Six Microsoft 365 Cost Saving Opportunities for Finance Managers
Microsoft 365 includes a variety of services such as email, document management, communication tools, cloud storage, enhanced Windows features, security, and management tools. Although Microsoft does have competitors offering alternatives for specific components of Microsoft 365, it does not have one competitor with an offering that includes the breadth and depth of features included with Microsoft 365.
This competitive advantage has enabled Microsoft to leverage its foothold in productivity and collaboration tooling to displace other vendor point solutions. This in turn is creating a dependency on Microsoft 365 that can often make up a substantial percentage of an organisation’s IT budget and software spend.
It’s therefore essential that customers of Microsoft 365 continually evaluate their needs and budgetary considerations when acquiring subscriptions.
From my experience as a Microsoft License consultant, it is evident that many organisations are failing to effectively control their SaaS spend, using data-driven decisions that could optimise cost and ensure that paid-for cloud services are used efficiently.
In this short blog, I will outline 6 cost-saving insights that Finance managers should include in their conversations with IT stakeholders.
1. Auto Renewals — Having all Microsoft SaaS products within your estate set to auto-renew can help avoid disruption of service. However, there is a risk that subscriptions that are surplus to requirements may roll over into the next billing cycle if set to auto-renew. For example, an organisation with Dynamics licenses no longer in use could be forced into spending thousands on subscriptions when user demand has dropped or changed.
2. License Buffers — Does the IT function maintain extra licenses beyond the actual number of users in an organisation to accommodate any unexpected or temporary increase in user count? Although this approach can help avoid disruptions where there is a lack of subscriptions it can also lead to unnecessary costs where the IT function has not factored the following into their license forecast:
· Historical growth patterns
· Project forecasts
· Changes in staffing levels
· Upcoming compelling events
Finance should be leveraged when defining the size of a license buffer to mitigate the risk of shelfware and the associated financial waste.
3. Harvesting Subscriptions — Does Finance have insight into the number of licenses within the estate associated with inactive users or perhaps users that have left the business? Is there a clearly defined policy for harvesting Microsoft 365 subscriptions when managing joiners, movers and leavers? Many organisations are focused on having the right number of licenses but often fail to proactively track and harvest inactive subscriptions leading to financial waste and possible duplication of licenses.
4. User Profiles — Has the organisation adopted a ‘one size fits’ all approach to license Microsoft 365? This is very often a decision that can be influenced by Microsoft sales teams and their reseller channel. Finance should question if all users in the estate have the most appropriate subscription type, be they actual people, robotic, services accounts or resource accounts. For example, it’s not uncommon to see organisations apply feature-rich and expensive Microsoft 365 licenses to shared resource accounts that may only need a free-of-charge license or standalone licensable components of Microsoft 365.
Finance managers should also be aware of the heightened risk of non-compliance where IT has implemented a blend of Microsoft 365 and Office 365 subscription tiers. Where features are not gated between tiers, this can create an audit risk that may result in having to license users with more costly feature-rich subscriptions unnecessarily.
5. Resellers Lock-in / Sticky Resellers — Finance managers should examine if their Microsoft license reseller is proactively helping them manage costs and avoid license compliance risk. Finance should also examine if the reseller has a FinOps and SAM (Software Asset Management) practice within their business that can verify their Microsoft 365 subscription posture and avoid a situation where subscription renewals rolled over without effective due diligence from a cost and license compliance perspective.
Developing a FinOps function internally can tackle this issue, or you may want to consider using independent external support to deliver customer-centric and non-biased recommendations.
6. Poorly Managed Negotiations — Has your organisation defined a process for Microsoft negotiations that leverages a blend of internal and external skills working toward achieving a distinct set of KPIs? Are you leveraging data-driven decisions at the heart of any Microsoft negotiations that enable your organisation to take the lead in maximizing cost savings and inclusion of other value-added concessions at all times?
Summary
As Microsoft 365 services have become so pervasive within many organisations it can be viewed as a BAU (business as usual) cost that goes unchecked unless there is a spike in value. Finance managers therefore can play an important role when it comes to driving a cost-saving mindset with technical stakeholders.
Having a deeper understanding of Microsoft 365 consumption can enable Finance managers to implement cost control measures, strengthen negotiations to optimise Microsoft 365 spending and minimize unnecessary expenses. Working with individuals internally or externally that can provide non-biased insights and recommendations can enable hard cost savings for Microsoft 365.
Implementing some or all the insights provided above will provide a foundation for Microsoft 365 cost savings. Remember cost optimisation for Microsoft 365 is not a ‘one and done’ project — it is a continual process that requires a blend of policy, automation, technical and licensing expertise.
If your organisation is seeking to right-size its subscription footprint for Microsoft 365 and requires independent expert support, please go to our website or contact us.
About the author:
Karl O’Doherty is a Principal License Consultant at Version 1.
