Microsoft 365®: Cutting Costs is Hard – How to Make it Easy 

Cutting 365 Costs_Main blog page

This article originally appeared on CIO.com.

When cost-cutting pressures hit, it’s a natural response to look at your largest invoice first. Cloud cost optimization initiatives typically start with the highest software expenses or the most sizable contracts coming due. That means Microsoft 365® goes under the microscope a lot. With more than 18 million registered users, countless IT and finance leaders are looking to lower their Office subscription costs and reduce the number of licenses they need.  

But cutting back on your 365 application costs can be like navigating a winding road on a dark, foggy night. Here’s why and what you can do to illuminate the path to cost optimization. 

Visibility into 365 Licenses is Difficult – But Not for Obvious Reasons 

It’s easy to assume 365 is hard to manage because of its universal usage. As a power app, nearly every employee is assigned a license, but size and scope only compound the primary reason companies fail to put a lid on their expenditures.   

Here’s the real problem: More than a single application, 365 is a suite of apps.  

Like a tiny nesting doll, a single 365 license can have many more tools on the inside that may or may not be used by the license holder. Think Word®, Outlook®, Excel®, Access®, Visio®, among others. In a layered or tiered app environment visibility is obscured, making cost optimization and effective license management elusive. Understanding which sub-products are used and by whom quickly becomes an exploration to uncover utilization at every layer – a granular dissection that only the deepest data observability can grant.    

IT leaders need microscopic insight into licensed users and their sub-product usage habits – moreover they need to monitor how usage changes over time.  

Downsizing Apps without Impacting Functionality: What You’ll Need  

All of this makes it a challenge to downsize license without impacting user functionality, which is the key goal for any application cost optimization program. To do this effectively, IT leaders need a deep level of intelligence, knowing exactly how many licenses the organization has, including:  

  • Which individual users have been assigned each license which departments they belong to 
  • Which types of licenses they have (E3 vs E5 for example) 
  • Who uses each nested sub-product and how frequently they use them 
  • How many additional licenses were purchased above and beyond corporate contractual commitments 

Deep Observability: Integration & User Analytics are Only the Beginning 

While some integrated software can expose E3 versus E5 license utilization at the surface level, most can’t reveal usage for the layered tools within 365. Cracking the code requires sophisticated user analytics powered by integration at the deepest layer that Microsoft will allow. This is the only way to see all the information necessary.  

But deep integration is only half of the equation. 

To cut costs, IT and finance leaders need to tackle usage visibility and expense management in one fluid motion. This is where SaaS security software or Cloud Access Security Broker (CASB) tools can fall short of being a comprehensive SaaS expense management solution, which combines Shadow IT discovery tools and spend management tools in one platform.  

Move Beyond the Basics: Tackle Visibility & Costs Together 

Whereas Shadow IT tools can help you visualize app usage at granular levels, revealing how many licenses go unused or verifiably need to be upgraded to E5, a SaaS expense management solution can go further by: 

  • Highlighting subscriptions set to auto-renew on corporate credit cards and even personal cards 
  • Redistributing licenses as necessary using automated playbooks to accelerate the IT response effort needed  
  • Generating custom financial reports for each stakeholder and department, putting a spotlight on what portion of each budget goes to Microsoft 
  • How financial chargeback activities are distributing 365 costs across the company, holding departments responsible for the expenses associated with their licenses 
  • Forecasting spend using historical data to extrapolate usage for the future 

The Benefit of Effective 365 Management: 30% Savings  

While SaaS security is paramount, sometimes it’s more about revealing how that one big app — or even a critical few — can crack the biggest leaks in the corporate budget. When Gartner reports that 30-40% of IT spending goes to SaaS applications due to lack of visibility and control, SaaS cost optimization unveils new ways to save money. The key is to have the right tools to define sub-product usage, pinpoint actionable insights for IT teams, and arm procumbent teams with the facts behind every license.   

Jumpstart your SaaS management strategy with Tangoe, the leader in AI-powered cloud cost optimization.