Optimizing Dynamics 365 Licensing: Compliance, Cost Savings, and Best Practices

Microsoft Dynamics 365 constantly evolves, introducing new features across its CRM and ERP applications. However, many organizations still find it difficult to navigate its licensing structure.

The January 2025 Licensing Guide for Dynamics 365 highlights several important changes, such as introducing Sales Premium to the Capacity License Table and removing Customer Voice from Customer Service Premium. Organizations that depend on these services should take note and adjust their licensing as needed.

Microsoft employs a Base and Attach licensing model, which necessitates that users first acquire the most expensive app as a base license before they can add on less expensive attach licenses. This approach helps optimize costs when multiple applications are needed, ensuring businesses avoid paying for features they don't utilize.

Understanding Multiplexing and Compliance Risks

Multiplexing is an essential concept in licensing and remains a significant focus for enforcement. It refers to the situation where multiple users access Dynamics 365 data indirectly through automated processes, pooled connections, or third-party applications. Consequently, even if users do not log into Dynamics 365, they still need the appropriate licenses.

For example:

• If a company synchronizes data between Dynamics 365 and SAP using automated tools, the SAP users who access that data will still need Dynamics 365 licenses.

• Power Automate workflows that interact with restricted Dynamics data can also create licensing obligations, even if users do not log into the Dynamics interface.

Ensuring compliance with Microsoft's Multiplexing Policies is essential to prevent unexpected licensing costs or audits.

Aligning Licensing with Business Needs

Microsoft provides a range of licensing models to meet diverse business requirements:

• Per User: Ideal for individual users who require complete access.

• Per Device: Tailored for shared devices in retail, manufacturing, or logistics sectors.

• Tenant-Based Licenses: Offer access to a broader array of services, including Customer Insights and Electronic Invoicing.

For companies looking for more flexibility, Power Apps and Power Automate licenses can provide cost-effective options for custom applications without needing full Dynamics 365 licenses.

Due to the complexities surrounding Dynamics 365 licensing, partnering with an IT Solutions Provider can help businesses:

• Evaluate current licensing requirements to optimize expenses.

• Ensure adherence to Microsoft's policies, especially regarding multiplexing.

• Streamline licensing to prevent unnecessary software acquisitions.

• Adopt cost-saving measures like using attach licenses and utilizing shared resource activation.

Microsoft Dynamics 365 licensing is constantly evolving, with regular updates that can affect costs, compliance, and overall efficiency. It's essential for organizations to regularly evaluate their licensing strategies to stay proactive. By leveraging internal IT teams or a managed services provider, companies can maintain a well-organized licensing strategy that helps avoid unnecessary expenses while ensuring compliance.