O365 Optimization: Getting to the Root of Suboptimal Licensing to Eliminate Cost Waste

By Jim Hussey


August 13, 2021

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When it comes to Microsoft O365, license optimization is not a one-time event. It’s an ongoing process made more challenging by continuous shifts in Microsoft licensing and customers’ usage requirements. For large O365 estates, optimization requires a number of activities, with the first being a detailed License Optimization Assessment that identifies optimization opportunities. Building upon that foundation, the second (and often overlooked) part of the strategy is treating the root causes that lead to suboptimal licensing across customers’ O365 estates.

NPI’s O365 optimization methodology goes deep. It reliably produces consistent savings as we normalize and rationalize multiple data sources to achieve multi-level optimization targets (including license harvest targets and profile/persona refinement). But what happens after this initial license optimization? What risks do clients face as they try to maintain an optimized state moving forward?

Getting to the Root Cause of O365 Optimization Challenges

While clients benefit from the initial and follow-up optimization efforts, we continually observe the root causes associated with the identified optimization remain unaddressed. As O365 customers develop strategies to establish ongoing efficient consumption, NPI recommends a deep review of those dynamics and root causes that continually compromise optimization efforts. These recommendations include:

Detailed Feature-Level Usage Analysis and Adoption: While the primary goal is to identify unused licenses and licenses that can be downgraded, there is a tremendous amount of data available in the O365 portal documenting the use of ancillary features and add-on offerings. A detailed study of this information will provide clues on consumption patterns and the ultimate value being delivered across the organization.

Profile Strategy: With the detailed usage analysis complete, those responsible for employee experience and productivity can develop a more targeted, structured approach to O365 profiles that aligns work/business requirements with capabilities offered within each SKU. Across the market there has been tremendous focus to develop profile strategies to reduce costs. However, many times the recommendations miss leveraging detailed usage as well as inefficiencies in training or change management to support adoption.

Change Management: Are O365 capabilities going unused because users are unaware they exist or are not familiar with how to utilize the service? Development of a profile strategy based on detailed usage patterns must consider the work being done and explore if the root cause of low or no usage can be addressed through training and education.

Process/Policy Alignment: With profile structure and criteria defined, O365 leaders need to make certain to establish and refine the required internal processes to achieve alignment. This requires close collaboration with HR and ITSM workflows to ensure associate categories are aligned with O365 license assignment and timing for harvest activities. For example, if users are not being off-boarded correctly in the HR systems, bad information might be flowing downstream to other systems.

Agreement Revisions: With the above accomplished, it’s time to sit down and look at the current Microsoft Agreement. Determine if SKUs, terms and conditions provide you the flexibility to align consumption with usage requirements and give you the ability to leverage a portfolio of profiles. Organizations are becoming more sophisticated and knowledgeable on SaaS subscription management and are pushing vendors to match the flexibility of their applications with flexible terms.

O365 Optimization Starts with Good SAM Hygiene

While optimization of the O365 portfolio will remain an ongoing requirement, organizations need to carefully consider the root causes that produce the SaaS cost waste we now call “toxic spend.” A License Optimization Assessment is a great way to clean house, reduce costs and create a new baseline for usage – but poor license management hygiene can undo those efforts rather quickly. To achieve truly effective O365 consumption, companies must identify optimization opportunities within their internal SAM processes. A holistic view of O365 optimization – rather than a point-in-time event – would serve many organizations well.

If you’re interested in learning more about optimizing your O365 estate, NPI can help.