One of the challenges of adopting Office 365 is getting your head around the licensing. Let’s look at what you need to know about Office 365 licensing to get started today!

The licensing terms themselves are straightforward. You subscribe to a license for a user for the product or product set (plan) that they need to use. That subscription is a small amount paid monthly or a larger amount paid annually. The license is assigned to the user in the admin portal, where the user details are entered (name, email address etc) or are synced to from your on-premises Active Directory.

Some plans that include Office 365 ProPlus let you use that same user login on multiple devices (5 PCs or Macs + 5 phones or tablets).

Office 365 Licensing when interpreted differently …

Unfortunately, some business think that one user license now covers them for 5 different computers, so they only really need one user license per 5 staff members. This is not how it works.

It’s good to see a Microsoft licensing structure that recognises that we now may have a desktop computer at work, a laptop for when we travel, a tablet for the daily commute and a smartphone.

Any abuse of that intent just to save money is unethical and contrary to your licensing terms and conditions.

A user is a person, period.

Office 365 does not offer per device CALs

Office 365 licenses are different to server CAL device licenses, where one device CAL covers anyone and everyone when they use that computer. Per device CALs are common in organisations with a lower number of devices than people (e.g. veterinary hospitals).

The next challenge is matching up who needs access to do what.

Mix and match

A real scenario could be that your business operates 24×7. You have medical specialists, doctors and nurses that have zero or few interactions with Microsoft Office. At the other end of the scale, your administrative staff need to write and edit procedural instructions in Office. Maybe some people just need email. Fortunately, Microsoft lets you add different product and plan licenses to the same Office 365 tenant (with a few restrictions) so you don’t have to pay for everyone to have the most comprehensive set of products (and therefore the most expensive license).

Business Needs Analysis

The best way to structure your Office 365 licensing is to perform a business needs analysis. What roles exist in your organization? How many staff perform those roles? Do they write or edit document or spreadsheets? Do they read files from a server file share or from a SharePoint site (and are you moving that to SharePoint online)? If they only ever need read access, can you PDF your current policies and procedures instead? Do they use a generic shared email address? That could be a shared mailbox, which doesn’t need a license, but they will still need a user license.


If the Microsoft license auditors come knocking at your door, they are going to expect that every person who has used Office, is paying for a license. Without an Enterprise Agreement, small and medium business can put licensing in the too hard basket, especially if they are used to sharing generic on-premises accounts. It’s worth spending the time to analyze your usage and to get your licensing counts right.

Follow that up with an HR process that removes and reassigns licenses when people leave your organization and you won’t be scared of a licensing audit.