Optimising Your Microsoft 365 Licensing

Identifying the Sources of Waste

Overspending on M365 is often "silent," occurring through several common oversights:

• Defaulting to High-Tier Plans: Organisations frequently upgrade entire teams to E3 or E5 plans without verifying if every user actually requires the premium security or compliance tools included.
• The "Ghost License" Problem: Licenses often remain active for employees who have changed roles, moved to part-time, or left the company. Crucially, deleting a user account does not automatically reclaim the license; it must be manually unassigned or handled via automation.
• Duplicate Assignments: The M365 admin portal does not always flag redundant assignments. You may be paying for a standalone Defender license for a user who already has that feature included in their existing E3/E5 subscription.
• Over-Licensing Shared Mailboxes: Many firms mistakenly assign premium licenses to shared mailboxes or service accounts that could function perfectly well (and for free) as standard shared mailboxes.

1. Downgrade "Light" Users

Not every staff member needs a full E5 license. A receptionist or warehouse worker may only require basic email and Teams access. Use usage reports to identify these "light" users and downgrade them to an E1 or Business Basic plan without impacting their productivity.

2. Automate Offboarding

Use Power Automate to link your HR system to M365. When an employee is marked as "departed," the workflow should automatically revoke access, convert their mailbox to a shared resource, and—most importantly—unassign their license for reuse.

3. Consolidate Overlapping Features

Review your third-party security stack. If your M365 plan already provides advanced threat protection (ATP) or endpoint detection, you may be able to cancel redundant third-party subscriptions. Similarly, ensure Copilot add-ons aren't duplicating AI tools you already pay for elsewhere.

4. Audit Group and Shared Mailboxes

Periodically check your shared mailboxes and service accounts. Convert any that are currently licensed into free shared mailboxes (provided they are under the 50GB limit) to instantly free up paid license slots.

5. Implement Governance and Alerts

Set up automated notifications for license expiration and renewal dates. Establish a policy to flag any license that has remained inactive for more than 30 days for immediate review.