Microsoft licensing is confusing on purpose
I don't think Microsoft makes their licensing confusing by accident. The more plans, add-ons, and bundles they offer, the more likely you are to overspend. And companies do overspend. Massively. The software asset management market is growing fast precisely because organizations have realized they're hemorrhaging money on licenses they don't need.
Microsoft 365 is one of the worst offenders. Not because it's a bad product. It's actually great. But the gap between what you need and what you're paying for can be enormous if nobody's paying attention. Here are the mistakes I see over and over again.
Buying E5 when E3 does the job
This is the big one. Microsoft 365 E5 costs roughly double what E3 costs per user per month. The extra features you get include things like advanced security tools, phone system capabilities, and Power BI Pro. Those are genuinely useful features. For some of your employees.
The mistake is giving E5 to everyone. Your marketing coordinator does not need advanced eDiscovery. Your warehouse team does not need Microsoft Defender for Endpoint's full suite. But when IT rolls out licensing, it's easier to just put everyone on the same plan than to think about who actually needs what. That convenience costs real money at scale.
A company with 500 employees paying for E5 across the board when 350 of those people would be fine on E3 is wasting somewhere around $50,000 to $75,000 per year. That's not a rounding error. Good software asset management practices would catch this during a proper license review, but most companies never do one.
The departed employee problem
Someone leaves your company on a Friday. IT disables their account. But does anyone actually remove their Microsoft 365 license? In a lot of organizations, the answer is no. The account gets disabled, the person can't log in, but teh license stays assigned. Microsoft keeps charging you for it.
I've seen companies with 20 or 30 licenses still assigned to people who left months ago. Each one of those is money going straight into the drain. The software asset management market exists in large part becuase of exactly this kind of waste.
The fix is straightforward. Add license reclamation to your offboarding process. When someone leaves, their license should be unassigned and returned to the pool within a week. Better yet, automate it. Most identity providers can trigger license removal when an account is deprovisioned.
Power BI Pro seats that nobody uses
Power BI Pro comes bundled with E5, but plenty of companies also buy standalone Pro licenses for people on lower-tier plans. The intention is always good. "We want our team to be data-driven!" In practice, a lot of those Pro seats end up unused.
People get access to Power BI, open it once, find it confusing, and go back to their spreadsheets. The license keeps renewing. If you're managing Office 365 licensing properly, you should be checking Power BI usage reports regularly. Any Pro seat that hasn't been actively used in 60 days is a candidate for removal.
This same pattern applies to other add-on services too. Visio Online, Project Online, Dynamics 365 licenses that were spun up for a project that ended six months ago. The implementation of Dynamics 365 in particular tends to leave behind orphaned licenses when projects wrap up or pivot direction.
Ignoring the admin center usage reports
Microsoft gives you the data. That's what kills me about this. The M365 admin center has built-in usage reports that show you exactly who is logging in, what apps they're using, and how often. Most IT teams never look at them.
These reports will tell you which users haven't touched Outlook in months, who has never opened Teams, and which SharePoint sites are completely dormant. You can use this data to right-size your Microsoft 365 licensing without any third-party tools at all. Just pull the reports, export to CSV, and start making decisions.
If you want a more structured approach, Microsoft software asset management as a discipline has matured a lot in recent years. There are now well-defined processes for doing this kind of review on a regular cadence rather than as a one-off panic when the CFO asks why the Microsoft bill keeps going up.
License compliance cuts both ways
Most conversations about Microsoft licensing focus on overspending. But under-licensing is a real risk too. If you're using features that your current plan doesn't actually entitle you to, Microsoft can and will catch that during an audit. The penalties aren't fun.
Microsoft offers their own License Review Assessment programs to help you figure out where you stand. I'd honestly recommend going through one of these proactively rather than waiting for Microsoft to come knocking. It's better to find the gaps yourself and fix them on your own timeline.
Start with the data you already have
You don't need to buy expensive tools to get started. Go into your M365 admin center right now. Pull the active users report. Export it. Compare it against your HR system's current headcount. I guarantee you'll find discrepancies.
Then look at the per-user license assignments. How many E5 licenses do you have? How many of those people are using E5-specific features? If the answer is less than half, you have a quick win waiting for you.
For Zendesk specifically, which tends to have the same kind of licensing bloat as Microsoft 365, that's exactly the problem we built LicenseTrim to solve. The pattern is always the same. Licenses accumulate, usage drops, nobody notices, and the bill keeps climbing. Whether it's M365 or any other SaaS tool, the fix starts with actually looking at who's using what.