Microsoft 365 License Management Tools

If your organisation holds Microsoft 365 licences but isn’t fully leveraging their benefits, you might inadvertently be squandering as much as 44% of their potential, a common oversight among many businesses.

Management of Microsoft 365 licences can be conducted through three primary methods: utilising free administrative tools provided by Microsoft, developing scripts with Microsoft Graph, or employing third-party applications. The choice you make will influence both the cost and the workload involved. However, any tool’s effectiveness hinges on timely approval of changes, particularly during the renewal period.

This guide is designed to assist you in selecting the most suitable Microsoft 365 licence management tools and leveraging them effectively.

Key Takeaways:

• Managing Microsoft 365 licences entails assigning, tracking, and reclaiming licences to prevent waste.
• Microsoft presents free, built-in tools that are ideal for smaller organisations with an administrator who can manage tasks.
• The usage reports from Microsoft provide limited snapshots of activity, covering just the last 180 days and lacking full historical context.
• Although Microsoft scripts are free to utilise, they require maintenance by engineers, potentially resulting in higher costs than some alternative tools.
• Microsoft 365 licence management tools divide into four categories: admin and governance tools, SaaS management tools, software asset management tools, and Microsoft-focused FinOps platforms.
• To choose the right tool, start by identifying the category that suits your needs and then evaluate tools based on their capabilities and actions.

Understanding Microsoft 365 Licence Management

Microsoft 365 licence management focuses on accurately assigning licences to users and tracking their usage. This process includes the retrieval of licences no longer in use and returning them to the available pool.

For instance, when a new staff member joins, you would allocate them a licence; conversely, it’s vital to reclaim that licence the day they depart. Additionally, if an employee’s only engagement is reading emails, a premium plan may be unnecessary for them.

Utilising Built-in Tools

Microsoft’s built-in management capabilities can efficiently cater to small organisations, provided there is an administrator available to oversee tasks. Here’s what Microsoft offers:

Note: Copilot Chat usage reports apply only to unpaid seats; tracking for users with paid seats is visible exclusively in the Microsoft 365 Copilot usage reports.

Limitations of Built-in Tools

1. Group-based licensing automates assignment but lacks management capabilities.

With Entra ID, users can be organised into various groups, such as the “Sales” team, with specific licenses linked. Once added to the group, users automatically receive a licence. However, they retain this licence as long as they remain in the group, regardless of departmental shifts or underutilisation of the licence. Although the “Dynamic Group” option updates membership based on changes, it still does not account for unused or underused licences. Additionally, you need to pay for a higher tier of Entra ID (P1) for group licensing.

2. The usage report only encompasses a 180-day viewing period.

Reports chart activity over intervals of 7, 30, 90, or 180 days, essentially providing a snapshot rather than a comprehensive overview. Consequently, spotting a licence that has been inactive for an entire quarter becomes challenging. Furthermore, data is automatically erased following account deletion.

Additional concerns include: Reports may anonymise user names unless organisation settings are adjusted, and Copilot data typically lags by 48 hours, complicating efforts to identify unused Microsoft 365 Copilot licences.

3. Scripts are without charge but necessitate maintenance.

Microsoft Graph and the Microsoft Graph PowerShell SDK hold considerable promise, allowing for usage reporting, seat comparisons, and bulk licence removal. Yet, their utility can diminish if Microsoft alters any functions. For example, upon retiring older licence management commands, teams needed to rewrite their scripts. Additionally, Copilot data resides in the beta version of Microsoft Graph, which is subject to frequent changes, further destabilising its reliability.

Exploring Third-party Microsoft 365 Licence Management Tools

The market features various Microsoft 365 licence management tools, categorised as follows:

1. Admin and Governance Tools: These operate within Microsoft 365, integrating licensing into tenant administration. Examples include:
   1. CoreView: Identifies unused or underutilised licences while allowing departments to manage their own.
   2. AdminDroid: Provides free licence reporting.
   3. ShareGate Protect: Flags unused licences.
   4. Syskit Point: Offers paid features for licence checks.
2. SaaS Management Platforms: Manage the licences of multiple applications, including Microsoft 365. Examples include:
   1. Torii: Automates the rescinding of unused licences.
   2. Zluri: Monitors user activity regarding licence usage.
3. Software Asset Management Platforms: Focus on IT asset oversight, encompassing both vendor and on-premises software audits along with SaaS management. For instance, Flexera One SaaS Management proposes licence plans based on user activity.
4. Microsoft-focused FinOps Platforms: Allow for the management of Microsoft 365 licences in conjunction with Azure expenditures, presenting licence data in cost analyses. An example is Turbo360.

Note: Even if multiple tools within different categories flag unused licences, they are designed for different users, vary in costs, and integrate with different applications. Choose one that aligns with your specific needs.

Choosing Your Ideal Microsoft 365 Management Tool

A comprehensive Microsoft 365 management tool should streamline the process of turning detected issues into actionable changes. Here are key criteria to consider:

How to Use This Table: Utilize the questions in the far-right column during vendor discussions, requesting responses tailored to your own Microsoft 365 data instead of sample configurations.

Evaluating Tools Across Categories

Examining this table reveals two main trends:

1. Native tools provide data without suggestions: Though you can track user activity and licence count alongside past changes, they do not offer actionable recommendations.
2. Third-party tools vary widely in breadth: Tools like Torii and Flexera encompass Microsoft within a diverse SaaS toolset, while Syskit and Turbo360 focus solely on Microsoft solutions. Both approaches have merits; the right choice depends on where your actual wastage lies.

Note: Anything labelled “Not Stated” on a vendor’s website should be discussed during discovery calls.

Creating Your Scripts or Choosing a Tool: A Practical Example

Imagine analysing costs for 1,200 licences over the span of a year (12 months). The monthly cost for a Microsoft 365 E3 licence is $39, whereas a Copilot licence costs $30, billed annually. Assume an overlapping add-on costs $12 per month, and an engineer’s time is valued at $90 an hour.

Two approaches can be adopted:

1. Scripts: Identifies 60 inactive seats.

Savings total: (60 x 39 x 12) = $28,080

Total engineering hours required: 40 hours for script creation + 6 hours monthly (72 hours annually) for execution = 112 hours overall.

Engineering cost: 112 x 90 = $10,080.

2. Tool: Identifies 60 inactive seats + 25 overlapping add-ons + 40 idle Copilot licences (note: this can also recognise 30 stale members, however, they are included in inactive seats, hence not counted twice).

Savings total: (60 x 39 x 12) + (25 x 12 x 12) + (40 x 30 x 12) = $46,080.

Note: While scripts could examine everything a tool can, they must be developed by your engineer (whose hours are calculated differently in this scenario). Furthermore, scripts lack an approval workflow, often resulting in inaction despite the findings. In contrast, the tool offers an approval process, requiring approximately 2 admin hours each month.

Total engineering hours for tool management: 2 hours monthly = 24 hours yearly.

Engineering cost: 24 x 90 = $2,160.

If the tool’s annual cost stands at $12,000, the total expenses would be: $14,160.

Thus, even though a tool may incur higher costs, it typically uncovers greater inefficiencies and encourages decisive action, yielding added value for your organisation.

Note: The results can fluctuate with changing figures. If your team already utilises pre-existing scripts, their cost will be lower. Additionally, enhancing scripts to assess Copilot and overlapping licences may also diminish the difference, albeit with increased engineering time. Furthermore, revoking a licence doesn’t equate to immediate cost reduction, as it only translates to lowering your future licence expenses within seven days of purchasing or renewing licences.

Do MSPs Require a Dedicated Tool?

Indeed, Managed Service Providers (MSPs) often oversee numerous client company licences, necessitating an efficient method for tracking each without excessive time investment. In this scenario, Microsoft 365 Lighthouse is a complimentary resource that displays the number of client users holding licences and their actual usage. However, it does not facilitate decisions on which licences to retract or the approval of those changes.

To use Microsoft 365 Lighthouse, MSPs must enroll in the Cloud Solution Provider programme, with the limitation of having no more than 2,500 licensed users. Moreover, the following are required:

• A singular interface to manage all client licences.
• Initial view-only access for clients.
• A sellable service that includes regular licence evaluations.

Determining the Right Tool for Your Microsoft 365 Licence Management

The ideal tool for your organisation hinges on your unique circumstances. Here’s a rapid reference table to guide your start:

Regardless of your chosen tool, it’s essential to conduct a trial period first. Compare the idle seats identified by the tool against your native usage report. If discrepancies exist, inquire with the vendor about the reasons.

Note: Be mindful of the trial period. Timing it close to renewal can provide you with actionable insights right away.

The Role of Turbo360 in Microsoft 365 Licence Management

As the use of Microsoft 365 escalates, native tools encounter limitations, especially when it comes to scaling and managing multiple tenants simultaneously. The increasing use of Copilot and keeping track of renewal dates can overwhelm administrators relying on manual processes. Turbo360’s Tenant Manager aims to simplify these complexities through the following features:

• Read-only initiation: Begin with a read-only connection, allowing you to grant write access later as needed.
• Enhanced activity insights: Access activity, departmental, and MFA status directly from your licence data, highlighting stale or dormant users still on the books.
• Comprehensive history: Maintain a clear record of who made changes, what they were, and their outcomes.
• Cost according to your pricing: Reports are tailored to reflect your specific licence costs, per tenant.
• Intelligent recommendations: Receive actionable suggestions for reclaiming, downgrading, or reducing licences, complete with justifications at user, group, or subscription levels.
• Delegated approval ownership: Recommendations are assigned as tasks to appropriate individuals, facilitating either sequential or bulk completion.
• Optional automation: You can permit automated licence removals from disabled or inactive accounts.
• Cleanup of Copilot and add-ons: The system flags any unused Copilot licences or duplicates and underutilised add-ons.
• Notification system: Stay updated with alerts regarding renewals, unused licences, or running low on seats.
• Multi-tenant management: Control MSPs and each client company through a single interface.

Moreover, Turbo360 addresses the challenge of managing licence groups by removing individuals who no longer require access. If a group lacks an owner, this is flagged within the Tenant Manager. Thus, Turbo360 ensures licences are allocated only to those who genuinely need them.

Consider booking a demo today to explore how Turbo360 could simplify Microsoft 365 licence management for your organisation.

Conclusion

Choosing the optimal Microsoft 365 licence management tool hinges on your specific requirements. Start by determining which category suits your needs and select the corresponding product. Although all the tools discussed will aid in identifying inactive licences, achieving tangible savings necessitates action on those findings. While a tool can highlight inefficiencies, it is the approval and actions of your team that will ultimately drive results.

Turbo360 streamlines this process, automatically identifying unused resources and assigning tasks to relevant personnel for approval, while also tracking the results. Additionally, it sends reminders before licence renewals to ensure you don’t miss opportunities to adjust your licence count. Start a free trial today and discover which licences you need to reclaim for your own tenant.