Research in over 850 organizations reveals that up to 25% of expenditure on Microsoft 365 could be avoided. Most organizations look at the price they are paying per subscription and congratulate themselves if they get a discount, but they fail to look at the most important measure: Total Cost of Ownership (TCO). In fact, often the bigger the discount on subscriptions, the worse the TCO. Here are the causes and what you can do about optimizing your Microsoft 365 ROI.
The Real Costs Behind Microsoft 365 Discounts
Commitment Contracts and Changing Needs
One major issue with large discounts is that they often come with a commitment in terms of the number of licenses and the length of the commitment. This means you are bound to a contract regardless of if your needs change. As your business evolves, the initial contract might not align with your current needs, leading to wasted resources and increased costs.
Inflexible License Allocation
Another issue is that some users may not need all the facilities, while others may need more. Flexibility helps assign the appropriate license types to the right users. Without this flexibility, you might end up overpaying for features that many users do not need, while under-provisioning for others who could benefit from a higher-tier subscription.
Seasonal Business Fluctuations
Business is often seasonal, with requirements fluctuating depending on the time of year. A rigid licensing agreement does not accommodate these changes, leading to either a shortage or an excess of licenses during different periods. Matching your Microsoft 365 subscription to your business needs and keeping your licensing under control is crucial to avoid unnecessary expenditure.
Three Key Initiatives to Maximize Your Microsoft 365 TCO
1. Recycle Unused Licenses
People are always leaving organizations, so implement a leavers process that identifies when someone is no longer using their subscription. Recycle these licenses by backing up their data and reallocating the license to a new starter when applicable. This practice not only protects your investment but also ensures security by preventing former employees from accessing your Microsoft 365 environment.
2. Minimize Surplus Licenses
Keeping surplus licenses to a minimum is essential. While it is useful to have a few licenses ready for new starters, many organizations over-commit on the number of licenses and end up with too large a stock of unused licenses. Avoid this by committing to a percentage of your expected needs for a lower unit cost and topping up with flexible licenses, which, although higher in cost, can be cancelled when requirements change.
3. Optimize Subscription Types
Follow the usage levels of apps, storage, and security needs by user to ensure that they are on the right type of subscription. Power users will need a higher specification license compared to a frontline worker who only uses Microsoft 365 for basic tasks like emails and occasional Teams calls. Regularly review and adjust license types to match actual usage patterns.
Professional Help to Optimize Your TCO
While managing Microsoft 365 licenses can seem like a lot of work, a professional Microsoft partner can offer services to help identify your best TCO for Microsoft 365 rather than just offering standard resubscription. For an independant 365 health-check that validates your Microsoft 365 TCO to show how costs can be improved along with data resilience and security, contact info@tbsc.cloud.
By focusing on these strategies, you can ensure that your investment in Microsoft 365 truly delivers value and avoids unnecessary costs. Don’t be misled by upfront discounts—consider the bigger picture of Total Cost of Ownership for long-term savings and efficiency. TBSC is an approved Microsoft ISV. We do not sell Microsoft products but instead we develop products and services which optimize the usage and security of Microsoft 365. www.tbsc.cloud
