Cost Optimization: Getting the Most Value from Your Microsoft 365 Licenses

07/30/2025

Microsoft 365 is a powerful platform, packed with security, collaboration, and productivity features. But too often, organizations are overspending – either by underutilizing licenses, stacking third-party tools unnecessarily, or simply not understanding what they already own. With IT budgets tightening and CFOs sharpening their pencils, now is the time to take a proactive approach to license optimization. 

Here’s how CFOs and IT leaders can align on a strategy that cuts waste, increases ROI, and unlocks the full potential of Microsoft 365. 

The Problem: Overspending on Underused Tech 

A recent Gartner report found that 30% of SaaS spend is wasted due to redundant apps and underutilized licenses. Microsoft 365 is frequently at the center of this problem, especially when organizations buy the E5 license but continue paying for separate third-party tools that offer overlapping features (e.g., Zoom, Okta, or Box). 

Meanwhile, Microsoft’s Productivity Score and usage analytics reveal that many licensed services go untouched by large segments of the user base. The end result is that many are paying for powerful tools that aren’t being used. 

Step 1: Take Inventory and Know What You Own 

Before you optimize, you need visibility. This is where tools like Microsoft’s Admin Center, Entra ID, and Usage Analytics in Power BI shine. Start by answering: 

  • What licenses are in use (E1, E3, E5)? 
  • What services are being actively used (Teams, Defender, Purview, etc.)? 
  • Which features are duplicating existing third-party tools? 

Leverage the Microsoft 365 Usage Report to see adoption trends by product and department. 

Step 2: Rationalize Licenses and Align with Roles 

Once you know what’s being used (and what’s not), segment your users by role: 

  • Task workers may not need E5—E1 or F3 could be a better fit. 
  • Knowledge workers likely benefit most from E3 or E5. 
  • Executives or regulated roles might require advanced security and compliance tools like Microsoft Purview, Defender for Endpoint, or Communication Compliance. 

Trim unnecessary E5 assignments and consider mix-and-match licensing. Microsoft allows granular assignment of services—E.g., assigning Defender for Endpoint P2 only to critical users. 

Organizations that tailored licensing by persona saw 25–30% cost savings in the first year. 

Step 3: Eliminate Redundancy 

The most impactful savings often come from eliminating third-party tools that duplicate Microsoft features: 

Third-Party Tool Microsoft 365 Equivalent 
Zoom / WebEx Microsoft Teams 
Dropbox / Box OneDrive / SharePoint 
Okta Entra ID (SSO / MFA) 
Proofpoint Microsoft Defender 
Adobe Sign Microsoft eSign (via Syntex or Purview) 

Step 4: Upskill Teams and Drive Adoption 

Optimization isn’t just about cutting, it’s about unlocking value. Provide internal champions with training and run adoption campaigns to boost usage of underutilized services. 

Consider Microsoft’s Adoption Score, or run a “Microsoft 365 Day” to raise awareness of features like: 

  • Viva Insights for wellbeing and productivity 
  • Loop for collaboration 
  • Teams Phone for integrated calling 
  • Microsoft Purview for compliance and data governance 

The more employees use native tools, the more ROI you extract from your licenses. 

Step 5: Reassess Quarterly, Not Annually 

License creep is real. As new hires are onboarded and projects spin up, organizations can drift into over-licensing again. 

Create a quarterly license review rhythm across IT and Finance to: 

  • Identify unused or inactive licenses 
  • Ensure roles are matched to the correct tier 
  • Recheck third-party app overlap 

Use automation (e.g., Power Automate + Graph API) to offboard users and reclaim licenses when people leave or change roles. 

Getting Started: A Practical Roadmap 

Here’s a high-level plan to move from license sprawl to strategic alignment: 

  1. Audit Your Environment 
    Use Microsoft 365 Admin Center, Usage Reports, and Power BI. 
  1. Classify Your Users 
    Build user personas (task, knowledge, executive, frontline). 
  1. Map Features to Personas 
    Align license tiers to actual needs. 
  1. Identify Redundant Tools 
    Target duplicative spend for elimination or phase-out. 
  1. Engage Your Teams 
    Run adoption and enablement programs. 
  1. Monitor and Refine 
    Establish regular check-ins between IT and Finance. 

Final Thoughts: 

When done right, license optimization turns Microsoft 365 from a line-item cost into a strategic enabler. It’s not just about cutting—it’s about aligning your technology investments to your workforce, unlocking hidden value, and tightening your security posture along the way. 

Forward-thinking CFOs and IT leaders who take action now will be better positioned to ride out budget constraints and deliver more with less. 

Posted in Refoundry Blog