The 20-minute Microsoft 365 licence audit

Almost certainly, yes. Most organisations of 100–500 staff are paying for something they are not using, and three checks find the majority of it: licences assigned against people who are actually active, tools you are paying for twice, and licence tiers that do not fit the role. You can do a first pass in about 20 minutes with admin access and your last few supplier invoices.

What you need before you start

• Global administrator or billing administrator access to the Microsoft 365 admin centre
• Access to the Microsoft Entra admin centre, or someone who has it
• Your Microsoft invoice, or your reseller's, so you know what each licence actually costs you
• A list of recent leavers from HR or payroll — the last six months is enough
• Twelve months of software spend from accounts payable, filtered to subscriptions

The 20 minutes

Twenty minutes gives you a list of findings, not a finished clean-up. The decisions and the changes take longer, and some of them need a conversation with the people affected. But the list is the hard part to start, and it is usually enough to justify the rest.

1. Assigned versus active

In the Microsoft 365 admin centre, go to Billing, then Licences. For each product you will see how many you have bought and how many are assigned. Any gap between the two is a licence you are paying for and nobody holds — an easy first find.

Then compare licences assigned against active users over the last 90 days. The usage reports under Reports show activity by user, and the Entra admin centre can show each account's last sign-in. Export both to Excel and sort.

Look for:

• Accounts assigned a licence with no sign-in in 90 days
• Leavers still licensed — the most common finding by a distance
• Shared or service accounts holding full licences that need only a mailbox

Shared mailboxes such as accounts@ or reception@ generally do not need a licence of their own unless they need more storage or an archive — check Microsoft's current limits. Service accounts used by scanners, integrations or old scripts often hold a full user licence because that was the quickest way to make something work years ago.

Handling leavers properly

Leavers are the most common finding because offboarding usually stops at disabling the sign-in. The licence stays assigned, quietly billed every month. A short, repeatable process fixes this for good.

Once that process is written down, it is a good candidate for automation: a flow triggered from the HR leaving form can raise each step as a task and record when it is done. Our Power Automate service covers that kind of build.

2. Duplicate tooling

You are likely paying twice for at least one capability:

• A separate video conferencing subscription alongside Teams
• A file-sharing service alongside SharePoint and OneDrive
• A survey or forms tool alongside Microsoft Forms
• A standalone e-signature product that overlaps what you already have

The quickest way to find these is not in Microsoft at all. Ask accounts payable for twelve months of recurring software charges, including those on company credit cards. Subscriptions bought on a card by one team are the ones nobody reviews.

The alternative tool is sometimes genuinely better. Sometimes it is a legacy contract nobody has revisited. Before cancelling, check who uses it, whether data needs exporting, and when the contract renews — an auto-renewal date is often the real deadline.

3. Licence tier fit

E5 for everyone is rarely correct. The premium security and analytics features in E5 matter enormously for some roles and are unused by most. A mixed model — E5 where it earns its place, E3 or Business Premium elsewhere — is usually the honest answer.

Business plans, including Business Premium, have a seat cap per plan — currently 300 — so larger organisations may need an enterprise plan for some or all staff. A good test for any tier: name the feature this person uses that the cheaper tier lacks. If nobody can, the tier is probably wrong. Check current plan inclusions and pricing with Microsoft or your reseller before you change anything.

Add-ons worth a second look

The base plans are not the only place spend hides. While you are on the Licences page, look at the smaller products assigned to individuals. They are often bought for one project or one person and never reviewed.

• Power BI Pro assigned to people who view no shared reports
• Visio and Project licences bought for a single project that has finished
• Teams Phone or audio conferencing for people who never make external calls
• Copilot licences assigned in a pilot and never revisited against actual use
• Power Apps or Power Automate premium plans bought for an app that has since been retired

The usage reports show activity for several of these. Where they do not, ask the licence holder directly. A one-line email — "do you still use Visio?" — clears more licences than any report.

Putting a number on it

Without a dollar figure, findings stay on a list. Use your own invoice price per licence and do the sum for each finding.

In this example that is 31 licences. Multiply by your price per licence per month, then by 12. Even at a modest per-licence price, that is a real annual number — before you count duplicate tools or tier changes.

What to do with the findings

Do not simply cancel. For each finding, decide:

1. Remove — nobody uses it
2. Reassign — someone else needs it
3. Downgrade — the tier is wrong
4. Keep — it is genuinely used, now documented

Write the decision and the reason next to each line. "Keep — used by the payroll team for X" is worth recording, because the same question will come up next quarter. Check your agreement terms too: annual commitments can often be reduced only at renewal, so the saving may land later than the decision.

Then set a calendar reminder to repeat this quarterly. Licence drift is continuous, not a one-off. Treating it as part of ongoing governance rather than a once-a-year clean-up is what keeps the savings from quietly leaking back.

The savings from a licence audit frequently fund the automation project you were told there was no budget for.

What to do next

Block 20 minutes this week, open Billing and then Licences, and write down the gap between purchased and assigned for each product. That one number tells you whether the rest is worth doing. Then get the leavers list from HR and check every name.

If you would like a second pair of eyes, our free diagnostic audit includes a licence review alongside the processes those savings could pay for.