Microsoft 365 license optimization

  • Release version: Australia
  • Updated March 12, 2026
  • 3 minutes to read
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    Summary of Microsoft 365 License Optimization

    The Microsoft 365 License Optimization guide provides recommendations for optimizing Microsoft 365 licenses based on user activity and subscription details. This enables organizations to better manage their licenses, reduce costs, and ensure appropriate allocation according to usage patterns.

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    Key Features

    • Active, Inactive, and Unassigned Subscriptions: Gain insight into the number of active, inactive, and unassigned user subscriptions for Microsoft 365 products, helping to identify potential areas for optimization.
    • Optimization Recommendations: Access monthly reports indicating licenses that can be downgraded or reclaimed based on usage over the past year, including options for downgrading from higher to lower tiers (e.g., Office 365 E5 to E3).
    • Potential Savings Reports: Analyze potential cost savings from optimizing licenses, particularly for Microsoft Windows Server licenses, along with Microsoft 365 and Office 365 licenses based on recommendations.
    • Portal Subscription Details: View available licenses on the Microsoft portal per subscription, detailing purchased rights, assigned rights, and available rights for better oversight.

    Key Outcomes

    By utilizing these optimization tools, ServiceNow customers can expect to enhance their license management, leading to significant cost savings and improved resource allocation. This proactive approach ensures that organizations are not overspending on unused or unnecessary licenses while maximizing the value of their existing subscriptions.

    Find Software Asset Management optimization recommendations for Microsoft 365 based on usage.

    Table 1. Microsoft 365 available subscription detailsEnhanced visibility of user activity within Microsoft 365 subscriptions
    Report Description
    Microsoft 365 subscription details

    Number of active, inactive, and unassigned user subscription details for Microsoft 365, Office 365, and Power BI products, which are grouped by software models.

    Select a data point to view more details about the user subscriptions for a software model.
    • Select the Active subscriptions bar to view the active user subscriptions, where the last activity date is equal to or less than 90 days.
    • Select the Inactive subscriptions bar to view the inactive subscriptions, where the last activity date is empty or was before 90 days.
    • Select the Unassigned subscriptions bar to view the number of available rights or user subscriptions that are unassigned.
    Table 2. Microsoft 365 optimization recommendations for subscriptions based on usage
    Report Description
    Microsoft 365 optimization recommendations

    Number of licenses per month that can be downgraded or reclaimed based on recommended downgrade, double licensed, and consolidate candidates. This report displays data for the last 12 months.

    Select any bar to view more details and act on the recommended downgrade or dual license candidates for a given month.
    • Select a bar that is marked as Downgrades from Office 365 E5 to E3 to view the list of candidates that can be downgraded from Office 365 E5 to Office 365 E3. Select a candidate from the list to downgrade the related license.
    • Select a bar that is marked as Downgrades from Office 365 E3 to E1 to view the list of candidates that can be downgraded from Office 365 E3 to Office 365 E1. Select a candidate from the list to downgrade the associated license.
    • Select a bar that is marked asDowngrades from Microsoft 365 E5 to E3 to view the list of candidates that can be downgraded from Microsoft 365 E5 to Microsoft 365 E3.
    • Select a bar that is marked as Downgrades from Microsoft 365 E3 to F3 to view the list of candidates that can be downgraded from Microsoft 365 E3 to Microsoft 365 F3.
    • Select a bar that is marked as Consolidate to view the list of consolidated Microsoft 365 optimization candidates.
    Table 3. Potential savings based on recommendation type
    Report Description
    Potential savings by optimizing licenses Potential cost savings for licenses on your physical hosts and clusters that are based on recommended license optimizations.
    Note:
    This report is available only for Microsoft Windows Server licenses.
    Select the report to view details about the recommended license optimizations and associated cost savings for each host or cluster. License optimizations include the recommended license, recommended rights, and recommended spending.
    Microsoft 365 potential savings by type

    Potential monthly savings for Microsoft 365 and Office 365 licenses that are based on recommended downgrade, double license, and consolidate candidates. This report displays potential savings for the last 12 months.

    Select any bar to view more details about the recommended downgrade or dual license candidates for a given month.
    • Select a bar that is marked as Downgrades to view the list of candidates that can be downgraded to a previous version of Microsoft 365 and Office 365.
    • Select a bar that is marked as Double Licensed Users to view the list of candidates with both Microsoft 365 and its applications (Office 365, Enterprise Mobility+Security (EMS), Windows) subscriptions.
    • Select a bar that is marked as Consolidate to view the list of Microsoft 365 consolidate subscriptions reclamation candidates.
    Microsoft 365 portal available subscription details Number of licenses that are available on the Microsoft portal per subscription.

    Select a bar to view details about the purchased subscription details, such as software model, product, purchased rights, assigned rights, available rights, and subscription profile.