License Optimization (M365, Google, Cloud): A Practical Playbook to Cut Spend Without Risk

Licenses are where “quiet” overspend hides—unused seats, the wrong tiers, duplicate tools, and orphaned accounts. The goal of license optimization isn’t just to slash costs; it’s to align entitlements with real usage while preserving security, compliance, and user experience.

Below is a field-tested playbook you can apply across Microsoft 365, Google Workspace, and your broader cloud/SaaS stack.

1) Foundations: Get Clean Data, Then Act

Inventory & normalize

Pull a complete user roster (employees, contractors, service accounts).
Normalize identities across HRIS, IdP (Entra ID/Google), and each app to remove duplicates.

Measure actual usage

Track last sign-in, feature consumption (e.g., Teams/Meet, SharePoint/Drive, advanced security), storage, and app add-ons.
Build simple KPIs:
- Active-to-licensed ratio per app
- % of users inactive >30/60 days
- $ per active user per month by app/tier

Define licensing personas

Map roles to baseline tools: e.g., Frontline, Knowledge worker, Power user/Analyst, Admin.
For each persona, list must-have capabilities and acceptable lowest-cost tier.

2) Microsoft 365: Fast, Safe Wins

Where to look

M365 admin: Usage reports (last activity), Product licenses, Service plans per user.
Entra ID: Group-based licensing and dynamic groups to automate assignment.

Tactics

Right-size tiers: Many users can run on Business/Frontline or E3-level capabilities; keep E5 (or E3+security add-ons) for security/compliance/power users.
Trim service plans you don’t use (e.g., disable individual workload toggles under a suite where appropriate).
Convert leavers to shared mailboxes (no license) and set retention properly.
Harden JML (Joiner-Mover-Leaver): automatic assignment on hire; downgrade on role change; reclaim on last day.
Audit add-ons (Audio Conferencing, Power BI Pro, Project/Visio, Teams Phone) for true usage.

Automation ideas

Entra ID dynamic groups for department/location/role → auto-apply licensing personas.
Scheduled job to flag users inactive >30 days for downgrade/suspension review.
Quarterly access review for high-cost tiers and admin roles.

Common pitfalls

Accidentally removing a service plan that underpins retention/ediscovery.
Over-licensing shared or resource mailboxes.
Duplicate security spend (buying an E5-equivalent stack and third-party tools).

3) Google Workspace: Seats, Storage, and Add-Ons

Where to look

Admin console: Users (last sign-in), Licenses, Storage reports, Groups/Org Units.
Consider GAM / Admin SDK for exports and automation at scale.

Tactics

Right-size editions: Business Starter/Standard/Plus vs. Enterprise; align storage, security, and compliance to personas.
Suspend vs. delete: Suspend immediately on exit; keep data under retention; transfer Drive ownership.
Voice & other add-ons: Ensure only active users on the right tier; reclaim unused numbers.
Shared drives governance: Remove abandoned drives; set lifecycle policies to contain storage costs.

Automation ideas

Org Units + Groups = persona-based license assignment.
Script to downgrade inactive users (after grace period) and notify managers.
Quarterly storage review with lifecycle actions (archive, delete, move).

Common pitfalls

Paying Enterprise for users who only need mail/calendar/Drive basics.
Retaining suspended accounts indefinitely without a timeline.
Letting storage growth drive you into higher tiers prematurely.

4) The Rest of the Cloud & SaaS Stack

Find and tame SaaS sprawl

Use SSO logs, CASB, or expense data to discover unsanctioned apps.
For each app: assign an internal owner, map a persona, and define renewal/true-up dates.

Eliminate overlap

Consolidate duplicative tools (e.g., multiple chat, video, project tools).
Standardize on one stack where possible; document exceptions.

Renewals & vendor leverage

Keep a renewal calendar with 90-/60-/30-day alerts.
Track adoption vs. commitment; negotiate lower tiers or flex terms if usage lags.

BYOL / platform commitments (high level)

Where cloud platforms allow, align committed use (e.g., annual seats, credits) with forecasted need, not wishful thinking.
Avoid lock-ins that outpace realistic adoption.

5) 30-60-90 Day Roadmap

Days 0–30: Baseline & quick wins

Export rosters & usage for M365, Google, top 10 SaaS.
Identify: inactive users, over-tiered users, orphaned/shared mailboxes, unused add-ons.
Action: reclaim leaver licenses, convert mailboxes, disable unused add-ons, right-size obvious outliers.

Days 31–60: Automate & govern

Implement persona-based, group licensing (Entra/Google).
Stand up a downgrade/suspension policy for inactivity (with manager approvals).
Create a renewal calendar and assign app owners.

Days 61–90: Institutionalize

Quarterly license review cadence (dashboards + approvals).
Add JML integration with HRIS so seats are created/changed/removed automatically.
Review overlapping tools; start consolidation plan.

6) Metrics That Prove It’s Working

Active users / licensed users ≥ 90–95% for core suites
% users inactive >30/60 days trending down each quarter
$ / active user / month by app, down and stable
% seats in highest-cost tier limited to defined personas
Time-to-reclaim after offboarding ≤ 24 hours

7) Risk Controls to Keep You Safe

Change management for license downgrades (capture approvals).
Preserve legal hold/retention before modifying service plans.
Enforce MFA and least privilege for license admins.
Keep an audit log of all license changes.

8) Simple Savings Model (use for approvals)

Let:

C = current monthly license cost
r = over-licensing rate (e.g., 0.20 for 20%)
s = recoverable share after optimization (e.g., 0.70)

Estimated monthly savings = C × r × s
This keeps forecasts conservative and defensible.

9) Quick Checklist (copy/paste)

Export users + last sign-in + current tier for M365/Google
Define 3–5 licensing personas with minimum viable tiers
Reclaim leaver accounts; convert eligible mailboxes to shared
Disable unused add-ons; cut duplicate tools
Implement group-based licensing; automate JML
Create renewal calendar and assign app owners
Review KPIs monthly; adjust personas and tiers

Bottom Line

License optimization is a continuous discipline, not a one-time cleanup. With clean data, persona-based assignment, automation, and a steady review rhythm, most organizations reclaim meaningful budget—without hurting productivity or compliance.