The complex task of Office 365 Licensing
Large organizations investing in Office 365 licensing are faced with some important buying decisions. These decisions will directly influence whether those investments will increase user productivity in an efficient fashion or expend capital on licenses that will not be used and therefore have no impact on the bottom line. Another way to look at this is that Microsoft 365 Licensing presents two major opportunities for an organization – first, for procurement to buy only what they need. The second is for IT to ensure that their end-users adopt all that they buy.
I often see an unnecessarily wide delta between what is purchased and what is assigned to users. I also see another between what is adopted and used. These expensive deltas are the results of over-purchasing or under-utilization, or both. Over purchasing was historically acceptable and is often caused by funding and purchasing cycles, but there is really no need for it in the cloud. Underutilisation is usually due to a lack of a clear understanding of what users want and actually need in the first place.
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 to allow more flexibility and accuracy with buying, and licenses can be turned off and on very quickly 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 7 steps an organization can follow for optimum licensing.
Step 1: Take an inventory of your licenses and review costs
Start with what you already have and make a thorough inventory of the technology and it’s the cost to the organization. You’ll also want to review what kind of contract you’re bound to because the parameters here will also 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 2: Evaluate how well your licensing reflects your user’s needs
Ask yourself, how well have you identified the functional needs of the organization? Then compare that data to the technology you currently possess. By doing this you are building a roadmap to identify the delta between what is purchased, and what is adopted and used. You need to ensure that licenses purchased to match the needs of the workforce, and this can be accomplished by building out functional profiles for user roles.
These functional profiles will help to identify under-utilized 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 2 and 3.
Step 3: Determine how to capture your user’s needs effectively and over time as they change
What processes do you have in place to identify user needs on an ongoing basis? This is important because the user needs to change over time. You must have visibility to this in order to figure out what you are going to need in the future, otherwise, you will most definitely over purchase.
Step 4: Establish a way to ensure you can see what end users are using
Determine how well you can monitor your users’ license utilization. You’ll need to find a reliable, granular reporting mechanism to capture the data to inform your licensing strategy. Things you’ll need to keep tabs on include understanding the licenses you have, who is assigned what and disabled users who still have licenses.
This step enables you to determine whether the licenses you purchased were adopted and are actively used across all workloads. This will also help you harvest any unused subscriptions. Finally, it can also be used as the basis to run campaigns to accelerate adoption if needed.
Step 5: Right size your licenses to meet the needs of the organization
After completing steps 1-4, you will now have a good grasp on whether you’re getting the full value of your investment and have the knowledge to act in reclaiming and downgrading 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 PowerBi, 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 6: Educate your users on the technology they have
The next step is to maximize user adoption, which is driven by education. You want to make sure your users really understand the technology they have access to, and what it delivers that is relevant to their role. This will involve educating them about the functionality their license provides, educating them on how to use it and checking in with them regularly in an engaging way to deliver that education.
Step 7: Adapt your procurement to provide the flexibility you need
In step 7 we want to adapt the procurement process to provide the flexibility of managing your licenses and equip procurement to support efficient licensing. This requires both providing better information to procurement and having IT and the business collaborate more effectively with them.
Achieving success with those steps requires somebody on your team with 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. It’s tempting to assign this to IT, but IT departments typically don’t have the time, and they usually rely on information that comes from Microsoft. The upside here is so large however that is well worth the effort and with a little expert guidance, these seven steps will largely eliminate the costly over-purchasing or under-utilization that so many organizations experience today.
To learn more about effective Office 365 license management, join Quadrotech's Doug Davis and Nigel Williams for their on-demand webinar: How to maximize your return on Office 365 licenses.
Ben Marshall is a Licensing Specialist at Blue Chip Consulting Group where he oversees Blue Chip's Direct CSP program and works with clients to optimize their Microsoft licensing position. Ben brings over 28 years of technology strategy and licensing experience to the role. Prior to Blue Chip, Ben held varied consultative and sales positions at SoftwareONE. Most recently, he helped establish CDW's Software Asset Management service. His expertise includes creating innovative and relevant buying strategies for software assets and licenses, establishing the basis for cost savings within a global enterprise, Software Portfolio Management, and Software Asset Management.