Starting April 1, 2024, Microsoft is making significant changes to how Teams licensing works. For many organisations, this represents an important milestone to review your Microsoft 365 strategy and ensure you're making the right choices for your business.
What's Changing?
Microsoft previously bundled Microsoft Teams across all Microsoft 365 plans, regardless of whether organisations actually used the service. This approach was straightforward but left many businesses paying for functionality they didn't need.
Starting April 1, 2024, the licensing model is changing:
- New Enterprise subscriptions (E3 and E5 plans) will no longer include Teams as standard. Instead, Teams will become a separate add-on that you can choose to include or exclude based on your needs.
- Business tier plans are now being offered in two versions: a Teams-inclusive option (at the current price) and a Teams-exclusive option at a lower cost. This gives organisations flexibility to choose the right plan for their situation.
- Existing subscriptions will not be affected. If you're currently using Microsoft 365, your current plan and pricing will remain unchanged until your next renewal.
What Does This Mean For My Organisation?
The impact depends on your current situation:
Non-Users Considering a Switch: If your organisation has deliberately chosen not to use Teams and has an alternative communications platform, you now have the option to switch to non-Teams subscriptions at your next renewal and save money.
New Customers: If you're implementing Microsoft 365 for the first time, you can now choose subscriptions with or without Teams based on your actual needs.
Should You Use Teams?
While some organisations might have niche use cases with decentralised communications stacks that don't require Teams, this represents a small minority of businesses. For most New Zealand SMBs and enterprises that are already using Teams, continuing with subscriptions that include Microsoft Teams is a straightforward decision.
Here's why:
- Proven Collaboration Platform: Teams is a mature, feature-rich platform for chat, video conferencing, and file collaboration. It integrates seamlessly with other Microsoft 365 apps.
- Future-Proofed Communications: Microsoft continues to invest heavily in Teams, with regular updates and new features being released. Your investment is protected long-term.
- Cost Savings Are Minimal: For organisations that would benefit from Teams, the cost of separately adding it is often less than the savings you'd get by removing it—especially when you factor in the training and migration effort required.
- Simplicity: Teams provides one unified platform for calling, messaging, and meetings. Replacing it with multiple disparate tools creates complexity and often increases total cost of ownership.
What Should You Do Now?
If you're approaching a Microsoft 365 renewal, now is a good time to review your licensing:
- Assess your current usage: Review how your organisation is using Teams and other Microsoft 365 apps to ensure you're on the right plan.
- Plan ahead for renewals: If your agreement is approaching renewal, contact your IT partner to discuss how the April 1 changes affect your pricing and options.
- Consider your communication stack: Evaluate whether Teams continues to meet your organisation's needs, or if there are additional tools or integrations that would benefit your team.
- Budget accordingly: If you're choosing to include Teams in your new subscriptions, ensure your budget reflects the ongoing investment.
The key takeaway is this: Microsoft's licensing change provides flexibility, but for most organisations, including Teams in your subscription remains the best choice. The real "savings" come from using the tools you already have access to effectively, rather than juggling multiple communication platforms.
