Somewhere in your business software subscription there is a person who does not work there anymore. Possibly two. There is also, very likely, a second tool doing something you already pay a first tool to do. Neither is a sign that anyone did anything wrong. They are the natural result of a company that hires, grows, changes vendors, and never stops long enough to read the bill line by line.
A license audit is one of the few IT projects with a genuinely honest business case, because it usually pays for itself the first time you run it and keeps paying every month after. It is a spreadsheet, a couple of admin screens, and an afternoon. Here is how we run one, and how to make it a schedule rather than the one time somebody noticed the invoice.
Why Your License Count Only Ever Drifts Up
Adding a license is a two minute task done under time pressure by someone who needs a new hire working today. Removing one is a five minute task done under no pressure by someone unsure whether it is safe. Guess which one reliably happens.
Add normal business events to that asymmetry and the drift compounds. A department pilots a new tool and never cancels the old one. A vendor repackages its plans and everyone gets bumped to a bigger bundle at renewal. Someone buys a premium tier for one feature and assigns it to the whole team because that was easier than figuring out who needed it. We wrote about the broader pattern in our look at what neglected subscriptions actually cost, and licenses are the sharpest example of it.
Pull the List: Two Views of the Same Problem
Every business platform worth using gives you two ways to look at licensing, and you need both. Product names and admin layouts change constantly, so we describe these by what they do rather than by exact menu paths.
- The per person view. In the Microsoft admin center, this is the active users area, where you open a user and see their assigned licenses and apps. It answers what is this person costing us.
- The per product view. In the same admin center, this is the licenses page in the billing area, where you pick a product and see everyone assigned to it. It answers who is using this thing we bought, which is the more uncomfortable question.
- Watch for group based assignment. Microsoft’s licensing documentation, which we reviewed in 2026, notes that when licenses are assigned through a group, you will see the group name in the list rather than individual users. If you only look at direct assignments you will undercount.
Match It Against a Roster of Actual Humans
Get the current employee list from payroll, not the list IT thinks is current. The one that ties to money going out the door. Then put the two lists side by side and look for three things.
- Licensed accounts with no matching person. The ghosts. Departed employees, a contractor from a project two years ago, a test account somebody created and licensed.
- Shared and service accounts on full licenses. The scanner account, the reception calendar, the address invoices go to. Some need a license and many do not.
- Two tools doing one job. Two video meeting platforms. A file sync tool running alongside the storage you already pay for in your main suite. Two e signature vendors because two departments each picked one.
The Security Angle Nobody Puts in the Budget
The money is why people agree to do this. The security exposure is why it matters. An active account belonging to someone who left is a working set of credentials with nobody watching it. The former employee may have no bad intent at all. That account is still a door, and doors get tried.
Order matters, and Microsoft’s guidance on removing a former employee, which we reviewed in 2026, lays out a sequence worth following. Preventing sign in comes first. Then preserving what you need: saving mailbox contents, removing company data from mobile devices, and granting a colleague access to the departing person’s files and mail. Then handling the address, either by forwarding it or converting the mailbox to a shared one. Only after that do you remove the license and delete the account.
Two timing details from that same 2026 documentation are worth knowing. When a license is removed, mail, contacts, and calendar are retained for 30 days and then permanently deleted. If you remove a license without deleting the account, the content in that person’s file storage stays accessible to you. Retention behavior changes and varies by plan, so confirm the current rules for your subscription.
Unapproved tools sitting outside your admin console are the blind spot in all of this, since you cannot audit seats you do not know exist. That is a separate problem worth reading about in our piece on unapproved software inside your organization.
Right Sizing: Downgrades, Duplicates, and Commitment Terms
Removing ghosts is the easy win. The bigger recurring savings comes from people on a bigger plan than their job requires. A warehouse supervisor who uses email and a shift schedule does not need the same tier as your finance lead. A part time bookkeeper may not need the desktop apps at all.
- Unassign before you try to reduce. Microsoft’s commerce documentation, reviewed in 2026, is explicit that you cannot reduce the number of licenses on a subscription while all of them are assigned. Free the seats first, then reduce the count. People miss this constantly and conclude the savings are not available.
- Understand your billing term before you commit. That same documentation from 2026 describes different behavior by billing account type, including a short window after purchase or renewal in which license counts can be reduced, after which the change shows up on the first invoice after the renewal date. Approximate discounts on annual commitments are real, but so is being stuck at a headcount you no longer have.
- Our general rule on terms. Commit annually for your stable core headcount, and keep a monthly buffer for the seats that fluctuate. You give up a small approximate discount on the buffer and you buy back the ability to shrink without waiting a year.
Make It a Ritual, Not a Project
The one time cleanup feels great and decays immediately. Within a year you are back where you started unless the audit happens on its own schedule. Three rhythms cover it.
- At every departure. Offboarding gets a written checklist ending with license removal, and someone signs off that it was done. This is where ghosts are prevented rather than discovered.
- Once a quarter, fifteen minutes. Compare purchased seats to assigned seats for your three largest platforms. That is the exercise. If the gap grew, find out why.
- Once a year, before your largest renewal. The full pass: every platform, every seat, matched to the payroll roster, with tier assignments reviewed. Do it 60 days ahead so you have negotiating room.
The Bottom Line
A license audit is the rare piece of IT work where the savings show up on the next invoice and the security benefit is real the same day. You are looking for three things: accounts belonging to people who are gone, people paying for more than they use, and two products doing one job.
If you would rather not spend an afternoon in admin consoles reconciling seat lists, that is fair, and it is a large part of what we do. We can pull the full picture across your platforms, identify accounts that should have been closed, right size the people who are over licensed, and hand you a repeatable checklist so it does not drift again. Contact us today.
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