5 signs your Microsoft licensing is quietly bleeding money

Five signs your Microsoft licensing is quietly bleeding money. Today's topic is about Microsoft 365 license optimization, where the waste hides, and how to find it before your next renewal. Most organizations don't decide to overspend on Microsoft licensing. It just happens. One lever whose account never gets deactivated, one growth spurt purchase that outlives the growth spurt, one renewal that arrives before anyone's looked closely at what's being used. No single decision causes it, and no one owns catching it. And by the time it shows up as a number on a renewal invoice, it's usually been building for a year or more. It also costs more than it used to. Microsoft's July 2026 pricing changes took E3 up 8.3% and E5 up 5.3%, with some frontline plans rising as much as 33%. So every license you aren't using is a bigger line on the invoice than it was at your last renewal. Here are the five signs worth looking out for and what to do once you find them. 1. Ghost accounts. Licenses stay active long after the person they belong to has left. It's one of the most common and most avoidable sources of licensing waste, and it's rarely caught by finance because finance sees a licensed line item and not a departed employee. Independent audits of enterprise Microsoft three six five estates put average waste at around 22% of total spend, and dormant accounts, still enabled in the directory but with zero interactive sign ins for 30 or more consecutive days, are one of the three largest contributors, alongside unassigned inventory and over licensing. Some of that inactivity is legitimate leave of absence, seasonal roles. A meaningful share of it is people who left the organisation months ago. So you need to check for licenses still assigned to accounts with no sign in activity in the last 60-90 days, cross referenced against your HR lever list, and not just active directory status. 2. Duplicate coverage. It's easy to end up paying twice for the same capability. A user with an E5 license that already includes Teams phone entitlements, but who's also carrying a separate calling plan add on. A team that was moved to a new SKU during a platform migration but never had their old add ons removed. Individually, these look like rounding errors, but across a few thousand users, they add up to a real number. So you'll need to check for users holding license combinations where one SKU's included features overlap with a separately purchased add on. It's a pattern that's easy to miss manually, but straightforward to catch with the right reporting. 3. Unassigned seats sitting idle. Seats get bought in a hurry ahead of a hiring push, a merger, or a big product launch, and the usage never quite catches up to the purchase. The hiring slows down, the merger takes longer than planned, and the seats just sit there, fully paid for and completely unused. Of the five, this is often the largest single line because unlike ghost accounts or duplicate coverage, unassigned seats don't require any unusual behavior to happen. They're just capacity nobody got around to using. So you'll need to check for the gap between licenses purchased and licenses actively assigned, tracked over time rather than as a one off snapshot. But beware, a single point in time count won't show you whether the gap is shrinking or growing. 4. No one owns it at the department level. Licensing decisions are usually made centrally. IT or procurement negotiates the enterprise agreement, sets the standard SKU, and moves on. But usage happens at the team level, where a department head has no visibility into what their team is costing and no incentive to flag it if they did. The result is a structural gap. The people who could spot waste, department leads who see how their team works, aren't the people who see the bill, and the people who see the bill, central IT or finance, aren't close enough to the day to day to know what's really needed. So you need to check for whether anyone outside of IT or procurement can currently answer, what does my team cost in licensing, and is that the right number? If the honest answer is no, this is worth fixing before any of the other four signs can be reliably caught on an ongoing basis. 5. You find out at renewal and not before. This is the sign that ties the other four together. If the first time your organization gets a real, current picture of license usage is the renewal conversation, you're not managing licensing, you're reacting to it once a year, and on Microsoft's timeline, not yours. By renewal time, ghost accounts have had twelve months to accumulate, unassigned seats have had 12 months to sit idle, and any negotiating leverage that came from knowing your actual usage has already been spent trying to catch up in the weeks before the deadline. And with 2026 list prices above the ones you last renewed on, that catch up window is a more expensive place to be than it was a year ago. Ask yourself how you'd answer this question right now. If our renewal were tomorrow, do we know exactly what we'd cut? If that takes more than an afternoon to answer, the underlying problem isn't the renewal. It's the twelve months before it. So what to do about it? Well, catching these five signs doesn't require expensive or complex tooling. It needs an ongoing process. Here are the three steps to take in order. 1. Audit. Get an accurate current picture of what's actually assigned versus what's actually used. Not what the config says should be happening, but what's genuinely happening. 2. Assign ownership. Someone, ideally with visibility below the enterprise agreement level, needs to be accountable for the number, not just informed of it after the fact. 3. Automate the ongoing check. A one time audit fixes this year's waste. However, it doesn't stop next year's from accumulating the same way. The organizations that actually keep this under control treat it as continuous monitoring, not an annual cleanup exercise. Licensing practices that run these reviews regularly report double digit reductions as the norm, on the order of 15-20% of annual Microsoft 365 spend on average. This is indicative only and not financial advice. Actual savings depend on your estate and tier mix. For most enterprise estates, that's not a rounding error. It's a number worth having an actual answer for well before the next renewal lands on your desk. So to summarize, here's the 5 point check. If you want a quick read on your own estate, these are the five questions to put to whoever holds the tenant. Question 1. Are there licenses still assigned to accounts with no sign in activity in the last 60-90 days, checked against the HR lever list rather than active directory status? 2. Is anyone holding a SKU whose included features overlap with a separately purchased add on? 3. What is the gap between licenses purchased and licenses actively assigned, and is that gap shrinking or growing over time? 4. Can anyone outside IT or procurement answer what their team costs in licensing and whether that is the right number. 5. If the renewal were tomorrow, do we know exactly what we would cut? If any of these five signs sound familiar, the quickest way to find out where you stand is a short discovery session with VOSS.