Microsoft Office 365 license management with OpenLM

Microsoft Office365 is often the largest software line item in an enterprise budget.

Because it is a SaaS subscription, the problem isn’t “denials,” but silent waste. Paying for E5 licenses for users who only need E1, or paying for “Zombie Accounts” of departed employees.

OpenLM extends its optimization capabilities to the cloud, helping you harvest unused subscriptions and downgrade over-provisioned users.

What is Microsoft Office 365 Licence Manager | Microsoft Office365 license management: An introduction

Microsoft Office 365 License Management is a cloud-native system integrated into the Microsoft 365 Admin Center (and Azure AD/Entra ID) that manages entitlements based on user identity rather than device hardware. Unlike traditional floating license servers, it assigns subscriptions directly to user accounts, requiring the application to connect to the internet periodically (typically every 30 days) to validate the license status. Administrators control these assignments centrally via a web dashboard or PowerShell, allowing for instant provisioning and revocation of access to the Office suite without managing physical license files or keys.

Licensing schemas of Office365 Cloud

Office365 uses Named User Subscriptions (E1, E3, E5, F3).

The “E5” trap: IT often assigns the most expensive tier (E5) to everyone to avoid management complexity. This results in massive overspending on features (like advanced analytics) that 80% of users never touch.
Inactive users: In large organizations, accounts for contractors or interns often remain active (and billable) for months after they leave the company.
Web vs. desktop: Users assigned a desktop-app license (E3) who only use the web versions could often be downgraded to a cheaper tier (E1).

OpenLM’s solution for Office365 license optimization

OpenLM interfaces with the Microsoft Graph API to pull deep usage statistics, comparing “Assigned” licenses against “Active” reality.

The following table:

OpenLM capability	Value for Office365 licenses
Inactive account harvesting	Identify users who haven’t logged into Office365 for 30, 60, or 90 days. Revoke these licenses immediately to stop the billing cycle.
Tier optimization	Analyze app usage (Word, Excel, Teams). Identify users who have premium E5 licenses but only use basic email and Teams, recommending a downgrade to E1 or F3.
App-specific tracking	See exactly which components are used. Are you paying for “Project Online” or “Visio” add-ons that no one is opening?
Double-licensing detection	Identify users who accidentally have multiple licenses assigned (e.g., an E3 and a standalone Exchange Online plan).

OpenLM advantages for Office365 usage monitoring

SaaS management: OpenLM allows you to manage SaaS expenses alongside engineering floating licenses in a single dashboard, simplifying IT budget reviews.

Renewal leverage: Enter your Microsoft Enterprise Agreement (EA) renewal with hard data on exactly how many seats you actually need.