Licensing is one of the most complicated aspects of using Microsoft software in a business setting. Each MS product is governed by its own set of licenses. In addition, businesses are known to use multiple MS products simultaneously. That makes managing all the different Microsoft license types challenging. But it still needs to be done.

We recommend working with a third-party provider who knows MS software inside and out. For example, we know Microsoft 365. Ensuring our clients have the right licenses based on how they use the software is a big part of what we do as a Microsoft 365 license partner. Do you use Microsoft 365? And if so, are you confident that you are compliant with all your licenses?

Three Main Categories of Commercial Licenses

Assuming your business utilizes the cloud version of MS 365, the licenses you need to be concerned about are divided into three categories: enterprise, business, and frontline. Organizations can purchase additional licenses to enhance functionality as needed. These are known as add-on licenses.

1. Office 365 for Enterprises

Microsoft's Office 365 E1 license is for enterprises with more than 300 users that are looking to utilize apps like Outlook and Excel. It is priced on a per-user basis. Another license, the Office 365 E3 license, is also for typical 365 applications. It allows installing Office 365 on up to five devices. The E5 license also gives access to up to five devices. It offers access to the entire Office 365 suite along with a bundle of analytics, security, and compliance services. Microsoft also renamed Office 365 E3 and E5 to Microsoft 365 E3 and E5. However, Office is not going away entirely so existing Office 365 subscription plans will be unaffected.

2. MS 365 for Business

Microsoft license types for businesses (not enterprises) are further subdivided into three categories: Business Basic, Standard, and Premium. These licenses are perfectly suited to small and medium-sized businesses that might offer different levels of desktop apps and cloud services. One thing to note about these license types is that they allow a maximum of 300 users. Customers can also purchase Microsoft 365 Apps for Business (up to 300 users) or Microsoft 365 Apps for Enterprise (over 300 users) for desktop apps only.

3. MS 365 for Frontline Users

Microsoft's F1 and F3 licenses for MS 365 are designed to allow organizations to give their frontline workers a suite of productivity, collaboration, and communication tools that are both secure and intuitive. Some of the apps available within these two licenses include  Microsoft Stream, and Microsoft Bookings. Microsoft had rolled out a new lineup of commercial Microsoft 365 and Office 365 suites on April 1, 2024, that do not include Teams in regions outside the EEA and Switzerland.

Add-On Licenses for MS 365

It goes without saying that standard licenses don't always meet an organization's needs in terms of function. This is certainly true with Microsoft 365. In order to help organizations enhance function, MS makes certain add-on licenses available. Some add-on licenses are purchased separately, and others are standalone licenses, but both provide additional functionality to the Office 365 suite. Here are a few examples:

• Office 365 Extra File Storage
• Teams Phone Standard
• Defender for Office 365 (Plan 2)

The add-on licenses an organization would consider are commensurate with the primary licenses they already possess. For example, some add-ons only apply to the enterprise version of MS 365.

Functions for Each License Type

Microsoft license types correlate directly to the functionality users have access to. When a license is assigned, the services and functions related to that license are automatically activated. Activating an Exchange license automatically creates a mailbox. Activating a SharePoint license gives immediate access to the organization's team site.

As for administrators, different licenses account for different roles and capabilities. It is important that administrators have the right kind of license in order to have access to the features and functions they need.

Understanding the many and varied Microsoft license types is no easy task. Yet it is critical for businesses of all sizes and types to fully understand Microsoft licensing and compliance. Get licensing wrong and it could cost your organization plenty. Why take that chance? Why not work with a partner who knows MS licenses inside out? Getting your licensing wrong could prove costly for your organization. Work with Opkalla as your Microsoft 365 partner and get the reassurance that your Microsoft license compliance is always up to par. There is a short assessment you can take to help choose the best plan for your business.