Microsoft 365 License Management Tools

You have Microsoft365 licenses for your organization, and if you’re not optimizing the usage, then you’re probably wasting 44% of its capacity, as most companies do.

Microsoft 356 licenses can be managed in three ways: either by its free admin tools, by writing scripts on Microsoft Graph, or by using a third-party tool. The option you choose will determine what it costs and who does the most work. Regardless, the tool only proves to be efficient if someone approves the change at the right time, i.e., during the renewal window.

This guide is particularly to help you pick the right Microsoft 365 license management tools and use them efficiently.

Key Takeaways:

• Microsoft 365 license management includes assigning, tracking, and reclaiming seats for users to ensure no licenses are getting wasted.
• Microsoft offers free built-in license management tools that are best for small tenants with an admin with enough time on hand to approve actions.
• Microsoft’s usage reports are free snapshots of activity; however, they only go back 180 days and don’t show full history.
• Microsoft scripts are free to run, but engineers build and maintain them, which may end up becoming more costly than other tools.
• Microsoft 365 license management tools fall into four categories, including admin and governance tools, SaaS platform management tools, Software asset management tools, and Microsoft-focused FinOps platforms.
• To pick the right tool, decide on the category first and then compare the tool based on what it can find and whether it can act on it.

What is Microsoft 365 License Management?

Microsoft 365 license management is assigning the right licenses to the right users and monitoring how they’re used. It also includes revoking licenses the tenant no longer uses and returning them to the pool.

So, for example, when you have a new employee, you might assign them a license. You will also need to take it back on the day they leave. Plus, if the employee only ever reads email, they might not need to be on an expensive plan.

Built-in tools and their usage

Microsoft’s built-in tools can do the management part well if you’re a small tenant with an admin who has time on hand. Here’s what Microsoft has to offer:

Note: Copilot Chat usage reports are for users without paid seats only. Tracking activity of users with paid seats is only visible on the Microsoft 365 Copilot usage report.

Limitations of Microsoft built-in tools

1. Group-based licensing automates assignment but not management

Entra ID lets you put users in different groups, say, for example, the “Sales” team, and attach specific licenses to it. Whenever someone is added to that group, they automatically get a license. However, the user keeps that license for as long as they’re in that group, even if they change departments or don’t use the license at all. There’s an option to update it to “Dynamic Group,” which updates membership when certain details change, but even that won’t recognize an unutilized or underutilized license. Plus, you pay for a higher tier of Entra ID (P1) for group licensing.

2. Usage report doesn’t provide history beyond 180 days

Reports only cover activity in the past 7,30, 90, or 180 days. It’s basically a snapshot, but can’t help you spot a seat that has been idle the entire quarter. Additionally, all data is automatically deleted after a user leaves and their account is deleted.

A few more issues: Reports hide names unless you’ve changed org settings, and Copilot data lags by 48 hours, making it difficult to find unused Microsoft 365 Copilot licenses.

3. Scripts are free but need someone to maintain them

There’s a lot of potential in Microsoft Graph and the Microsoft Graph PowerShell SDK, as they can get you usage reports, draw comparisons between purchased and consumed seats, and remove licenses in bulk. But the issue with them is that they get outdated if Microsoft changes anything. For example, when Microsoft retired older script commands for license management that required teams to rewrite their scripts. Additionally, Copilot data sits in the beta version of Microsoft Graph, which changes often, so it’s even less stable.

Third-party Microsoft 365 License Management tools in the market

There are four types of Microsoft 365 license management tools available in the market:

1. Microsoft365 admin and governance tools: Live within Microsoft 365 and licensing is a part of tenant administration. For example:
   1. CoreView: identifies unused or underutilized licenses and allows each department to manage their own licenses
   2. AdminDroid: offers free license reports
   3. ShareGate Protect: flags unused licenses
   4. Syskit point: offers a paid feature of license checks
2. SaaS management platforms: Treat Microsoft 365 as a part of many apps for which it manages licenses. For example:
   1. Torii: automates license rescinding for licenses that aren’t used
   2. Zluri: tracks how users use their licenses
3. Software asset management platforms: For IT asset management, which requires vendor and on-premises software audits in addition to SaaS management. For example, Flexera One SaaS Management recommends license plans based on users’ usage.
4. Microsoft-focused FinOps platforms: Let you manage Microsoft 365 licenses along with Azure spend and present license data when you break down Azure spend in Cost Analysis. For example, Turbo360.

Note: While two tools in different categories might flag unused licenses, each of them is built for different users, varies in cost, and works with different apps. Pick one that fits your situation.

Criteria to judge your next Microsoft 365 Management Tool

A solid Microsoft 365 management tool will make it easy to turn the ‘findings’ into approved and completed actions. Here’s what you need to look for:

How to use this table: Ask the questions in the extreme right column during each vendor call, and ask them to answer using your own Microsoft 365 data rather than a sample setup.

Comparing a tool from each category

You’ll notice two patterns from this table:

1. Native tools give you data, but not suggestions: You can see activity of users or number of licenses you have with a record of past changes, but don’t get suggestions to approve.
2. Third-party tools split on breadth: Torii and Flexera cover Microsoft amongst other SaaS tools, whereas Syskit and Turbo360 focus only on Microsoft. One direction isn’t necessarily better than the other, but the right one will depend on where your waste actually sits.

Note: What’s “Not Stated” on their website should be discussed over discovery calls.

Write your own scripts or buy a tool: A worked example

Say we’re running numbers for 1,200 seats at a tenant over a year (12 months). Microsoft 365’s E3 seat costs $39 per month, and a Copilot seat costs $30 per month, charged yearly. Let’s assume that an overlapping add-on is $12 per month and an engineer comes at a cost of $90 an hour.

The two approaches available:

1. Scripts: Finds 60 inactive seats

Cost in savings: (60 x 39 x 12) = $28,080

Total engineer hours using skills: Building script (40 hours) + running (6 hours a month or 72 hours a year) = 112 hours

Cost of engineer: 112 x 90 = $10,080

2. Tool: Finds 60 inactive seats + 25 overlapping add-ons + 40 idle Copilot seats (tool can also identify 30 stale members, but they’re part of inactive seats, so we can’t count them twice)

Cost in savings: (60 x 39 x 12) + (25 x 12 x 12) + (40 x 30 x 12) = $46,080

Note: While a script could check all that the tool can, it needs to be built by your engineer, who didn’t in this example (and his hours are adjusted accordingly). Plus, scripts don’t offer an approval workflow, which is the cause of no action on the findings. But the tool offers an approval workflow, which demands about 2 admin hours a month.

Total engineer hours using the tool: 2 hours every month = 24 hours a year

Cost of engineer: 24 x 90 = $2,160

Say the tool costs $12,000 a year, then the total cost is = $14,160

Therefore, a tool may cost more to run; it finds more waste and pushes for an action, resulting in generating more value for your organization.

Note: The results change if numbers change. Building scripts will cost less if your team already has scripts in place. Plus, if you enable scripts to check Copilot and duplicate licenses, the difference shrinks there, too. However, that’ll add to the engineer’s time. Additionally, revoking a license from someone won’t lower the bill, as you will need to lower the licenses you pay for, which you can only do within seven days of buying or renewing licenses.

Do you need a different tool for MSPs?

Yes, MSPs need to check for dozens of client company licenses, so checking each separately will take too long. You can use Microsoft 365 Lighthouse, a free tool, which shows the number of users at client companies with licenses and how many actually use them. However, you can’t use it to decide which licenses to take back and approve those changes.

To be able to use Microsoft 365 Lighthouse, the MSP must join the Cloud Solution Provider program and have no more than 2,500 licensed users. Additionally, you need:

• A single screen to see and manage all client licenses
• View-only access from clients to start with
• A sellable service where you offer a regular license check

Choosing the right tool for your Microsoft 365 License Management

The right tool for you depends on your situation. Here’s a quick where-to-start table:

Regardless of the tool you pick, first give it a trial run. Compare the lists of idle seats from the tool with your native usage report. If it doesn’t match, ask the vendor why.

Note: Make sure to time the trial. When it ends right before the renewal window, it will give you a list of actions to take right away.

Role of Turbo360 in managing Microsoft 365 licenses

Native tools go only so far as you scale the use of Microsoft 365. With several tenants, growing Copilot usage, and renewal dates to track, admins fall short with their manual effort. That’s where Turbo360 makes things easier with its Tenant Manager. Here’s what Turbo360 offers for Microsoft 365 license management:

• Read-only start: Start by connecting read-only first, and then you can grant write access when you decide to turn on automation.
• Greater activity insights: Get activity, department, and MFA status right from your license data and identify stale or dormant users still holding licenses.
• Detailed history: Get a full tab on who changed what and the results from it.
• Cost at your price: The reports use your own license pricing, per tenant.
• Intelligent recommendations: Get recommendations to reclaim, downgrade, or reduce seats with reasoning at user, group, or subscription level.
• Assign approval ownership: All recommendations are presented to relevant individuals as tasks that can be done one at a time or in bulk.
• Opt-in automations: You can give permission to automate license removal from disabled or inactive accounts.
• Clean up Copilot and add-ons: It also flags any unused Copilot seats or duplicated/underutilized add-ons.
• Notifications: Get alerted for renewals, any unused licenses, or seats running out.
• Multi-tenant: Manage MSPs and each company client with a single interface.

We earlier also pointed out a gap in managing license groups. Turbo360 takes care of that as well by removing people from the group when they’re no longer needed. If a group has no owner, Tenant Manager flags it. This way, Turbo360 ensures licenses only go to people who can utilize them.

Book a demo today and see how Turbo360 can simplify Microsoft 365 license management for you.

Conclusion

The best Microsoft 365 license management tool for you depends on your needs. First, figure out what category you need to pick from and then decide on the product. While all the tools here will help you find idle seats, in order to get the savings, you need to act on them. So, while a tool helps you identify, your people’s approval does the actual job.

With Turbo360, taking action becomes easier. While it finds all your unused resources, it assigns tasks to the named person for approval and records the outcome. It also gives you reminders before the renewal so you don’t miss the time frame to lower the seat count. Start a free trial to see what licenses you need to reclaim in your own tenant.