Office 365: 3 ways your organization is mismanaging licenses

A new report finds that more than half of Office 365 licenses in the enterprise are inactive, underutilized, or unassigned.

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Software-as-a-Service (SaaS) company CoreView has released results of a survey of over 3 million enterprise Office 365 users in which it discovered that 56% of Office licenses are, "inactive, underutilized, oversized, or unassigned."

With Microsoft recently reporting over 200 million total Office 365 users, that's a lot of mismanaged licenses, which CoreView said is causing businesses to spend on average 14% more on Office 365 licenses than it needs to. 

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The report specifically highlights three common mistakes enterprises make when purchasing Office 365 licenses:

  1. Cautiously purchasing too many licenses

  2. Continuing to pay for inactive licenses (previously active, but unused for 30 or more days) instead of reassigning them

  3. Buying Office 365 packages that contain apps employees don't use

In short, there's a lot of Office excess in the enterprise.

Where the Office 365 budget is going

Office 365 business plans are divided into three tiers: E1, E3, and E5. E1, the cheapest solution, is the pure cloud tier—there's no access to desktop apps at all. At only $8 per license per month, this is by far the cheapest option.

E3 adds desktop apps, unlimited OneDrive storage, and larger Exchange mailbox capacities, and E5 adds access to Power BI, Microsoft's business analytics suite. E3 and E5 cost $20 per user per month, and $35 per user per month, respectively.

This is one of the biggest pain points that CoreView found in its study: Organizations aren't aligning the types of licenses they purchase with the needs of their employees. Of the three categories of Office 365 business licenses:

  • 37% of Office 365 E1 licenses are inactive, and 39% have never been assigned to a user
  • 12% of E3 licenses are inactive, and 42% have never been assigned
  • 23% of E5 licenses are inactive, with 27% having never been assigned

Based on those figures, the report concludes that 16% of E3 licenses could be downgraded to E1, and 38% of E5 licenses could do the same. 

"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 said in its report.

How to reduce your Office 365 license waste

It's important to keep in mind that CoreView offers SaaS management software designed to solve the very problems it found in its report. That doesn't mean concerned IT managers need to leap to buying its products, however.

CoreView's biggest recommendation is for organizations to get a better handle on their license management. Whether done by using SaaS management software or through some other method is up to the individual business and its needs. 

Along with better license management, the report also gives organizations suffering from Office 365 package bloat two options: Downgrade E3 and E5 licenses to save money, or train employees to take advantage of the Office features available in the higher-level tiers. 

Training and downgrading both have advantages—think of them in terms of short-term savings vs. business investment. Cutting licensing costs now will reduce overhead, but training employees to use the advanced features of Office 365 E3 and E5 could lead to a more efficient workforce, better business intelligence, and more return on Office license investment.

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