Three kinds of mismatch
Almost every licence problem falls into one of three groups. Naming them helps, because each one needs a different kind of evidence and a different decision.
- Inactive licences. A paid seat with no recent sign-in or activity. See unused Microsoft 365 licences.
- Duplicate licences. Two assignments that provide the same capability, often left behind when plans were changed.
- Over-specified licences. A higher plan given to someone who only uses the features of a lower one.
Why the bill drifts
People join, move and leave. A plan is added for one project and never removed. Standardising on the top plan for everyone is easy, and expensive. Nobody looks at the whole picture until a renewal arrives, which is the point at which it is hardest to change anything.
How it works in practice
- Get three numbers from the Microsoft 365 admin centre: licences bought, licences assigned and licences actually used. The Active users report shows last activity by person.
- Compare the user list with your staff list from HR or payroll.
- Group what you find by risk: safe to change now, needs a manager to confirm, or needs a security check first.
- Check whether any security or compliance feature depends on the licence before you move anyone down a plan.
- Make changes at the right time. Some changes are only possible at renewal, so timing decides how much you can do.
- Check your next invoice. Until you have seen it, any saving is an estimate to test, not a result.
Where security comes in
Some protections are licensed per user, including Conditional Access and device management. Downgrading a person can quietly remove the control that protects their account. Read ten security controls to set first before you cut anything, and review cost and security together.
Two ways to do it
You can run the steps yourself using our guide to a Microsoft 365 licence audit. Or, if the picture is wider than licences, an expert-led assessment covers cost and security together.
Frequently asked questions
Is licence optimisation the same as cutting licences?
No. Sometimes the right answer is to keep the licence, or to move people up a plan because a protection they need depends on it. The aim is a good match between what you pay for and what you use.
How often should we do it?
At least once a year, well before renewal, plus whenever the business changes shape through growth, a merger or a reorganisation. Our Microsoft 365 licence management page covers a lighter routine for every month.
Does it need access to our tenant?
Not for a first pass. The usage reports in your admin centre contain most of what you need, and an administrator can export them.
Innoligo is an authorised Microsoft CSP partner. This page is general information and applies whoever you buy your licences from. Microsoft changes its plans, prices and admin screens, so check the linked Microsoft pages for current detail. Microsoft, Microsoft 365, Entra and Copilot are trademarks of the Microsoft group of companies; this page is independent and is not published or endorsed by Microsoft. About Innoligo.