SaaS Management

  • 5 min read

3 Ways to Optimize Microsoft 365 License Costs

Ritish Reddy

1st February, 2024

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IT managers can cut costs by optimizing Microsoft 365 licenses, like analyzing their requirements, acquiring the right type of subscription, freeing up under-utilized licenses, and more so that they can stay within budget. 

After talking with multiple IT managers and analyzing their Microsoft licenses, we almost always find a lot of budget wastage in the form of unused licenses and underused apps.

Suppose you audit your company's Office 365 license usage. In that case, you will notice that not all licenses are fully utilized and will come across employees using higher tiers of licenses than what they actually require. 

According to the Coreview report, an average business uses 44% of Microsoft 365 licenses that need to be more utilized or oversized. This shows you the higher amount of scope for savings among your current Office 365 license consumption.

This is one of the reasons why your Microsoft 365 subscriptions are higher. You could discover and free up many unused licenses with a proper app usage analysis to optimize your Microsoft 365 license costs. 

You can follow the mentioned ways below to potentially reduce their license costs and free up your IT budget.

3 Cost-Saving Initiatives on Microsoft 365 Licenses

Now let's discuss the various ways to optimize spend on Microsoft 365 licenses.

1. Evaluate your Office 365 license usage 

You need to know how your employees use Microsoft 365 licenses to save money down the line. 

For example, if employees only use Microsoft 365 for email and basic document editing, they may not need a license with advanced features such as Microsoft Teams or SharePoint.

Thus, evaluating Microsoft 365 license usage is important because it helps you identify which licenses are being used and which are not. Based on this insight, you can terminate the no longer required licenses, thus saving costs.

For example, consider purchasing additional licenses if multiple employees share one license. 

Furthermore, evaluating license usage can help you comply with Microsoft licensing requirements. It has specific licensing requirements for different products and services, and failing to comply with them can result in hefty fines. 

How to evaluate a large number of Microsoft 365 licenses?

To make the evaluation process easier, tools like Zluri can help automate the process of gathering and analyzing license usage data. 

Zluri is a powerful SaaS management platform that provides you with an easy and efficient way to evaluate Microsoft 365 license usage within your organization. With Zluri, you can monitor and manage Microsoft license usage data and make informed decisions.

Managing Microsoft 365 licensing can be a significant challenge. With Zluri, you can quickly and easily see how their licenses are being used across their organization, which can help them to identify areas where they may be over or under-licensed.

For example, Zluri can help you identify which Microsoft 365 applications and features are being used most frequently, which can help them determine which licenses are most essential for your organization. 

Also, Zluri helps you track license usage over time, which can be useful for identifying trends and making data-driven decisions about licensing.

Moreover, by providing insights into license usage data, Zluri can help you to identify areas where they may be over-licensed, helping you to reduce costs. 

2. Discover unused Microsoft licenses

Many companies purchase more licenses than they need, leading to unnecessary expenses. You can help the organization save money on Microsoft 365 licensing fees by identifying and eliminating unused licenses. 

This enables you to gain insights into the organization's Microsoft 365 usage and make informed decisions about licensing requirements.

For example, if an organization has many unused licenses for Microsoft Teams, they may consider downgrading their license to a lower tier or eliminating it altogether to reduce costs.

How to discover unused Microsoft 365 licenses seamlessly? 

With Zluri, you can easily discover unused licenses to reduce unnecessary expenses.

You will be able to see the SaaS application's name, license quantity, cost, and utilization and identify how many are unused. So you can easily discard those and purchase new licenses when needed. 

If you look at the below screenshot, you will notice that out of 100 Microsoft licenses, only 96 are used, and the rest 4 are not assigned. This also shows the potential amount you can save among Microsoft's license costs which is up to $360/Y. 

3. Be proactive with Microsoft's auto-renewals 

Most businesses use Microsoft 365, but it can be expensive if not managed properly. By being proactive with auto-renewals, you can cut costs on Microsoft 365 by avoiding unnecessary renewals of licenses. This can help you save significant costs, which can be allocated toward more critical business areas.

Furthermore, it also gives the IT procurement team time to prepare for negotiations with Microsoft. Negotiations can be time-consuming, but when you can provide timely communication to the involved teams, they can negotiate the best way to grab better deals. 

However, manually tracking Microsoft 365 renewals with spreadsheets can be challenging, especially if you have a large number of users. 

How to automate the renewal management process?

Zluri can help you track renewals and get alerts before renewals are due. Using Zluri, you can easily track Microsoft 365 renewals and receive alerts before they are due. This can help you stay on top of renewals and ensure that you are meeting all critical deadlines. 

For contracts, you get alerts 30 days, 15 days, and one day in advance. For payment, you get seven days and 1-day alerts. And you can set custom alerts as well. This helps you prioritize high-value contracts and optimize your SaaS spending.

Zluri also provides insights into license utilization, which can help organizations make informed decisions about renewals and optimize their licensing to reduce costs.

Optimize Your Microsoft 365 License Spend with Zluri

Zluri helps you optimize your Microsoft 365 license spend by managing the users' access and usage rights. In addition, the platform provides you with a 360-degree view of the SaaS applications, including Microsoft 365, allowing you to control their licenses by monitoring and managing them.

The platform enables IT teams to define user roles and permissions, ensuring users can access only the needed applications. In addition, this helps prevent over-licensing, ensuring that you pay only for the licenses being used. 

You can also save costs by negotiating contracts that are tailored to your specific needs. Thus, you no longer have to pay for unnecessary features and services and can get the best value for your money.

Zluri helps you negotiate efficiently with vendors and optimize your license spending. In addition, we offer SaaS buying services, helping you streamline your negotiation process and cut costs on licenses efficiently.

In addition, Zluri has access to much information related to applications that help during the negotiation and empower them to get the best price and deal for your application requirements. ZOPA (Zones of Possible Agreements) and BATNA (Best Alternative To a Negotiated Agreement) are two such vital pieces of information that help in any negotiation. Let's understand them in detail. 

• Suppose you are looking to purchase a SaaS app from a vendor with a budget of $50,000. After researching the market, you find a vendor who offers the app you need for a price range of $45,000 to $55,000. The ZOPA in this scenario is the overlap between your budget and the vendor's pricing range, which is $45,000 to $50,000.
  
  Armed with this knowledge, Zluri's procurement team can negotiate confidently for you and aim to get the SaaS app for a price closer to $45,000.

• Let's say you're negotiating a new service contract with a vendor. Your preferred vendor is offering a price of $20,000 annually. However, you have obtained quotes from other vendors offering similar services for $18,000 and $16,000 annually. BATNA, in this scenario, is to go with one of the other vendors if the preferred vendor can't meet your price range.

To explore Zluri and how it helps optimize your SaaS spend, schedule a demo today!

About the author

Ritish Reddy

Ritish is one of the co-founders of Zluri, the SaaS management tool for IT teams. He leads the Marketing and Partnerships as part of his role. Before Zluri, he was part of the founding team at KNOLSKAPE and Co-Founder at Cranium media. Ritish is an MBA graduate and is passionate about building, and scaling businesses ground up. He is an avid reader and loves exploring book stores and libraries in different parts of the world. He loves painting with his 4-year-old daughter.