According to Gartner, one in five corporate employees currently uses a Microsoft Office 365 service. In fact, Microsoft 365 is the most widely used cloud service by user count, with research from Bitglass indicating Microsoft 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.
Cloud adoption and Microsoft 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 Microsoft 365 licenses for their workforce. There are three common mistakes enterprises make with their Microsoft 365 licenses:
1 Err on the side of caution and purchase too many licenses;
It’s more important than ever for businesses to strategically manage their Microsoft 365 licenses, maximize productivity by reaping the full value of their purchased licenses, and spend their cloud budget effectively.
To understand how enterprises are managing their Microsoft 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 Microsoft Office 365 Health Check analysis which discovers license optimization and savings opportunities, finds vulnerabilities, and helps IT teams understand what operators and end users are doing with Microsoft 365. Read on for a breakdown of the full report, including three core findings.
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:
CoreView’s data shows that businesses struggle with managing inactive and unassigned licenses, in particular. Here’s a breakdown of the percentage of how Microsoft 365 accounts fall under these two categories by the three primary licensing tiers:
In addition to licenses for employees, enterprises should have visibility into any non-employee accounts that do not require a Microsoft 365 license, such as customer service accounts/mailboxes, internal departmental accounts/mailboxes (e.g. an HR hotline), or even automated chatbots.
One factor that is leading organizations to overspend is a lack of alignment between the type of Microsoft 365 license that is purchased [see table below] and the needs of employees. IT managers often buy Microsoft 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:
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 the adoption of Microsoft 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’ Microsoft 365 investments.
This is particularly true for the Microsoft 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:
With the level of employee churn in many organizations, and a need to oftentimes make Microsoft 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 Microsoft 365 costs by 14% if they discovered and better managed inactive licenses by eliminating or reassigning them.
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 Microsoft 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 Microsoft 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.