been given to new employees or contractors.

CoreView’s data shows that businesses struggle with managing inactive and unassigned licenses, in particular. Here’s a breakdown of the percentage of how Office 365 accounts fall under these two categories by the three primary licensing tiers:

  • Office 365 E1: 37% are inactive, and 39% are unassigned
  • Office 365 E3: 12% are inactive and 42% are unassigned
  • Office 365 E5: 23% are inactive and 27% are unassigned

In addition to licenses for employees, enterprises should have visibility into any non-employee accounts that do not require an Office 365 license, such as customer service accounts/mailboxes, internal departmental accounts/mailboxes (e.g. an HR hotline), or even automated chatbots.

Finding #2: Enterprise Users Struggle with App Adoption

One factor that is leading organizations to overspend is a lack of alignment between the type of Office 365 license that is purchased [see table below] and the needs of employees. IT managers often buy Office 365 licenses in batches and do not align the requirements of their employee profiles with the proper license package which is why 44% of licenses are either underutilized or oversized.

Breaking CoreView data down by the three major license tiers reveals the following:

  • Office 365 E3: 16% could be reduced to E1 licenses based on employee app usage
  • Office 365 E5: 38% could be reduced to E1 licenses based on employee app usage
License TypeOffice Apps IncludedServices IncludedEmail HostingOneDrive Storage SpacePrice / User / Month
Office 365 E1NoneExchange
OneDrive
SharePoint
Teams
Yammer
Stream
Email hosting with 50GB Mailbox and custom email domain address1TB OneDrive Storage$8 / User / Mo.
Office 365 E3Outlook
Word
Excel
PowerPoint
Access (PC Only)
Publisher (PC Only)
Exchange
OneDrive
SharePoint
Teams
Yammer
Stream
Email hosting with 100GB Mailbox and custom email domain addressUnlimited OneDrive Storage$20 / User / Mo.
Office 365 E5Outlook
Word
Excel
PowerPoint
Access (PC Only)
Publisher (PC Only)
Exchange
OneDrive
SharePoint
Teams
Yammer
Power BI
Stream
Email hosting with 100GB Mailbox and custom email domain addressUnlimited OneDrive Storage$35 / User / Mo.
Note: This table contains only partial high-level overviews of each license type. For full details, please follow this link to compare Office 365 Business Plans.

Businesses that purchased the more expensive Office 365 packages are faced with two choices for optimizing their license usage: either downgrade their license packages or upskill and train their people to use the apps they purchased to create productivity gains. Businesses can promote adoption of Office 365 by targeting their people who are not taking advantage of all of the services of Office 365 with Just-in-Time Learning (JITL) assets to increase employee productivity and maximize the return on the businesses’ Office 365 investments.

This is particularly true for the Office 365 E5 license. Often proclaimed “The Cadillac of Office 365,” the E5 license is the most expensive and, when used in conjunction with CoreView’s SMP, enterprises find that it delivers significant value.

Specifically, CoreView can optimize E5 license usage by:

  • Surfacing Advanced Threat Protection (ATP) Reports for the entire organization, making them searchable (i.e. by department or user), with a one-year retention period.
  • Enhancing Azure Information Protection (AIP) encryption and data loss prevention (DLP) actions by surfacing historical actions and alerts based on users, groups, and files.  
  • Mapping threat events surfaced by E5 and then link those events with configuration information, such as whether or not the user has multi-factor authentication, what conditional access policies were applied (if any), and what methods are being used to attack accounts.  
  • Augmenting advanced eDiscovery AI searches for emails and files with reports that show user actions, such as file access, sharing, user creation, password changes, or forwarded email.  

Finding #3: Better Managing Inactive Licenses Would Reduce Total Office 365 Costs by 14%

With the level of employee churn in many organizations, and a need to oftentimes make Office 365 available to external users, organizations find it exceptionally challenging to identify inactive licenses that can be harvested for use by others. CoreView found that the average business could reduce their total Office 365 costs by 14% if they discovered and better managed inactive licenses by eliminating or reassigning them.

Conclusion

To thrive in today’s evolved and highly competitive business climate, organizations must continue to support cloud-based apps and services wholeheartedly. Most IT teams need to devote more time and resources to better understand the dynamic licensing needs of their organization.

CoreView’s data demonstrates there is room for improvement when it comes to Office 365 license management due to common licensing errors, including enterprises purchasing more licenses than necessary, failing to align licenses with actual employee usage, and wasting money on unassigned or inactive licenses. Organizations with an actionable view into their SaaS environment are able to target specific groups of users to drive Office 365 adoption, as well as transform the seemingly mundane task of license management into significant cost savings and boost productivity.

CoreView helps organizations manage their cloud investment by tracking, reviewing and reporting on a variety of SaaS subscriptions and identifying any wasteful plans or licenses. For more information on how to improve your organization’s Microsoft or other SaaS license optimization, administration efficiency, employee adoption or security and compliance, please visit www.coreview.com.