Microsoft 365 licensing quick start

When it comes to licensing Microsoft 365 (M365) and Office 365 (O365), understanding the various options and finding the best fit for your organisation can feel overwhelming. With a range of Business and Enterprise SKUs (Stock Keeping Units), along with a myriad of add-ons, businesses must weigh their needs against the available features and costs. In this guide, we’ll break down the main M365 and O365 Business and Enterprise SKUs, discuss key reasons to choose one over another, and explain why it might sometimes be more economical to opt for a lower SKU paired with add-ons.

Understanding the basics: Business vs. Enterprise SKUs

Microsoft 365 and Office 365 plans are split primarily into Business and Enterprise categories, each catering to different types of organisations.

Business SKUs

The Business plans are designed for small to medium-sized businesses with up to 300 users. They include:

Microsoft 365 Business Basic
- Cloud services like Teams, SharePoint, and OneDrive
- Web and mobile versions of Office apps
- No desktop apps included
Microsoft 365 Business Standard
- All features of Business Basic
- Desktop versions of Office apps (Word, Excel, PowerPoint, etc.)
- Business-grade email with Outlook
Microsoft 365 Business Premium
- All features of Business Standard
- Advanced security and device management tools (e.g., Microsoft Defender)
- Conditional Access and Intune for device management
Microsoft 365 Apps for Business
- Only the Office desktop and mobile apps, without cloud services

Enterprise SKUs

Enterprise plans are tailored for larger organisations, offering advanced features and no user cap:

Office 365 E1
- Cloud services like Teams, SharePoint, and OneDrive
- Business email and calendaring with Exchange
- No desktop Office apps included
Office 365 E3
- All features of E1
- Desktop versions of Office apps
- Enhanced security and compliance features (eDiscovery, data loss prevention)
Office 365 E5
- All features of E3
- Advanced security, analytics, and voice capabilities (e.g., Microsoft Defender for Office 365, Power BI, Phone System)
Microsoft 365 E3
- Office 365 E3 plus Windows 11 Enterprise, and Enterprise Mobility + Security (EMS) suite
Microsoft 365 E5
- Office 365 E5 plus additional security and compliance tools, identity protection, and Azure Active Directory Premium P2

Why choose one SKU over another?

When selecting a Microsoft SKU, it’s essential to match the plan’s features with your organisation’s needs. Here are key reasons to choose one SKU over another:

User size and growth potential
- Business SKUs are capped at 300 users, making them ideal for smaller organisations. If your business plans to grow beyond 300 users, the Enterprise SKUs would be more appropriate.
Security and compliance needs
- Microsoft 365 Business Premium is perfect for small businesses needing advanced security but without the complexity or cost of Enterprise SKUs.
- Organisations in highly regulated industries or with stringent security requirements should consider Microsoft 365 E5 for its comprehensive security and compliance capabilities.
Desktop apps vs. web apps
- If your team needs full desktop versions of Office apps, Business Standard or Office 365 E3 are solid choices.
- If your workforce primarily uses web-based tools, Business Basic or Office 365 E1 can fulfil those needs at a lower cost.
Device management
- Microsoft 365 Business Premium includes Intune for mobile device and app management, making it suitable for businesses managing a fleet of devices.
- Larger enterprises with complex device management needs might benefit from Microsoft 365 E3 or E5, which include advanced features like conditional access and Windows 11 Enterprise.
Communication and collaboration
- For businesses that rely heavily on internal and external communication, Office 365 E5 offers the most comprehensive solution with Microsoft Teams Phone System, Audio Conferencing, and advanced analytics via Power BI.

When it’s more economical to choose a lower SKU with add-ons

In some cases, opting for a lower SKU with specific add-ons can be more economical and tailored to your needs. Here’s why:

Pay only for what you need
- If you don’t need all the features of a higher-tier SKU, consider a lower-tier SKU and add only the specific services your organisation requires. For example, you could combine Microsoft 365 Business Standard with add-ons like Microsoft Defender for Office 365 instead of paying for Business Premium.
Flexibility
- Add-ons provide flexibility. If your needs change, you can easily add or remove services without switching your base plan. This approach can prevent you from overpaying for features you don’t use.
Scalability
- As your business grows, you might need more advanced features. Starting with a lower SKU and gradually adding on services as needed allows for a scalable solution that can grow with your organisation.
Tailored security
- Security needs vary widely between organisations. By selecting a lower SKU and adding specific security features (e.g., Azure Information Protection), you can tailor your protection without overcommitting to a higher-tier SKU like Microsoft 365 E5.

Key takeaways

Choosing the right Microsoft 365 or Office 365 SKU requires a deep understanding of your organisation’s needs, current size, growth potential, and budget. While Business SKUs are excellent for smaller organisations with straightforward needs, Enterprise SKUs cater to larger organisations with more complex requirements. However, the flexibility of add-ons allows businesses of all sizes to customise their Microsoft environment, ensuring that they pay only for what they use. By carefully considering these factors, you can find the most cost-effective and efficient licensing solution for your organisation.

Final thoughts

In the world of Microsoft licensing, there is no one-size-fits-all answer. By evaluating your organisation’s specific needs and leveraging the flexibility of add-ons, you can build a licensing strategy that not only meets your current demands but also scales with your business. Whether you’re a small business eyeing the simplicity of the Business SKUs or a large enterprise needing the full suite of Enterprise capabilities, understanding your options is key to making the right choice.