Licensing Optimization Strategies

Licensing costs for enterprise platforms like Microsoft Dynamics 365 and the Power Platform can quickly escalate if not managed strategically. As organizations grow, add users, adopt new apps, or expand environments, licensing complexity increases. Without careful planning, you could end up overspending on licenses or underutilizing capabilities you’ve already paid for.

This guide explores key licensing optimization strategies to help organizations get maximum value from their investment while remaining compliant. We’ll break down practical steps, real-world scenarios, and tools you can use to optimize your Microsoft licensing strategy.

1. Understand Your Licensing Landscape

Audit Current Licenses

The first step toward optimization is understanding what you’re currently paying for. Conduct a license audit across your Microsoft 365, Dynamics 365, and Power Platform services.

Use Microsoft 365 Admin Center or Power Platform Admin Center to view active licenses.
Export a report of assigned licenses by user and role.
Review your license purchases via the Microsoft Volume Licensing Service Center (VLSC) or CSP partner.

Map Licenses to Roles

Map users to the specific licenses they hold and match them against their actual job roles and tasks. You’ll often find discrepancies, such as:

Users with full Dynamics 365 Sales licenses who only need Team Member or Power Apps per app licenses.
Power BI Pro users who rarely log in or view dashboards.

Creating a license-to-role mapping sheet will help identify excess or misaligned licensing.

2. Rightsizing Licenses

Not every user needs the most expensive license. Microsoft offers a variety of licensing tiers to suit different business needs.

Team Member License

If a user only needs to view records, run reports, and update basic information, the Team Member license is often sufficient. These licenses are a fraction of the cost of full Dynamics 365 licenses.

Use Cases:

Light CRM users (executives, assistants)
Users who only need to read data or approve workflows

Power Apps Licensing

If users primarily interact with custom apps built on the Dataverse, a Power Apps license may be more cost-effective than a full Dynamics license.

Per App License: Good for users who use 1–2 apps.
Per User License: Better for those needing multiple apps or broader Dataverse access.

Tip: Consider building lightweight Power Apps versions of your core business processes for departments that don’t require full Dynamics 365 capabilities.

Dynamics 365 App Modules

Microsoft licenses Dynamics 365 in individual modules—Sales, Customer Service, Field Service, etc. Avoid over-provisioning multiple modules to users who only need one. Use attach licenses where applicable to reduce cost for users needing more than one module.

3. Monitor Usage and License Consumption

You can’t optimize what you don’t measure. Regularly monitoring actual usage helps ensure your licenses are aligned with real needs.

Tools to Use:

Microsoft 365 Admin Center: View assigned licenses and user activity.
Power Platform Admin Center: See environment-level usage, app interactions, and storage consumption.
Azure Active Directory Sign-In Logs: View login frequency and application usage.
Power BI Reports: Create dashboards using exported data to visualize underused licenses.

Indicators of Over-Licensing:

Users with Dynamics 365 licenses who haven’t logged in for 30+ days
Power BI Pro users with no report usage
Power Automate per user licenses for users not running any flows

4. Use Shared Resources Where Possible

Power BI Pro Licensing Strategy

Rather than assigning every user a Pro license, consider:

Publishing content to Power BI Premium capacity, allowing free users to view reports.
Sharing dashboards via Teams or SharePoint for broader access without increasing license count.

Power Automate Flow Ownership

Instead of assigning multiple per-user licenses for Power Automate, centralize flow ownership:

Use service accounts to host shared flows.
Assign Power Automate per flow licenses where business-critical automations are used by many users.

5. Consolidate Environments and Apps

Each Power Platform environment consumes storage and administration resources, which can impact your license costs over time.

Consolidation Benefits:

Reduce overhead and complexity
Lower Dataverse storage consumption (which has a cost)
Easier governance and license tracking

Use tools like the Center of Excellence (CoE) Starter Kit to identify unused environments, orphaned apps, or inactive flows that can be cleaned up or consolidated.

6. Leverage Microsoft Licensing Programs

Microsoft offers multiple programs and promotions that can help reduce licensing costs:

Microsoft Volume Licensing

Enterprise Agreements (EA): Offers volume discounts for large organizations.
CSP Program: Flexible monthly pricing through partners, useful for smaller businesses or scaling quickly.
NCE (New Commerce Experience): Offers committed savings for annual or multiyear subscriptions.

Promotions and Grants

Microsoft frequently offers Power Apps adoption incentives and nonprofit discounts.
Educational institutions can receive academic pricing on many licenses.

Talk to your Microsoft account manager or licensing partner regularly to stay up to date on current promotions and pricing changes.

7. Automate License Management

Manual license assignment is error-prone. Automating license management helps enforce policies, prevent waste, and streamline provisioning.

Tools:

Azure AD Group-Based Licensing: Assign licenses based on group membership (e.g., Sales Team, Field Service Users).
PowerShell Scripts: Automate license cleanups and generate reports.
Lifecycle Workflows (Entra ID Governance): Automate onboarding/offboarding license changes based on role or status changes.

Tip: Include license reviews as part of your user offboarding process to avoid paying for inactive accounts.

8. Implement a Governance Framework

Without governance, licensing strategies quickly spiral out of control. Your governance plan should define:

Who can request licenses and how
What roles get what licenses
How frequently license audits are done
Who is responsible for license compliance

Use Microsoft’s Power Platform Governance and CoE kits to build processes around user provisioning, app creation, and license assignment.

9. Evaluate Add-Ons and Overlapping Services

Be cautious of overlapping services across different Microsoft workloads. For example:

If you’re using Power Apps Portals, check if you’re also paying for separate web hosting or third-party forms tools that can be consolidated.
Using Field Service Mobile App? Ensure users aren’t also being licensed for similar third-party tools unnecessarily.
If you’ve enabled Power BI Premium, ensure that it’s replacing other analytics platforms rather than running in parallel.

Eliminating redundancy is a key step toward licensing optimization.

10. Communicate and Train

Often, users or IT teams purchase additional licenses out of confusion or urgency. Ensuring internal stakeholders understand the current licensing model and options helps reduce unnecessary purchases.

Create internal guides or FAQs about licensing tiers and use cases.
Train admin staff on how to assign the right license for a role.
Provide self-service dashboards showing available and used licenses.

Real-World Scenario

Company A had 300 Dynamics 365 licenses, mostly Sales Enterprise. A license audit revealed:

80 users hadn’t logged in for 60 days.
60 users were only using basic contact lookup and task entry.
40 users were accessing only custom Power Apps, not Dynamics 365.

After rightsizing:

100 users moved to Team Member licenses.
30 moved to Power Apps per app.
20 licenses were removed.

Savings: Over $60,000 annually.