Licensing and SaaS This article helps you understand the licensing and SaaS capability within the FinOps Framework and how to implement that in the Microsoft Cloud.
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Licensing & SaaS refers to the specialized competency in managing and optimizing the financial aspects of software licensing agreements and Software as a Service (SaaS) investments within an organization.
This capability involves optimizing the procurement, deployment, and utilization of licensed software and SaaS solutions to achieve cost-efficiency while meeting business needs.
✋ Before you begin
Having an understanding of Microsoft’s various licensing models, such as per-user licensing, per-device licensing, subscription-based licensing (e.g., Microsoft 365), and perpetual licensing (e.g., Microsoft Office), is crucial for optimizing licensing agreements and ensuring compliance with vendor terms, while familiarity with Microsoft’s diverse portfolio of cloud services, including Azure, Microsoft 365 (formerly Office 365), Dynamics 365, and other SaaS offerings, is essential for making informed decisions regarding subscription management and cost optimization, understanding their features, pricing structures, and usage patterns.
▶️ Getting started
Microsoft offers several tools to help you identify when you should consider purchasing reservations or savings plans. You can choose whether you want to start by analyzing usage or by reviewing the system-generated recommendations based on your historical usage and cost. We recommend starting with the recommendations to focus your initial efforts:
- Understand Azure licensing models: Gain an understanding of Azure’s licensing models, including pay-as-you-go, reservations, hybrid benefits, and enterprise agreements. Determine which licensing options align best with the organization’s needs and budget. Review the rules for Azure Hybrid Benefit for Windows Server and Azure Hybrid Benefit for SQL database.
- Review Advisor’s cost optimization workbook to identify existing licensing benefits and ensure they are applied to the resources that will have the biggest return in savings.
🏗️ Building on the basics
At this point, you have definied a strategy for Licensing and SaaS optimization. As you move beyond the basics, consider the following points:
- Enhance compliance governance: Establish processes and controls to ensure compliance with licensing agreements, regulatory requirements, and internal policies within Microsoft Cloud. Implement software asset management practices, conduct regular audits, and enforce license usage policies.
- Monitor and review: Continuously monitor usage, costs, and compliance metrics for software licenses and SaaS subscriptions within Microsoft Cloud. Review reports, analyze trends, and identify areas for further optimization or cost savings.
🍎 Learn more at the FinOps Foundation
This capability is a part of the FinOps Framework by the FinOps Foundation, a non-profit organization dedicated to advancing cloud cost management and optimization. For more information about FinOps, including useful playbooks, training and certification programs, and more, see the Licensing and SaaS article in the FinOps Framework documentation.
You can also find related videos on the FinOps Foundation YouTube channel:
⏩ Next steps
Related FinOps capabilities:
🧰 Related tools
- 🏦 FinOps hubs – Open, extensible, and scalable cost reporting.
- 📊 Power BI reports – Accelerate your reporting with Power BI starter kits.
- 📒 Cost optimization workbook – Central hub for cost optimization.