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Maximizing Value from Microsoft 365 Updates: Navigating Licensing Changes with Confidence

by | Jun 4, 2024 | T.E.M. Thought Leadership

It’s no surprise that Microsoft 365 is a popular cloud-based subscription service. It offers everything a business needs for productivity and collaboration in one convenient package. Undoubtedly, Microsoft 365 empowers employees with Word, Excel, PowerPoint, Outlook, and other essential Office apps from any device, including cloud storage with OneDrive and other handy tools.

Companies especially appreciate how Microsoft 365 simplifies IT management, ensures everyone has the latest software versions, and enables seamless teamwork from anywhere. Plus, it’s a cost-effective way to equip the entire workforce with powerful productivity tools.

However, recent changes to Microsoft 365 licensing and pricing have made things more confusing and difficult for businesses. Companies now have to navigate a maze of options and decisions, which can be overwhelming and costly if not handled properly.

In this article, we’ll discuss these changes, explore their effect, and share how you can navigate them effectively with the help of technology expense management (TEM) audits and the know-how for optimization from experts like SpyGlass.

Understanding the New Microsoft 365 Licensing Changes

In April 2024, Microsoft introduced new licensing models for Microsoft 365 and Office 365 that exclude Microsoft Teams. Under these new models, Teams is now offered as a separate add-on rather than being bundled with the core suites. This change affects new customers purchasing licenses for the first time and existing customers who may need to adjust their licensing strategy.

New customers buying Microsoft 365 or Office 365 for the first time after April 1, 2024, must purchase one of these new “no Teams” versions. If they also want Teams, they must buy it separately as an add-on called “Microsoft Teams Enterprise.”

However, customers who already had a Microsoft 365 or Office 365 subscription before April 1, 2024, can continue using their current plan, which includes Teams. They can renew it and add more user licenses as needed. But if they want to switch to one of the new “no Teams” versions, they can only do that when their subscription is up for renewal.

Challenges Presented by the New Microsoft 365 Licensing Model

The new Microsoft 365 licensing model presents two major challenges:

  1. It introduces a new layer of complexity in managing licenses and understanding which plans are the most cost-effective for your needs. With Teams now a separate add-on, you’ll need to carefully assess which users require the full suite and which can operate effectively with only the core applications.
  2. The financial effect of adding Teams separately can be substantial. Depending on your organization’s size and the number of users, the additional cost of Teams licenses can quickly add up, putting pressure on your technology budget.

If you don’t already have Microsoft Teams but need it, you must purchase two products: the core Microsoft 365/Office 365 suite without Teams plus the separate $5.25 per user/month Teams Enterprise add-on license. This potentially increases your per-user costs by $3 to $4 per month compared to the previous bundled pricing.

In other words, adding Teams as a separate, additional cost could offset the potential savings of a consolidated enterprise solution like Microsoft 365 if not managed strategically. You must thoroughly assess your Teams usage requirements to determine the most cost-effective approach—either including Teams in your licensing or opting for the new suites without Teams for specific user groups.

Opportunities for Optimization and Cost Control

Despite the challenges, the new licensing model presents optimization and cost control opportunities. By carefully analyzing your usage patterns and selecting the right plans for your needs, you could potentially reduce your Microsoft 365 expenses. This is where a thorough understanding of your organization’s requirements comes into play.

Take the time to assess which users genuinely need access to Teams and other advanced features, and consider alternative plans for those who don’t. You could avoid overprovisioning and unnecessary costs by aligning your licensing strategy with your actual usage.

Strategic Recommendations for the New Microsoft 365 Licensing Model

Navigating the new Microsoft 365 licensing landscape requires a strategic approach. Here are some recommendations to help you effectively manage your licenses and control costs:

  1. Conduct a thorough assessment of your current Microsoft 365 usage and identify areas where you may be overprovisioned or underutilizing licenses. Work with a trusted partner like SpyGlass to assess and optimize your licensing strategy, starting with a TEM audit.
  2. Consider negotiating with Microsoft or your licensing reseller to secure more favorable terms or discounts based on your specific needs and volume.
  3. Develop a proactive budgeting and forecasting process that considers the long-term costs of Microsoft 365 licenses and anticipates future changes in pricing or licensing models.

Gain Control Over Rising Microsoft 365 Costs with SpyGlass

As businesses increasingly rely on Microsoft 365 for productivity and collaboration, the costs associated with licensing and services can quickly add up. A comprehensive TEM audit can provide much-needed visibility and control.

SpyGlass SnapShot Audit is designed to streamline and optimize your technology service costs, including Microsoft 365. Through a detailed analysis of your usage patterns, licensing, and expenses, SpyGlass can identify opportunities for savings and help you select the most cost-effective plans for your needs.

The SnapShot Audit process involves a deep dive into your technology expenses, analyzing every aspect of your licensing and usage. That means our experts can identify the following:

  • Unused or underutilized Microsoft 365 licenses
  • Recommend the right license types and plans
  • Ensure compliance with licensing requirements

At SpyGlass, you’ll work with industry experts who truly understand the complexities of Microsoft licensing. Our team will provide personalized guidance to help your business navigate the recent changes, control costs, and maximize your Microsoft 365 investment.


Don’t let the complexity of Microsoft 365 licensing hold you back.

Start a SnapShot Audit as part of your TEM strategy.

Contact SpyGlass to inquire about a no-costs-up-front SnapShot Audit.