Why is Office 365 license management so confusing?

In my role as Product Owner for Quadrotech’s Office 365 license management solution, I recently analyzed our database of 3.4 million Office 365 users and found a jaw-dropping 18 percent of purchased licenses were unassigned.  

For an organization of 10,000 staff, this equates to roughly $150k worth of unused licenses eating up budget. My CFO is nicknamed ‘The Punisher’, and if he found out we were blowing such a vast sum up the wall, there’s no telling what level of fury he’d unleash.  

However, effective Office 365 license management isn’t just about assigning licenses; in many ways the bigger task is ensuring users actually adopt the workloads you’re paying for, integrating them into daily working life. Only then will you be able to claim value for money and avoid the wrath of frugal executives.  

Insights into Office 365 license management 

From discussions with industry professionals, it’s clear there are some common factors at play when it comes to over-licensing, which ultimately boil down to different stakeholders not ‘singing from the same hymn’ sheet:  

  • Purchase decisions are dependent upon budget cycles, meaning it’s common to front-load and oversubscribe, spending the money while it’s available rather than wait for approval later down the line. 
  • Buying teams are incentivized to secure discounts on contracts, which encourages sellers to form attractive packages from a cost-per-license perspective, but this can easily create a mismatch between what is purchased and what the business actually needs. On the face of things, you might think you’re getting great value, but a deeper look shows this is often too good to be true.
  • Bundled packages are commonplace, but you might not need or want all workloads. Selective purchasing, workload-by-workload, will always be more precise and offer better value. 

Reflecting on this, and it’s no wonder so much license spend is wasted, sitting on the shelf collecting digital dust. 

To address the issue, particularly in uncertain financial times, it’s crucial for IT, procurement and business executives to join forces to understand the business needs and be in a better negotiating position with sellers. 

A tighter grip on the license lifecycle – from buying to assignment to adoption – will ensure your maximizing your return, both from a financial perspective and a workforce productivity viewpoint. 

Driving Office 365 license adoption 

The chasm that stands between you and maximizing your return is the gap between licenses assigned and those being used.  

This is usually down to three common issues: 

  • Users are automatically assigned licenses without a nuanced understanding of what they need. Not everyone in the same department will require the same services, for example. 
  • Few enterprise organizations actively monitor usage, so there’s no way of gauging adoption and forming a plan for improving uptake. 
  • The skills needed to guide adoption are still relatively sparse, despite last year’s introduction of the Microsoft Service Adoption Specialist qualification. As such, most organizations don’t have any formalized structure to lead this initiative.

About the Author

Doug Davis

Doug Davis is the Product Owner of the Office 365 management tools at Quadrotech. Doug's career in Product Management spans over 20 years. During this time, he has managed products around the Microsoft technology stack for Quest Software, Dell Software, as well as a stint in Big Data with Assent Compliance. Based out of Ottawa, Canada, Doug is a graduate of Carleton University and an avid cyclist.


  1. Christopher

    Thank you. This was a big help to me as a micro-business owner. It helps me to see that just having the licenses necessary doesn’t make sense if I don’t take the time and effort to involve my people in the process of USING the tools that Microsoft has.

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