November 26, 2025
If you're an IT leader watching your budget shrink while your Microsoft 365 costs continue to climb, you're not alone. Most companies waste over 30% of their Microsoft license spending. That's not a typo. Nearly a third of your Microsoft investment may be going toward unused licenses, duplicate subscriptions, or employees assigned premium features they never touch.
The good news? Microsoft license optimization isn't just possible — it's one of the smartest ways to reduce IT overhead without sacrificing productivity or user experience. In this blog, I’ll cover what you need to know and provide a few smart shortcuts to save you some time.
The Hidden Cost of "Just in Case" Licensing
For years, IT departments operated on a simple principle: buy more than you need, just in case. Procurement cycles meant bulk purchasing, and keeping surplus licenses on hand just made sense.
But all of those old habits cause big problems:
- Licenses that cost a significant amount of money every month, but go unused
- Overspending on premium licenses for users who only need basic features
- An ongoing lack of visibility into how your Microsoft licenses are being used
Those problems are nothing new, but they do have new solutions.
Cloud licensing makes it much easier to scale licenses up or down quickly, assign licenses based on actual needs, and avoid the expensive gaps between what you purchase, what you assign, and what actually gets used.
And as the cost of Microsoft licenses continues to increase, the price tag for neglecting license management is going to keep going up.
Why Microsoft 365 License Optimization Isn’t That Easy
Okay, to be fair, while it’s entirely possible to save more on M365 licenses thanks to the cloud, it’s not that easy. IT people are talented problem-solvers, and where you have a persistent problem, there’s always a reason it’s like that.
In this case, while M365 licenses have become more flexible and scalable, they’re also pretty challenging to manage. A single Microsoft 365 license can include dozens of sub-products — Word, Excel, Outlook, Teams, OneDrive, SharePoint, and more. Some users need the full suite. Others might only use email and basic document editing.
Below, I’ve outlined what best practices look like for Microsoft 365 optimization, but if you’re looking for shortcuts, feel free to skip ahead!
Microsoft 365 License Optimization Best Practices
It takes some time to right-size your licenses, but if you’re looking to save money every month, here’s what needs to happen.
1. Conduct a Comprehensive Inventory
Start by understanding exactly what you own and what you're paying for it. This means cataloging every license type across your organization — from basic to premium licenses, plus any specialized tools.
Pro tip: Don't forget to review your contract terms. The parameters can significantly influence how you manage your technology portfolio going forward.
2. Map Licenses to Actual User Needs
Build functional user profiles for different roles in your organization. What does a typical sales representative actually need? What about someone in finance, or a project manager?
My prediction — you’ll probably find that quite a few users with expensive licenses are only using basic features.
3. Implement Continuous Monitoring
User needs change over time! New employees come aboard, others leave, and job responsibilities evolve. Without ongoing monitoring, you'll inevitably drift back toward over-purchasing.
Pro tip: Microsoft can also make onboarding and offboarding easier, so you’ll have more time to spend on tasks like these!
4. Educate Your Users
Before right-sizing licenses, make sure users understand the tools they have access to. Sometimes low utilization stems from a lack of awareness rather than a lack of need.
Investing in user education can actually increase the ROI of your existing licenses by driving adoption of valuable features that users didn't know existed.
5. Right-Size Based on Data
Once you’ve got clear data about who’s using what, you can make informed decisions about downgrading, reallocating, or reclaiming licenses.
Around 11% of premium licenses with powerful tools go unused at most organizations. If you just tackle this expense and do nothing else, an organization of around 500 people could probably save a few thousand dollars right there.
6. Adapt Your Procurement Model
Move away from transactional bulk purchasing toward a more flexible model that aligns with your actual needs. This requires breaking down silos between IT and procurement so both teams work from the same data and share the same goals.
Using a Microsoft License Management Tool Instead
Those best practices I outlined can save you a lot of money. But time-wise, they’re just not in the cards for every single IT team. It’s just going to be a hard thing to prioritize.
And if you’re wondering if someone’s invented a cheat code for most of this, the answer is yes. We built one.
What Our Tool Can Help You Find
Our Microsoft Insights Assessment is a quick, secure online tool designed to identify opportunities to save money — and also reduce risk — across your Microsoft environment. In just 10–15 minutes of your time, you can get the information you need to make well-informed, quick decisions.
When we made it, we knew it was going to be a big deal for a lot of our clients. But even we didn’t know how big.
Organizations that aren’t even clients of ours have been finding out that they had:
- Security misconfigurations
- Active licenses for past employees
- Active cybersecurity incidents
Yes! Our assessment has surfaced evidence of overlooked or active security incidents!
And considering that some of these organizations were already working with a managed IT provider (not us!), a lot of them came away with some very easy ways to trim their budget and increase their security, but also a few new questions about the IT support they’re actually getting.
Maximizing the Value of Your Newly Optimized Microsoft Environment
Once you've optimized your licenses, the next opportunity is getting maximum value from the Microsoft tools you're keeping.
Incidentally, that's another place where a lot of organizations are leaving money on the table — they have the right licenses but aren't leveraging them fully for cybersecurity and IT support. Instead, many are purchasing additional tools that essentially accomplish the same things.
Marco's ACE services are designed to help you do more with what you already have. Instead of layering on expensive third-party tools, our experts provide flexible cybersecurity and IT support by working through your existing Microsoft ecosystem. This approach often costs less while delivering robust protection and support — because you're maximizing investments you've already made.
But if you’re just getting started with Microsoft license optimization, the very next step I’d recommend is our Insights Assessment. It’s eye-opening, and from there, you can get a much clearer picture of what you need and what you don’t.
