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How to lock down rising Office 365 costs

Avoid springing a money leak in your Office 365 tenant by keeping closer tabs on several areas and following more frugal practices.

Administrators who move to the cloud will need to familiarize themselves with the nuances of subscriptions and the consumption pricing model.

To ensure their new subscription to services such as Microsoft Office 365 don't spiral out of control, administrators must adapt and monitor the addition and removal of users and build new skills to keep unnecessary costs in check. This shift to the cloud eliminates the typical burdens associated with building out complex on-premises Exchange environments and reduces the need for high upfront investments with the hardware and software. Despite those potential upfront savings, some IT leaders find it challenging to keep the ongoing monthly Office 365 costs in check for several reasons. Administrators must develop expertise with licensing and monitor key areas to stop extra fees from weighing down the organization.

One Office 365 license doesn't fit all users

It's easy for an administrator to just assume everyone needs email, SharePoint, Microsoft Teams and OneDrive. They can assign everyone the same license SKU, such as E1 or E3, but that is one of the more common ways to waste money. There is a significant difference in pricing across Microsoft's Office 365 plans. You can pay as little as $4 per month, per user for an F1 plan up to $35 each month in the E5 plan.

This is one of the first areas administrators should address. Administrators need to define the user license requirements by building a matrix that outlines the services and functionality needed and then match the users to the correct license. For organizations already on Office 365, Microsoft provides helpful reports in the admin portal with additional details on the current users. Based on the user's role, they will have a different cost.

The product usage report gives a drill-down view into the volume of key activities for each service. Reports in this section detail how your users utilize Office 365.

The Office activation report tracks Office 365 ProPlus, Project and Visio activations in your organization. Each person with an Office license can install products on up to five devices. Reports in this section show the device types users have installed Office apps.

Bundle the license when possible to save on costs

As organizations start to rely on more Microsoft products, there is an opportunity for these companies to purchase bundles to lower costs.

For organizations with 300 or more employees, Office 365 costs can easily exceed $64,000 dollars a year on an E3 plan.

For example, a company that uses Windows 10, Office 365 and tools such as Intune and Azure AD Premium services can look at Microsoft 365 Business ($20 per user, per month) or Enterprise ($57 per user, per month) that includes all those licenses at a much lower price point compared to paying for them individually.

Exchange administrators will need to confer with the systems administrators to identify which end users may qualify for these bundles and move them to the new licensing model.

User activity and activation usage to ensure terminated users are removed

For organizations with 300 or more employees, Office 365 costs can easily exceed $64,000 dollars a year on an E3 plan. Every company out there deals with employee turnover; some employees leave while new ones arrive or existing users move to different departments. These staff changes will require IT to stay nimble to remove Office 365 licenses and assign the right ones to individuals.

Office 365 administrators must evaluate the user adoption reports to guide them to give out the appropriate licenses to the individuals. Microsoft provides PowerBI services as a free add-on for this purpose.

Office 365 services usage
Microsoft provides PowerBI to measure the usage of the Office 365 services across the organization.

Streamline onboarding and offboarding of employees

A key area to control costs is the process the IT staff uses to manage licenses for terminated employees. In most cases, administrators have a workflow that includes deactivating the account, converting the mailbox to a shared mailbox, wiping corporate data from mobile devices and releasing the license from the user.

However, IT can add one more step to verify a terminated user does not tie up a costly license. One of the quickest ways is through the admin portal, specifically the User views section. From here, administrators select a view that includes name, licenses and sign-in status; this guides IT to quickly determine there are blocked users with assigned licenses that must be updated.

blocked user license
The admin portal features a users section administrators can use to see if a blocked user still has an Office 365 license assigned.

Control the ongoing costs of third-party add-ons

Another common expense that can get out of control relates to third-party subscriptions associated with Office 365 add-ins and apps from the Microsoft AppSource.

Users can use the AppSource portal to sign up for different apps that can run on Microsoft Office components, such as PowerPoint. Some apps are free, but authorized users can add paid apps through a one-time fee or monthly subscription.

Microsoft offers its Office 365 subscribers access to thousands of third-party add-ins that bill the client on a monthly basis. Administrators of the collaboration platform should monitor these add-ins and apps regularly to limit use to apps approved by the business. Within the Office 365 admin portal under Services & add-ins, an administrator can review and manage the apps.

third-party add-ins
The admin portal in Office 365 shows what third-party add-ins the organization uses, which might uncover some hidden costs.

Office 365 provides several areas for administrators and upper-level managers to see what they pay for and use. For many organizations, IT will be responsible for creating standard operating procedures and for performing regular audits to avoid paying for unused or unnecessary licenses.

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