Enhancing Governance Strategy Through Effective Microsoft 365 License Management

Microsoft 365 has over 400 million paid seats and is used by over 60% of Fortune 500 companies. These Microsoft 365 business users could be managing a diverse range of licenses – from E1, E3, to E5 – offering different features tailored to meet the specific needs of their organization’s structure and workforce. For instance, a Gartner survey revealed that 30% of organizations have E5 licenses for all employees, while 51% have E5 licenses for half of their employees.

E5 is Microsoft’s most comprehensive license for Microsoft 365, offering email and file storage, as well as file sharing, message encryption, Power BI, and advanced security and compliance capabilities – some of which are not available in other licenses.

However, it’s common to find that many of these licenses are inactive, underutilized, or even unassigned, often leading to inefficiencies and unnecessary costs. In fact, the Gartner Magic Quadrant cited that 25% of provisioned licenses are unused.

This underscores the importance of effective license management as part of a robust governance strategy, ensuring businesses avoid unnecessary expenditures on unused or underutilized software.

Read on to explore the importance of proper license management, which could be the missing link to your effective governance strategy.

Why are Microsoft 365 Licenses Underutilized?

Clear visibility into license usage is crucial for organizations to maximize their software investments. While access to productivity tools like Microsoft 365 are table stakes for office employees, that doesn’t necessarily mean they are being used to their full potential.

Employees may have varied reasons for not fully utilizing their licenses. They may be unaware of the full range of Microsoft 365 features and only use a fraction of the tools, missing out on functionalities that can bolster their productivity. Similarly, the sheer number of applications and features, as well as the rapid pace of software updates and feature releases, may also overwhelm users, which could lead them to stick with the safety of basic functions.

Without proper training and guidance, employees may struggle to effectively use advanced features or integrate the tools into their daily workflows, resulting in a vast array of untapped features.

Underutilization of Microsoft 365 licenses can also come from having Microsoft 365 features employees do not need, attributable to organizations’ lack of complete visibility into employees’ license usage. For example, if an organization has E5 licenses for all its employees, including those who do not need access to Power BI, this translates to paying for subscription for features certain employees do not need. This misalignment can lead to low usage rates and wasted resources.

Why Having Visibility into License Use Matters

Without proper tools to track software usage and employee productivity, organizations are flying blind when identifying underutilization patterns. By gaining visibility into license usage, organizations can identify areas for improvement in utilization and proper reallocation, if necessary.

Here are the three most important benefits organizations gain when they have visibility into Microsoft 365 license usage:

• Proper License Allocation

Suppose E5 licenses, including Power BI access, are assigned to a department that doesn’t fully utilize this analytics tool. In that case, these licenses can be reassigned to another department that would benefit more from them, ensuring that valuable resources are not wasted. Having the information to make this decision must be part of any enterprise’s workspace governance strategy to ensure all assets are accounted for and used to their maximum extent. This visibility can also reveal whether the current licenses meet employees’ needs or if there is a need to adjust subscriptions.

• Targeted Training Program

Understanding how employees use their licenses provides valuable insights that can be used to develop targeted training programs. By analyzing usage patterns, organizations can identify which features are underutilized and focus their training efforts on those areas. Training can be tailored to different departments or individual roles based on their specific usage patterns and needs. This targeted approach improves training effectiveness and increases employee engagement, as staff members receive relevant, practical instruction that directly applies to their work.

• Forecasting License Needs

Access to license usage patterns also allows for more accurate forecasting of future licensing needs as the organization grows or evolves. For example, the company might show increasing usage of Microsoft 365 Copilot for generative AI needs or Power Platform for app development or automation, indicating a potential need for more licenses. Similarly, if a company expects workforce growth, license visibility can help review its existing licenses and plan its subscriptions.

AvePoint Cense for Effective License Management

Only less than 10% of respondents with E5 licenses thought their organizations were getting maximum value from Microsoft 365, according to Gartner. License management solutions, such as AvePoint Cense, offer comprehensive license reporting and management for specific users, business departments, or the entire enterprise, to help maximize usage of their specific licenses. Cense also provides flexible grouping functionalities, allowing enterprises to group users and understand usage based on other factors, such as Entra ID property or location.

To help provide better oversight, department or regional owners can access this license reporting, allowing them to resolve license management concerns by detecting unused and inappropriately assigned licenses across your tenants.

Alongside proper allocation of licenses, organizations can track return on investment for license spend and plan license budgets accordingly through license usage, consumption, cost, and budget information on the Cense dashboard.

One business in the media industry experienced the same benefits with Cense following a 50% increase in its Microsoft 365 annual licensing cost. With over 100,000 users, monitoring license usage across multiple tenants was a challenge for them.

Upon using AvePoint Cense, the company gained access to a unified dashboard that provided information on the licenses it owns and how they are used across the organization. Through Cense’s insights, the company can also determine if there are inactive or underutilized licenses prompted by an employee leaving or transferring to another department, allowing them to reallocate the license accordingly or make adjustments in their annual subscriptions, paving the way for them to right-size their license subscription.

Effective license management will remain a critical factor in driving innovation and productivity. It’s not just about managing licenses — it’s about empowering your organization to make data-driven decisions that align with strategic goals and foster sustainable growth.

Part of an effective governance strategy includes comprehensive oversight of license usage across the organization. Proper license management enables organizations to eliminate or reallocate redundant or underutilized licenses, leading to improved resource allocation and maximized investment.

A comprehensive license management system, such as Cense, provides valuable insights into software usage patterns and enables informed decision-making for future investments. As a result, organizations can transform license management from a mundane administrative task into a strategic asset that drives value and enhances governance.