Making Sense of Microsoft Cloud Licensing
For as long as I can remember, I was in awe of people who had the discipline and time to get their heads around Microsoft licensing. The list of things I’d rather do to escape it was getting comically long. In the early days of the Microsoft Cloud, BPOS and Office 365, there wasn’t much choice, but years later and an explosion of services and offerings means we face a somewhat overwhelming array of plans, entitlements, consumption models, SKUs and add-ons. It’s become critical to understand the dark art of Microsoft licensing when it comes to helping clients make informed decisions and strategies.
In this blog we’ll look at simplifying the what, why and how of Microsoft Cloud licensing, focussing specifically on the SaaS service offerings. Experience shows this can be the most challenging to gets to grips with. Microsoft’s IaaS and PaaS cost models are easier to understand. Largely based on consumption, the phrase ‘what you see is what you get’ rings true as you generally buy compute power, storage or bandwidth. It’s a concept that IT Pros have been dealing with long before the cloud.
When it comes to SaaS, the options are more diverse. Whether your organisation has a handful of users or thousands, it’s essential to have a solid licensing strategy that ensures users have the right plans and entitlements to make their lives more productive, whilst choosing the most cost-effective approach. Most Microsoft end-user licences are available as a SaaS offering these days, so it can often be beneficial to carry an audit of some description to ensure you’re getting the most return on your investment. For example,
- Do you buy Windows licence with each device?
- Are you licensing Office products as one-off purchases?
- Do you have an existing EA with Microsoft?
With Microsoft 365, there are various options that include Windows 10 and Office Pro Plus, so by switching to an OpEx model you are not only guaranteed to be on the latest version, but you’ll benefit from other entitlements provided by these plans.
Microsoft literature needs to appeal to different demographics. Depending on where you look or what you searched for, you’ll find different ways of describing the same set of licences or services. First off, let’s look at some descriptions captured from different sources and what services and platforms underpin them.
|Office Applications |
Office on tablets and phones
|Office Pro Plus (Word, Excel, PowerPoint & OneNote)||Office 365|
|Office Online|| ||Office 365|
|Email & Calendar|| ||Office 365|
|Chat-based workspace |
Hub for Teamwork
| ||Office 365|
|Schedule & Task Management |
| ||Office 365|
|Workflow Automation|| ||Office 365|
|Web and Mobile Apps |
| ||Office 365|
|Voice, video & meetings |
Messaging, Presence and Meetings
| ||Office 365|
|Social & Intranet |
| ||Office 365|
|Corporate Social Network|| ||Office 365|
|Professional Digital Storytelling|| ||Office 365|
|Enterprise Video|| ||Office 365|
|Threat Protection|| ||Office 365 |
Enterprise Mobility + Security
|Identity & access management|| ||Enterprise Mobility + Security |
|Device & app management|| ||Enterprise Mobility + Security|
|Information protection|| ||Office 365 |
Enterprise Mobility + Security
|Advanced compliance|| ||Office 365|
|Analytics|| ||Office 365|
|Workday Management|| ||Office 365|
|File storage and sharing|| ||Office 365|
Now we know a bit about what’s going on behind the scenes, we can see how Microsoft is pulling together different services that are harmoniously integrated to deliver a great experience. Impressive as that list is, it’s now important to note that each of the services and platforms have multiple licence plans available. Another phrase, ‘you get what you pay for’ springs to mind here. For example, some of the services come in Office 365, Plan 1 and Plan 2 variants, with differing levels of capabilities. Some services aren’t available on the lower-priced plans, so let’s take a closer look at what entitlements are associated with the common Office 365 plans.
|Office 365||Business Essentials||Business Premium||F1||E1||E3||E5|
|Office 365 Business||✓|
|Office 365 Pro Plus||✓||✓|
|Exchange Online K1||✓|
|Exchange Online Plan 1||✓||✓|
|Exchange Online Plan 2||✓||✓||✓|
|SharePoint Online Enterprise Kiosk (K1)||✓|
|SharePoint Online Plan 1||✓||✓|
|SharePoint Online Plan 2||✓||✓|
|Skype for Business Online Plan 1||✓||✓|
|Skype for Business Online Plan 2||✓||✓||✓||✓|
|OneDrive for Business Plan 1||✓||✓||✓|
|OneDrive for Business Plan 2||✓||✓|
|Microsoft Flow for Office 365||✓||✓||✓||✓||✓||✓|
|Microsoft Flow Plan 1|
|Microsoft Flow Plan 2|
|Microsoft PowerApps for Office 365||✓||✓||✓||✓||✓|
|Microsoft PowerApps for Office 365||✓||✓||✓||✓||✓||✓|
|Microsoft PowerApps Plan 1|
|Microsoft PowerApps Plan 2|
|Microsoft Power BI Pro||✓|
|Microsoft Stream for Office 365||✓||✓||✓||✓|
|Microsoft Stream Plan 1|
|Microsoft Stream Plan 2|
|Office 365 Advanced Threat Protection||✓|
|Office 365 Advanced Compliance||✓|
|Office 365 Cloud App Security||✓|
|Office 365 Threat Intelligence||✓|
|Azure Information Protection for Office 365||✓||✓|
|Azure Active Directory Free||✓||✓||✓||✓||✓||✓|
|Enterprise Mobility + Security||E3||E5|
|Azure Information Protection Premium P1||✓|
|Azure Information Protection Premium P2||✓|
|Azure Active Directory Premium P1||✓|
|Azure Active Directory Premium P2||✓|
|Microsoft Advanced Threat Analytics||✓||✓|
|Microsoft Cloud App Security||✓|
|Windows Hello for Business||✓||✓||✓|
|BitLocker and BitLocker to Go||✓||✓||✓|
|Windows Information Protection||✓||✓||✓|
|Windows Defender Credential Guard||✓||✓|
|Windows Defender System Guard||✓||✓||✓|
|Windows Defender Application Guard||✓||✓|
|Windows Defender Application Control||✓||✓|
|Windows Defender Exploit Guard||✓||✓||✓|
|Windows Defender Antivirus||✓||✓||✓|
|Windows Defender Advanced Threat Protection||✓|
|Windows Server Update Service||✓||✓||✓|
|Windows Update for Business||✓||✓||✓|
|Desktop Analytics Upgrade Readiness||✓||✓||✓|
|Desktop Analytics Update Compliance||✓||✓||✓|
|Desktop Analytics Device Health||✓||✓|
|Windows Insider Program for Business||✓||✓||✓|
|Windows Shared Devices||✓||✓||✓|
|Hybrid Azure Active Directory Join||✓||✓||✓|
|Microsoft Store for Business||✓||✓||✓|
|Mobile Device Management||✓||✓||✓|
|Mobile Application Management||✓||✓||✓|
|Manage User Experiences||✓||✓|
|Microsoft Application Virtualisation (App-V)||✓||✓|
|Microsoft User Environment Virtualisation (UE-V)||✓||✓|
As long as those lists are, in the case of Office 365 and Enterprise Mobility + Security, they just scratch the surface. The information was collated from several Microsoft sources and has proven invaluable as a quick reference cheat sheet, rather than trawling through different sites and different formats of information. It provides a good high-level overview, but we often need to know more about the variants of each plan to ensure it’s fit for purpose as well as helping clients make the most of the available entitlements and getting a full ROI.
This is where it can get unwieldy. I find the Office 365 Service Description site is a fantastic source of information – https://office365sd.com. Tracking down the same level of information for Enterprise Mobility + Security is harder as it’s currently spread across several sections of the Microsoft Azure and Power Platform repositories.
Things change quickly in this space, so rather than collating information that could be out of date before you’ve finished reading it, I find it’s better to keep a high level cheat sheet of the differences, along with links to the original sources to make it easy to cross reference.
So, what more do you get?
There are so many features of Exchange Online, I’d recommend looking through the Service Description for the low-level detail, but Plan 2 includes everything offered with Plan 1 with these additional features:
* 100GB vs 50GB mailbox storage
* Unlimited in-place archive
* Unified messaging & voice mail
* Advanced Threat Protection
* Data Loss Prevention
* In-place hold and litigation hold
* Message encryption
* IRM with Azure Information Protection
Like Exchange Online, the exhaustive list of features can be found on the Service Description page. Plan 2 includes everything offered by Plan 1 with these additional features:
|Business Connectivity Services |
|Advanced Publishing Features |
|InfoPath Form Services |
|Data Loss Prevention|
|Video search asset libraries |
|Enterprise Search |
|Business Intelligence |
If you’re licensed for Office 365, you’re licensed for Microsoft Teams. There is also a free, stand-alone plan, designed to entice organisations into the Microsoft ecosystem. The limitations of the free offering mean reduced capacity for file storage and of course, the extended capabilities provided by other Office 365 services like Exchange, OneDrive, SharePoint, Planner and Yammer.
The Microsoft Teams for Office 365 offering is consistent across all Office 365 plans. If you don’t hold an Enterprise E5 licence, you can enable Phone and Audio Conferencing features with add-on subscriptions.
|Skype for Business Online||Variants||Linnks|
|Plan 2||Service Description|
Skype for Business Online is currently in a major transition. As of October 2018, Plan 1 is no longer available. As a result, there are migration paths for any Plan 1 users to Office 365 plans that offer Plan 2. Longer term, Microsoft Teams will become the primary client for messaging, meetings and calling. New Office 365 tenants with less than 500 seats won’t have Skype for Business capabilities and migrations are planned for existing tenants that will enable Microsoft to, one day, remove Skype for Business Online entirely.
Who knew? If you’re looking after the compliance and advanced data governance for an Office 365 tenant, you probably did. Plan 2 is included with Enterprise E3 and E5 plans. Check out the Plan Comparison for the low-level features. As usual, Plan 2 includes everything offered by Plan 1 with these additional features:
- Unlimited storage (for subscriptions of 5 users or more) up to 25TB
- Advanced Data Loss Prevention
- In-place hold for eDiscovery
Microsoft Flow is included with all Office 365 plans. The offering is reasonably consistent, except for the Enterprise F1 plan effectively providing the Free plan, and Enterprise E1 limiting connectivity to Microsoft online services, so no on-premises data gateway usage.
If you need faster run frequencies, more runs per month or interaction with other SaaS systems like Salesforce, you’ll need to purchase a Plan 1 or Plan 2 subscription.
Like Microsoft Flow, Microsoft PowerApps is included with all Office 365 plans. A key consideration here is that Microsoft PowerApps has Microsoft Flow bundled in. If you need to use the Common
Data Service or create model driven apps, you’ll need to purchase a Plan 1 or Plan 2 subscription. Because Microsoft PowerApps includes Microsoft Flow, you’ll get the added benefits of the equivalent upgrade to Microsoft Flow.
|Office 365 |
If there was ever a good example of how fast-paced the cloud is, it’s this. When I started writing this post, there was a good Plan Comparison page showing the differences between the variants. It’s now gone, and it redirects to the Microsoft Stream product page. I even found a cached version to make sure I wasn’t going mad. On reflection, it probably wasn’t that valuable. Advanced features such as searching automatically generated transcripts, In-video face detection and a timeline view of face detection are only available in Plan 2 and selected Office 365 plans. Check out the Service Description for the low-level detail.
|Azure Information Protection||Variants||Links|
|Office 365 |
Before we get excited about a free offering for protecting content, we should adjust our expectations. It enables anybody using Windows or Mac to open protected content. Think of it like the free viewers for opening Office content like Visio diagrams.
The Office 365 offering is reasonably comprehensive in terms of its integration with platforms like Exchange Online, SharePoint Online and OneDrive for Business. However, the real benefits of Azure Information Protection are delivered through the Premium plans.
|Plan 1||Plan 2|
|Azure Active Directory||Variants||Links|
Office 365 uses Azure Active Directory as an identity provider, so if you already have a tenant, you will be using the Free offering. If you’re looking to enhance areas around self-service user management, Multi-Factor Authentication, Mobile Device Management, sight of other SaaS applications in use across the organisation or conditional user, group and device access then Premium P1 has plenty to offer. Premium P2 adds further levels of protection to identities. Check out the Plan Comparison for the low-level detail.
What’s the right plan for you? To make things easier, Microsoft 365 is a construct that pulls together Office 365, Enterprise Mobility + Security and Windows 10. It’s available in Enterprise F1, E3 and E5 plans, which include the respective plans for each of the services. In addition to this, there is also a Business plan, which includes Office 365 Business Premium, Windows 10 Pro and selected Enterprise Mobility + Security features. Naturally, there are price incentives for buying a Microsoft 365 plan compared to purchasing the individual plans.
The beauty of SaaS based licensing is that you only buy what you need. With a rolling monthly subscription, you can increase or decrease the number of licenses to meet your demand. Also, you only need to license users for the services they need. For example, if only a handful of users need enterprise voice or Power BI capabilities, license them with Enterprise E5. If others just need email, you can look at Enterprise F1 or an Exchange Online plan.
Practically all the Office 365 and Enterprise Mobility + Security services can be bought individually as add-ons to plans you may have assigned already. For example, you may have a bunch of users with Enterprise E1 who need SharePoint Online Plan 2, but don’t need Office Pro Plus, so E3 would be cost prohibitive. In this scenario, purchasing SharePoint Online Plan 2 entitlements for those users would work out to be more cost effective, whilst ensuring they have the tools they need to be productive.
In addition, Microsoft also offer the following add-on plans. Some are purely stand-alone as they’re not included in any of the Enterprise or Business plans.
- Project Online Essentials
- Project Online Premium
- Project Online Professional
- Visio Online Plan 1
- Vision Online Plan 2
- Exchange Online Advanced Threat Protection
- Exchange Online Archiving for Exchange Online
- Exchange Online Protection
- Azure Active Directory Basic
- Azure Advanced Threat Analytics
- Common Area Phones
- Calling Plans
When it comes to buying and managing licenses for your Microsoft Cloud tenancy, you have a few options. Firstly, you may have an Enterprise Agreement with Microsoft already. Sticking with that is probably your best option for being able to negotiate terms under any pre-agreed arrangements. But the cloud is fit for everyone, so if you’re not big enough to have a direct relationship with Microsoft you can either purchase licences through the admin centre, pop in your credit card details and deal with filing the expenses or enlist the help of Intelogy. As Microsoft 365 experts and a Tier 1 Cloud Solution Provider Reseller, we’ll listen to what you need to achieve and help you make the right choice.