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Control Office 365 costs -- or pay the price

Not every user needs every service in the Office 365 suite. Tailor subscriptions to different groups so the company only pays for what it requires.

Administrators who move to Office 365 need to acclimate themselves to the nuances of the SaaS-based cost structure...

on Microsoft's cloud platform -- or ignore it at their budget's peril.

Office 365 is an attractive option for a business with an older Exchange Server platform winding down on its lifecycle. Microsoft offers several different subscriptions that charge a flat rate, but some a la carte services cost extra. With that in mind, admins must also monitor these additional Office 365 costs to ensure they don't spiral out of control.

Admins can't predict the overall total cost of ownership over several years without first evaluating several areas. For one, Office 365 offers more services bundled together under different plans. Microsoft considers some of these add-ons that require additional purchases, which adds complexity to Office 365 licensing.

IT decision-makers must evaluate what they need from Office 365, and that includes a careful cost analysis and upfront sizing -- this consists of provisioning of cloud services, migration work and third-party services for Office 365 backups. For most IT projects, the business only approves a technology purchase or investment when tangible returns justify the project's costs. As a result, admins should review all aspects of Office 365 costs, including the areas listed below.

Define the right licenses for the right users

Not every user needs the more advanced services, such as the analytics product Power BI Pro. Put users in categories, then determine the appropriate license for each group.

Identify the Office 365 licenses that each user needs based on their roles and requirements. Map out which plans go to what users to lock in Office 365 costs. Not every user needs the more advanced services, such as the analytics product Power BI Pro. Put users in categories, then determine the appropriate license for each group.

The Office 365 Enterprise E3 plan costs $20 per user per month and includes services such as the on-premises Office suite, Skype calling and Sway presentation app -- which is overkill for some workers. Some users don't need the on-premises Office applications; for those employees, Microsoft offers an Enterprise E1 plan that costs $8 per user per month.

Perform frequent audits

When a business moves to Office 365, the IT team needs to learn how to manage and monitor the platform's services. Admins should use Office 365's reports to conduct a quarterly or even monthly review of licensing use.

The Office 365 adoption content pack in Power BI builds customized dashboards that provide insights into application activations and how departments and locations use Office 365. Admins should use this data to find underutilized services to discern if employees can work without some services to reduce costs.

Monitor services with variable costs


How the adoption content pack helps
admins track service adoption.

Every Office 365 subscription goes for a flat rate, but additional workloads bring extra charges. Advanced features -- such as Advanced Threat Protection, Advanced Security Management, Cloud PBX and Power BI -- often make Office 365 costs add up.

For example, the public switched telephone network feature in Office 365 Enterprise E5 often brings extra expenses. Workers get a set number of minutes for domestic and international calls, but when users exceed that limit, Microsoft adds additional charges to the monthly bill. Admins must monitor consumption to ensure these variable Office 365 costs don't get out of hand.

Take advantage of licensing tools

The Office 365 license manager in the admin portal lets administrators assign licenses and see the current consumption of licenses, which makes the assignment process less confusing. Admins well-versed in PowerShell also have the option to allocate licenses via that management tool. Microsoft additionally provides a group option based on the categories created by the IT department.

Next Steps

Prepare well before an Office 365 move

Find tips on the Office 365 migration process

Different rules for Office 365 VDI deployment

This was last published in September 2017

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How does your business manage expenses on the Office 365 platform?
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Office 365 licenses need to be assigned by user business roles.  There is no need to use a 1 licenses apply to all.  If you are doing that then your are over licensed for your environment.  We manage customers of all sizes from small accounts to very large enterprise accounts.  Everything is about the licenses mix for the, and the ability to change licenses in a 30 day  window without long term commitment.  That is how we manage our customers.  If you are caught into a n agreement with fix license deployment, you need to look for a new Microsoft partner  that can supply you with a variable license mix options.

If you manage the user licenses mix and adjust for the security threats (you must deploy the Office 365 Advance Threat protection), your experience in office 365 will be much better and a lower cost than the equivalent on premises solution.

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