Dive Brief:

• At the average business, 44% of Microsoft Office 365 licenses are "underutilized or oversized," according to a report from SaaS management company CoreView. The company reviewed data from hundreds of global companies. 
• The mismatch is caused by managers purchasing Office 365 licenses in batches without aligning the requirements of their employee profiles with the corresponding license package, according to CoreView.
• Office 365 Enterprise licenses follow a tier structure, ranging from E1 — with basic business services — to the E5 bundle, which includes a full suite of products and services. Among E5 licenses, 38% could be downsized to E1 licenses based on employee app usage, according to the analysis. Businesses could lower Office 365 costs by 14% by identifying inactive licenses, and eliminating or reassigning them​.  

Dive Insight:

In fraught financial times, companies will look for ways to bring their software and licensing spend under control.

Early polls of financial priorities in a pandemic-swept world indicate IT is prime territory for cutbacks, as leaders shift spending to areas that can enable business continuity. The new normal made 19% of organizations shift resources away from IT projects and into infrastructure that powers remote work.

Enterprise bundles that power work, especially those from established providers such as Microsoft, are unlikely to be first on the chopping block. But streamlining spending makes sense, pandemic or not. Organizational overspend is caused by a "lack of alignment between the type of Office 365 license that is purchased and the needs of employee," according to CoreView.

Microsoft is king of the enterprise software as a service market, a space worth $101 billion in 2019, according to Synergy Research Group. The space has more than doubled in size over the last three years. Industry watchers say vendors such as Microsoft, will act as "tech bellwethers" to understand how much the pandemic will impact the IT market. In a recession, the instinct of cutting back on modernization could have the adverse effect of giving up a competitive edge.