Microsoft Education licensing: the opportunity for optimization

This is the second post in my series addressing Microsoft's latest changes to Education licensing.

My first post was an orientation piece, offering a snapshot of what's changing, when, and why it matters.  This post builds on that understanding with a closer look at how to prepare for change and use it as a moment for IT estate optimization.

For many education institutions, significant discounts and broad staff and student entitlements made Microsoft licensing relatively predictable. That gave institutions less reason to scrutinize every assigned license or match each user to a particular plan.

The new structure changes that calculation. Institutions will need a clearer view of who needs what, which services they depend on, and when their agreement renews.

Licensing is becoming a strategic decision, and it needs strategic attention.

It needs optimization.

Understanding optimization

It's tempting to treat this as a pure cost-cutting exercise: identify what's changing, minimize the increase, move on. But optimization done well is much broader and more valuable than that.

It includes identifying licenses nobody's using. It means checking whether tools you've bought separately duplicate something you already have (or could have) inside Microsoft. It can also help improve your security or governance with capabilities already included in plans you hold,  or in plans that will become available in future.

With Microsoft’s licensing changes phased through 2027 and into 2028, you do have time to plan and prepare.  Optimization means using that time constructively to build an accurate picture of your environment, work out exactly where the new licensing model helps or hurts you, and then make deliberate decisions instead of reactive ones for the best way ahead.

The institutions that start earliest with that process will have the most options going forward.

Gain visibility

Before you can plan for what's ahead with Microsoft licensing, you need an honest picture of exactly where you stand today.

That should extend beyond a simple license count to encompass knowing which agreements you're on, and when they renew, which benefits you rely on, which users consume which services, and how each of these variables will be impacted by the changes coming during the course of 2027 and into 2028.

Some of those dependencies may not be obvious. In my first post, I said no two institutions will feel these changes in exactly the same way. The effect will vary according to agreement type, renewal date, user mix and reliance on current benefits. A research university and a school system may therefore face very different cost and capability decisions.

Gain accurate visibility of your own current state within that complicated picture and you have a firm foundation for building into the future.

Ask the right questions

Getting started certainly doesn’t have to involve a time-consuming and costly audit exercise. You can begin by bringing together four sets of information: your agreements and renewal dates; assigned and active licenses; user groups and service dependencies; and current spending on potentially overlapping tools. Use this baseline to model the options available under the new structure.

In practical terms, answering four simple questions will tell you a lot of what you need to know:

1. “Which milestones actually affect us?” Microsoft's dates are the same for everyone, but your individual renewal dates and budget cycle decide when they bite. Work back from April 2027, when we suggest your agreement review should be finalized.
2. “Which of our users and services are affected?” Not every license type changes the same way, and not every user needs the same plan. You will therefore need a firm grip on all the details as you work through the milestones outlined in my first post and Microsoft’s own licensing updates.
3. “Where exactly could our costs increase?” In the new world, understanding your licensing costs will involve a multiplicity of line items. Teams becomes optional. Storage and security costs will depend on which plan you choose. Accurately establishing your usage of these now rather than at renewal will mean the licensing change itself can become part of a planning exercise rather than a scramble and a series of distress purchases.
4. “Where could we (affordably) unlock more value?” New plans will bring new capabilities. Some of what you might otherwise buy separately from other vendors might now be within reach as part of a new plan with Microsoft.

Look ahead

Once you know where you stand today, you can take an informed view of what the IT environment will look like under the new Microsoft licensing structure,  which of the benefits you rely on today will change or disappear, which of the new plans and capabilities will be most relevant for you—and what they will cost.

Put side by side, your current state and this future state will show the opportunities for optimization.

This is where the real work happens.

For some institutions, the task will be mostly financial, with costs rising in places they hadn't budgeted for. For others, it'll be more about capability: security, compliance or AI features they don't have today but could use well. Either way, the precise optimization agenda is specific to each institution. It can't be estimated from a headline percentage or a peer comparison.

It can, however, be managed better and more quickly with expert external advice.

How SoftwareOne can help

Optimizing Microsoft licensing is the kind of work we do every day at SoftwareOne.

In my first post, I mentioned examples including Hochschule Düsseldorf, where we built a centralized platform for Microsoft licensing procurement across seven faculties, and the Norwegian Refugee Council, where we found nearly 3,000 inactive users and delivered around NOK 2 million in savings. And as I’ve said, optimization isn't only about cost. At St Peter's School in York, we helped move around 1,700 students and staff onto Microsoft 365 A5 and built a zero-trust security model around it.

Our wider experience in the commercial sector also shows just how significant the benefits of optimization can be.

In one example, rail freight operator Lineas had relied on a government-negotiated Microsoft agreement. When that agreement expired, it had to move onto commercial terms without overspending. We reconciled licenses for 1,900 users and 400 servers, modeled three future scenarios to choose the right new agreement, and made sure each of its 2,100-plus users got the functionality they needed without paying for more. The result was €708,848 in cost avoidance over three years.

That's exactly the shift many Education institutions now face in response to the latest Microsoft changes: moving off terms they've relied on for years, onto a model where every license has to earn its place.