In today’s digital world, remote work and digital transformation are rapidly transforming the way businesses operate. As a result, more companies are turning to Microsoft 365 to enhance their collaboration and productivity. However, while Microsoft 365 offers a comprehensive suite of tools to meet these demands, it can also lead to significant costs for businesses.
For managed service providers (MSPs) and consulting companies, helping your clients optimize and reduce Microsoft 365 costs is crucial in maintaining their budgets and providing valuable services. It is important to understand the key drivers of Microsoft 365 costs so that you can better advise your clients on how to optimize their usage of Microsoft’s services and work with your clients to align these services with their business needs and avoid unnecessary costs during times of change.
By taking a strategic approach to managing Microsoft 365 services, MSPs and consulting companies can help their clients save money while still enjoying the benefits of this powerful suite of tools.
Understanding the Key Drivers of Microsoft 365 Costs
To help your clients optimize Microsoft 365 costs, you must first understand the key drivers that impact those costs. Licensing models, data storage costs, and third-party app integrations are three of the main factors contributing to Microsoft 365 costs. Understanding the impact of each factor can help you advise your clients on how to optimize their usage of Microsoft 365 services.
Licensing: Finding The Right Fit for Your Clients
One of the biggest cost drivers in Microsoft 365 is licensing. Microsoft 365 offers several licensing models with varying features and pricing. Depending on the size and needs of your client’s business, one licensing model may be more cost-effective than others. Microsoft offers both user-based and device-based licensing, as well as different tiers of service plans. For example, a small business with only a handful of employees may find that a user-based licensing model makes more sense. Conversely, a larger business with hundreds of employees may benefit from a device-based licensing model.
MSPs and consulting companies can help their clients navigate the various licensing options by assessing their business needs and offering recommendations. Additionally, they can help clients track license usage to avoid unnecessary costs.
Data Storage: Reducing Overhead
Another significant cost driver in Microsoft 365 is data storage. As businesses store more and more data in the cloud, storage costs can quickly escalate. A company with a lot of data may need to upgrade to a more expensive licensing model to meet its data storage needs. By monitoring data usage and storage, MSPs and consulting companies can help their clients make informed decisions about data storage and avoid unnecessary costs. Microsoft offers a range of storage options with different pricing, but companies can take several steps to reduce these costs.
For example, companies can delete unnecessary data, implement retention policies to automatically delete older data, or move less frequently accessed data to less expensive storage options. MSPs and consulting companies can help their clients understand their data storage needs and implement these strategies to reduce overhead.
Third-Party App Integrations: Choose Wisely
While third-party app integrations can enhance the functionality of Microsoft 365, they can also contribute to unnecessary costs. You can help your clients understand the benefits and drawbacks of different app integrations and choose the right apps for their needs.
For example, it’s important to choose apps that integrate well with Microsoft 365 and offer the features that align with business needs. Additionally, companies should consider the cost of each app, as well as ongoing maintenance and support costs.
Managing Microsoft 365 Licenses Effectively
Once you have helped your clients understand the key drivers of Microsoft 365 costs, the next step is to help them manage licenses more effectively. There are several strategies MSPs and consulting companies can use to help clients optimize their licensing usage and avoid unnecessary costs.
Tracking licenses and usage is essential for managing Microsoft 365 costs. Here are some strategies for managing licenses more effectively:
- Use a license management tool to monitor and track usage
- Remove unused licenses or downgrade to lower-cost options
- Monitor employee activity to identify users who may be misusing licenses
- Implement policies that limit license usage, such as only allowing employees with specific job roles to access certain licenses
Taking a Governance Approach
As more businesses embrace remote work and digital transformation, the demand for Microsoft 365 services has skyrocketed. While Microsoft 365 offers a comprehensive suite of tools to enhance collaboration and productivity, it can also lead to significant costs for businesses. For partners, this presents a tremendous opportunity to work with your clients to manage these services.
In the eBook “The Ultimate Guide to Optimizing Your Microsoft 365 Costs”, Rencore CEO and Microsoft MVP, Matthias Einig, explores practical examples of governance approaches that MSPs and consultancies can use to optimize Microsoft 365 costs for their clients, emphasizing the importance of setting up a governance strategy to manage costs effectively and ensure compliance with security and compliance requirements.
Matt highlights three governance approaches in action, including implementing a data retention policy, establishing a governance committee, and using automation tools to monitor usage and costs.
- Implementing a data retention policy involves defining how long data should be retained and then removing unnecessary data. This approach helps businesses reduce data storage costs and manage compliance requirements effectively.
- Establishing a governance committee involves assigning responsibility to a group of individuals to manage Microsoft 365 policies and procedures. This approach helps businesses stay compliant and identify opportunities for cost optimization.
- Using automation tools to monitor usage and costs is an effective approach for businesses to identify trends and usage patterns, which can inform decisions on cost optimization. Automation tools can help businesses manage licenses, track data usage, and identify underutilized resources.
Focusing on these three governance strategies is essential in optimizing Microsoft 365 costs. By implementing a data retention policy, establishing a governance committee, and using automation tools to monitor usage and costs, MSPs and consulting companies can help their clients reduce costs, improve compliance, and optimize their use of Microsoft 365 services.
For more guidance on creating a governance strategy for your clients, be sure to download a copy of “The Ultimate Guide to Optimizing Your Microsoft 365 Costs” here.