The cloud keeps evolving at a breakneck pace. New features, new bundles, new AI add‑ons, and with every wave of innovation, Microsoft pushes harder on its premium enterprise licenses. But while cloud and SaaS make scaling easier than ever, they also make it easier to overspend. Bigger doesn’t automatically mean better, and nowhere is that more evident than with Microsoft 365 E5.
Many organizations are paying top‑tier prices for capabilities they barely touch. And with Microsoft’s incentives shifting, the pressure to adopt E5 — whether you need it or not — is only increasing. That’s why now is the moment for IT leaders to slow down, look closely, and rethink how they approach Microsoft licensing.
The True Cost of Microsoft 365 E5
Microsoft 365 E5 is positioned as the “everything included” SKU. It bundles productivity apps, Teams, cloud storage, advanced security, compliance tools, identity management, endpoint protection, analytics through Power BI Pro, and more. It’s a powerful suite — but it’s also the most expensive Microsoft 365 plan in most markets.
The challenge is simple: most organizations don’t use even half of what E5 offers. Many already have established security stacks, compliance platforms, or analytics tools from other vendors. Others simply don’t need the advanced features at their current stage of maturity. What starts as a well‑intentioned move toward “enterprise readiness” often becomes a recurring cost burden with little measurable return.
Why E5 Is Being Pushed So Aggressively
Microsoft’s licensing strategy has shifted significantly. As of 2025, the company extended E5 promotions to the CSP channel, making it easier — and more profitable — for partners to upsell the SKU. Add in the rising push for Microsoft Copilot, Viva, Power Apps, and other add‑ons, and the sales narrative becomes even louder.
This creates a dynamic where partners are incentivized to recommend the highest‑margin licenses, even when the customer’s environment doesn’t justify them. For organizations on Enterprise Agreements or working with CSPs, this makes partner selection more critical than ever. Not every partner is motivated to evaluate whether E5 truly aligns with your needs. Some are motivated to sell it simply because the incentives are too good to ignore.
SaaS Sprawl and the Hidden Cost of Over‑Licensing
Across mid‑size and enterprise organizations, SaaS sprawl continues to accelerate. Every new subscription adds another recurring cost. Every mismatched license compounds the problem. And without strong governance, these costs quietly balloon year after year.
It’s not uncommon for companies to discover they’re paying for redundant tools, unused features, or license tiers that far exceed their actual requirements. In many cases, the issue isn’t the technology; it’s the lack of visibility. Without active oversight, organizations effectively lock themselves into expensive plans that deliver little value.
What a Good Partner Should Actually Do
If you’re evaluating your Microsoft 365 licensing strategy or preparing for renewal, the right partner can make the difference between optimized spend and unnecessary waste. A strong CSP partner begins with a deep assessment of your environment — not an upsell. They look at what you’re using today, where redundancies exist, and how your business actually operates. Licensing should follow your needs, not dictate them.
Flexibility is one of the greatest strengths of the CSP model. You can scale up or down, mix and match SKUs, and adapt as your environment evolves. But that flexibility only matters if your partner uses it to your advantage. You should expect ongoing governance, clear reporting, and proactive recommendations that help you avoid overspending.
As Microsoft shifts more support responsibilities to partners, you should also expect real support, not just license delivery. That means guidance, change management, and strategic planning that helps you grow without over‑licensing. And as you consider future investments in Copilot, Viva, or Power Apps, your partner should help you expand thoughtfully, not push you toward the highest‑margin SKU.
Build for Need, Not Hype
Microsoft 365 E5 can absolutely deliver value — but only when an organization truly needs the full breadth of what it offers. In today’s environment of rapid SaaS expansion, shifting Microsoft incentives, and rising pressure to adopt premium SKUs, the smartest move any IT leader can make is to pause, assess, and right‑size. Flexibility is the real advantage of the CSP model, but it only works when your partner treats your environment as unique and your budget as strategic.
If you want a licensing strategy built around your actual needs, The IT Strategists can help you get there.
We support organizations with Microsoft 365 optimization, CSP governance, and cost‑efficient cloud strategy. Schedule a call to learn how we can help your organization.