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Office 365 cost optimisation – is it worth it?

Office 365 cost optimisation

How to squeeze best value out of Microsoft’s cloud based Office solution

Squeezing best value from Office365 requires a change of thinking from the old world of perpetual device based office:

Old School Perpetual device based office:

  • Have we purchased enough copies? (compliance)
  • Are we using it correctly according to the product use rights? (compliance)
  • Are we on the right version? (compliance / optimisation)
  • Have we got copies that are unused? (optimisation)

Compare this to the new user based hybrid cloud office:

  • Have we any unused / redundant users?
  • Are users on the optimal version?

I would argue that compliance doesn’t go away entirely with Office365, but it takes a more of a back seat compared to the headaches of the old perpetual device world. Similarly many ITAM Review readers may have purchased an Office365 agreement but might be still using Office the old fashioned way. (If you are being tripped up by compliance issues with O365 I’d love to hear about it – please let me know in the comments or get in touch).

Office365 Cost Optimisation – Is it worth it?

Let’s use a fictional example, a company with 5,000 employees.

The worst-case scenario is someone has agreed to pay for 5,000 users of Office365 at the highest E5 level.

With optimisation it might be determined that actually we only have 4,500 active user accounts, 2,000 of them can use E5 and 2,500 employees would be perfectly happy with an E1 subscription (Office365 email and other online services but no locally installed apps).

Optimisation of user accounts is best performed on two fronts – profiling users architecturally or strategically based on their role, and also performing an optimisation clean up based on actual usage. As Filipa Preston said in this video – accurate profiling of users has benefits way beyond Microsoft with better management of all other user based license agreements e.g. SAP.

Office 365 cost optimisation

Two pronged attack to user management: strategic user personas plus clean up of redundant accounts and right-sizing.

At the time of writing fully featured E5 is $35, whilst E1 is just $8 per user per month. So a quick optimisation in this case, using retail pricing, would take our annual Office365 bill from $2.1M (5K x 12months x $35) to $1.08M (2K x $35 x 12 months plus 2.5K x $8 x 12 months). Cutting the bill in half and saving a cool $1M. So yes, I’d say it is worth it using this fictional example.

Microsoft is well known for over-supply to their customers, tantalising them with bundles that include everything and the kitchen sink. So an offer from Microsoft for our fictional example might include E5 for all users at a heavily discounted price of $20 per user. This would generate a cost of $1.2m a year versus our optimised cost of $1.08M. A better deal – but does the business actually need all that functionality? And how much of an overhead will it be to manage our E1 versus E5 estate?

Enter SAM Tools, can they help?

I recently had a chat with Snow Software to discuss their new Office365 optimisation offering. As mentioned above, The Snow offering is based identifying unused user profiles and also shifting users onto the right subscription – but then takes it a step further and automates the provisioning and removal process. The goal is a ‘Pool’ of subscriptions harvested from unused accounts to avoid future cost.

Office365 is a pervasive cloud application, touching on-premise, cloud consumption, desktop, mobile and potentially personal devices. The challenge for Snow is to streamline all of these data points into a single source of truth to support optimisation. Snow claim their solution for Office365 optimisation goes well beyond the data available in the Office365 API to collate intelligence on Users, Usage, Costs vs. PC, cloud and mobile. For example to shift users from E5 to E1 you would need data of those employees with a subscription who weren’t using local version of Office – not possible as far as I’m aware via Microsoft intelligence. Similarly Microsoft has a good track record of generating terrabytes of technical data based on your environment requiring a rocket scientist to make a business decision – I don’t see any different here.

To address the challenge of Office365 optimisation Snow claim to have re-engineered six different components of their portfolio:

  1. Snow Device Manager (or connectivity to other MDM tools) for understanding mobile consumption
  2. Snow Inventory for understanding local installs
  3. Software recognition service updated to include Office365 components
  4. Snow License Manager for managing O365 entitlement
  5. Automation Platform for provisioning of new O365 users and closure of dormant accounts
  6. And finally the Snow integration connector for hooking up with exchange online and Skype for business

Competitively this puts Snow ahead of enterprise SAM tools who may not have their own inventory or MDM solution.

Snow has decided to include their Office 365 optimisaiton offering within the standard platform price. So with our 2017 salary survey suggesting the average IT Asset Managers wage is $100K in the USA*, and assuming the $20 per user per month, an Asset Manager can justify their entire salary for the year by re-harvesting 400 or so subscriptions, a no-brainer (* Salary survey details are being shared at our 2017 conferences).

I reviewed Zylo in January, see “Discovery, software recognition and optimisation in a SaaS world“, and other SaaS optimisation platforms such as Meta Saas exist, but I wrote with my review of Zylo, “This is a good idea and innovative solution but can’t help but feel it would be better off embedded within a normal SAM tool“. Snow have said they also plan to develop similar offerings for optimisation of ServiceNow, and Adobe Creative Cloud.

I would love to know how Snow customers are getting on with the Office365 optimisation offering – if you have direct experience with it please share a review on Tools Advisor. Thanks! Martin

About Martin Thompson

Martin is owner and founder of The ITAM Review, an online resource for worldwide ITAM professionals. The ITAM Review is best known for its weekly newsletter of all the latest industry updates, LISA training platform, Excellence Awards and conferences in UK, USA and Australia.

Martin is also the founder of ITAM Forum, a not-for-profit trade body for the ITAM industry created to raise the profile of the profession and bring an organisational certification to market. On a voluntary basis Martin is a contributor to ISO WG21 which develops the ITAM International Standard ISO/IEC 19770.

He is also the author of the book "Practical ITAM - The essential guide for IT Asset Managers", a book that describes how to get started and make a difference in the field of IT Asset Management. In addition, Martin developed the PITAM training course and certification.

Prior to founding the ITAM Review in 2008 Martin worked for Centennial Software (Ivanti), Silicon Graphics, CA Technologies and Computer 2000 (Tech Data).

When not working, Martin likes to Ski, Hike, Motorbike and spend time with his young family.

Connect with Martin on LinkedIn.


  1. Greg Holmes says:

    I think it would be remiss if I didn’t mention how Flexera includes Office 365 License Management in our Microsoft License Optimization module. On top of the benefits you mention in your article, we find customers need help managing both legacy perpetual licenses and Office 365 subscriptions. Over the last 18 months we’ve been working with customers on this and finding many opportunities for cost savings as people take on Office 365 and the ongoing management. We have plenty of more information here:

  2. Ian says:

    Hi. Cutting through the clear no-so-well diguised advert for Snow LM, O365 optimisation is key. In my current role I have saved in excess of £300k per year through optimisation. That is for a relatively small estate.

    The Office 365 Admin Center reporting is somewat error prone. If Snow LM, and other tools such as 4ward365, Cogmotive, drive off the same data then you need to take the accuracy with a pinch of salt. For example, Admin Center will report on ProPlus activations. However, if a user inherits a PC from someone else which has O365 ProPlus installed, the activation will never appear against their account, despite them being an active user of the applications.

    Similarly the report may show that someone has no “last used date” against any of Exchange, Skype For Business, OneDrive for Business, SharePoint, etc, yet on closer investigation, the user is active.

    So, regardless of what tools you use, you need to be careful. Look at the data for potential optimisation and, if the savings are significant enough, speak to a sample set of users, then approach with caution. Earlier this year I cleared out around 1,000 E3 accounts that weren’t being used. It took 2 weeks to do as we started with a small sample and increased by small number each night. We had a 10% failure rate where the data being reported was not a reflection of reality

  3. Thanks Ian. Always value your input to our community.

    For the record – the article was inspired by a demo I received from Snow when I visited their office in Texas last month. It is not an advert.

    Kudos to your saving with O365 – I look forward to hearing from others that have made similar savings. With Snow LM or whatever else.

  4. I wouldn’t agree that you don’t have to bother about PURs anymore when going O365. Especially when staying in business plans and when using mixed plans, there are still a few things to consider. It’s something different in Enterprise though.

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