Identifying Unused Services Before Microsoft EA Renewal

Identifying Unused Services Before Microsoft EA Renewal

Unused Microsoft licenses and services – often referred to as “shelfware” – quietly drain IT budgets. If your Enterprise Agreement (EA) renewal is on the horizon, now is the time to uncover and eliminate these unused entitlements.

By identifying shelfware and right-sizing your licenses before renewal, you can cut costs by millions and strengthen your negotiation position with Microsoft.

Read our overview on how to manage Microsoft EA renewals.

Why Shelfware Costs Enterprises Millions

Shelfware is essentially Microsoft’s hidden profit center. These are the licenses and cloud services you paid for but never fully use. Microsoft benefits because you’re paying for value you don’t receive.

Common scenarios that create shelfware include:

• Licenses bought “just in case”: Many companies over-purchase licenses to accommodate possible new hires or projects that never happen. These surplus seats remain assigned to no one or to inactive users.
• Cloud services never deployed: An organization might commit to Azure services or Microsoft 365 features that never get rolled out enterprise-wide. For example, you might own a bundle of security or compliance tools that were included in a premium package but were never enabled.
• Unused add-ons and extras: Departments sometimes request add-on products (such as a Power BI Pro subscription or a Dynamics 365 module) that are not ultimately adopted. The licenses sit idle, but the cost still hits your budget each month.

All this unused software quietly inflates your EA renewal baseline. If you simply renew the same quantities as last time without scrutiny, you’ll carry over all that waste into the new agreement.

Microsoft’s sales team certainly won’t rush to point out you’re overspending – it’s up to you to find and eliminate shelfware. Identifying these unused services now means you won’t be locked into paying for them for another three-year term.

Step 1 — Audit Current License and Service Usage

The first step is a comprehensive audit of your current Microsoft licenses and cloud services.

You need a clear picture of what you have versus what you use:

• Inventory all entitlements: Catalog every license and subscription in your EA – from Office 365/Microsoft 365 seats to Azure, Dynamics 365, Windows/SQL Server, and any add-ons. Use admin portals and software asset management tools to pull usage reports.
• Compare usage to licenses: For each product, verify the number of assigned or active licenses versus the number of paid licenses. Look at user activity logs and adoption metrics. For instance, if you have 1,000 Office 365 accounts but only 800 active users, note the 200 discrepancy.
• Find inactive hot-spots: Review each major service area (Office 365 apps, EMS security tools, Dynamics modules, Azure resources) for signs of shelfware. Are there Azure VMs sitting idle or unused cloud credits? Are there any Office 365 apps that few employees ever use? Flag any SKU with zero or minimal usage.
• Identify redundant or stale accounts: Often, you’ll discover licenses assigned to former employees, duplicate accounts, or users who haven’t logged in for months. These should be reclaimed or removed. Every unassigned or inactive license is a prime target to cut at renewal.

By auditing early (ideally 6–12 months before renewal), you give your organization time to address any surprise findings. This audit is the foundation for the steps that follow. It replaces guesswork with data – and Microsoft will take your requests to reduce licenses more seriously when you can back them up with usage evidence.

Step 2 — Identify “High-Risk” Software Categories

Not all licenses carry equal risk of going unused. Focus your analysis on the high-risk software categories that are notorious for creeping into enterprise agreements:

• Microsoft 365 E5 add-ons: Companies that upgraded to E5 often don’t utilize all the advanced security and compliance features. Tools like advanced threat protection, eDiscovery, or audio conferencing may remain largely untouched if your team hasn’t had the resources to deploy them. Those unused E5 components are expensive shelfware hiding in plain sight.
• Power BI Pro licenses: It’s common to assign Power BI Pro broadly, but in many firms, only a small group of analysts actively uses it. If hundreds of Pro licenses were handed out but most users never build or consume dashboards, that’s a significant chunk of spend delivering no value.
• Visio and Project subscriptions: These productivity apps are frequently purchased for entire departments or included in bundles, yet often only a subset of people actually use them. You may find that, out of 500 Visio licenses in your EA, only 100 users have opened Visio in the last year. The rest are dormant.
• Other unused extras: Scan for any other niche licenses that tend to linger unused – for example, developer tools, training subscriptions, or secondary cloud services enabled by your EA that weren’t adopted. High-tier bundles sometimes include features (like Microsoft Viva modules or advanced analytics) that were never rolled out.

By pinpointing these high-risk areas, you can prioritize which licenses to scrutinize first. Often, just a few categories (like those E5 security features or unused Project Online seats) account for the majority of your shelfware spend. Identifying them now ensures they won’t sneak through into the renewal.

Step 3 — Quantify the Cost of Shelfware

Once you’ve identified unused licenses and services, assign a dollar value to that shelfware. This turns an abstract problem into a compelling business case for action:

• Calculate the waste: For each software item, calculate how much it costs per year. For example, if a Microsoft 365 E5 license costs, say, $57 per user per month, that’s about $684 annually. Ten unused E5 licenses would be roughly $6,800 wasted each year; 200 unused licenses would be over $136,000 per year drained from your IT budget. Tally up all such instances across your EA.
• Project multi-year savings: Remember that an EA typically runs for three years. If you’re paying $500,000 a year for various unused services, that’s $1.5 million over the life of the agreement that could be saved. Quantifying this in terms of multi-year impact helps executives see the magnitude of the opportunity.
• Model downsizing scenarios: Show what your spending would look like after eliminating the shelfware. For instance, “If we remove these 300 unused licenses, we cut $X from our annual run-rate.” This is essentially pre-approved savings – costs you can strike out without harming any productivity, since nothing is actually in use.
• Leverage the numbers: Use these figures in both internal discussions and eventual Microsoft negotiations. When you can demonstrate, with concrete data, that “we have $800,000 of licenses no one used last year,” it’s hard for anyone to argue that those shouldn’t be reduced. It transforms shelfware from a hidden annoyance into a powerful lever for cost-cutting.

By quantifying shelfware, you also gain credibility. It shows Microsoft (and your stakeholders) that you’re running a data-driven optimization effort. You’re not asking for a discount out of thin air – you’re aligning the contract with reality, which is a fair and necessary request in any renewal.

Pre-Renewal License Audit for Microsoft EA Negotiations

Step 4 — Downsize Before Renewal, Not After

Timing is critical. You must eliminate or reduce shelfware at the EA renewal – not after. Once you sign a new EA, Microsoft locks in your quantities, and you generally cannot drop those licenses mid-term:

• No mid-term givebacks: Microsoft’s agreements are built so that you can increase usage during the term (via true-ups) but rarely decrease it. If you agree to an inflated number of licenses now, you’ll be stuck paying for that number every year for the next three years, even if usage stays low.
• Avoid a 3-year overspend: Every unnecessary license you carry over from the old EA becomes a fixed cost. For example, renewing 200 unused licenses means paying for 200 extra units for three more years – a huge compounded waste. The renewal is your chance to right-size to actual demand. I miss that window, and the overspend continues.
• Set the correct baseline: Microsoft will often use your last agreement’s quantities as the starting point for the renewal proposal. By downsizing beforehand (or signaling the intent to do so at renewal), you reset the baseline to what you truly need. This prevents the “rubber stamp” renewal, where everyone assumes last year’s numbers were correct.
• Reduce first, then add if needed: It’s far better to eliminate unnecessary expenses now and add licenses later if you genuinely need them, than to continue paying “just in case.” Microsoft isn’t going to turn down your money if you come back mid-term needing more licenses. But they will gladly keep your money for unused licenses if you leave them in the contract.

In short, treat the EA renewal as your one big chance to shed the dead weight. Do the necessary internal work to obtain approvals for removing unused services ahead of the negotiation. Once those reductions are baked into your renewal plan, you can approach Microsoft confidently, knowing you’re not signing up for another cycle of waste.

Step 5 — Use Shelfware Findings in Negotiations

Your shelfware analysis isn’t just an internal cost-cutting exercise – it’s a strategic tool in your Microsoft negotiations.

Here’s how to put those findings to work when you sit down at the bargaining table:

• Show Microsoft the data: Come to negotiations armed with a summary of your usage audit. For example, “We purchased 1,000 Visio licenses but only 150 are in active use – here’s the proof from our usage reports.” Presenting this helps justify why you’re insisting on reductions. It shifts the conversation from emotion (“we want to spend less”) to facts (“we have no reason to buy what we’re not using”).
• Make downsizing non-negotiable: Position the removal of shelfware as a governance decision. You might say, “Our company policy is not to renew unused licenses – it’s a stewardship issue.” This frames the cuts as a logical necessity, not merely a bargaining chip. Microsoft reps will see that you’re serious about not paying for waste.
• Reallocate budget to value: If there’s pushback, you can soften it by indicating you plan to reallocate some of the saved budget into other Microsoft products or services that will deliver value. For instance, you might invest in new Azure services or advanced training to increase adoption of the tools you keep. This way, Microsoft knows it can maintain your overall account value, but in areas that matter to you. You’re effectively saying, “We’re happy to spend money where it makes sense, but not on shelfware.”
• Demonstrate leverage: By highlighting the money you will save by cutting shelfware, you implicitly show Microsoft that you’re willing to walk away from bloated deals. They understand that you have a strong alternative (i.e., simply not buying those things). This gives you leverage to ask for better pricing on what you do purchase. Microsoft, hoping to retain as much of your spend as possible, may be more inclined to offer concessions or discounts rather than lose that portion of the deal entirely.

Ultimately, using your shelfware findings in negotiations keeps the discussion grounded. It prevents the common vendor tactic of glossing over usage and focusing only on adding new products. You keep the spotlight on efficiency and value, which steers the deal toward what you need rather than what Microsoft hopes you’ll blindly renew.

Step 6 — Avoid Common Shelfware Traps

Even after a successful renewal, it’s important to maintain vigilance. Many organizations fall into repeat patterns that create new shelfware. Here are some common shelfware traps to avoid going forward:

• Buying into bundles without a plan: Don’t let enticing bundles or upgrades sway you unless you have a clear adoption strategy in place. For example, upgrading everyone to an E5 or adding a new Microsoft suite because “it has everything” can backfire if you haven’t budgeted time and resources to roll out those extra features. Only invest in bundles when you’re prepared to use most of what’s included.
• Keeping licenses “just in case”: It’s easy to leave unused licenses on the books to appease a department or avoid a tough conversation. This “just in case” mentality leads to paying for capacity you don’t need. Instead, right-size immediately and establish a process to quickly provide additional licenses if and when real demand appears. It’s more efficient to add later than to carry dead weight for years.
• Trusting optimistic projections over data: Microsoft and its sales representatives might project that your usage will grow or that a new product will see widespread adoption in year two or three. Don’t let these promises inflate your purchase decisions unless your data and pilots support it. Be cautious with “required” purchases based on vendor hype. Ground your decisions in the reality of your environment, not hopeful forecasts.
• Skipping regular usage reviews: After your renewal, institute a practice of ongoing license monitoring. Conduct an internal mini-audit annually (or even quarterly) to catch new shelfware early. This prevents small issues from compounding into big waste by the next renewal. Remember, shelfware is much easier to prevent than to eliminate after the fact.

By steering clear of these traps, you ensure that your optimized EA stays optimized. The goal is to make shelfware reduction a continuous discipline, not a one-time project. Microsoft will constantly introduce new products and bundle offers – approach each with a critical eye toward genuine need and usage, so you don’t slide back into an overspend situation.

FAQ

What is shelfware in a Microsoft EA?
Shelfware refers to licenses or services in your Enterprise Agreement that you’ve paid for but never deployed or used. They are essentially “sitting on the shelf,” delivering no value, even though you’re paying for them.

When should I check for unused licenses?
Start reviewing for shelfware at least 6–12 months before your EA renewal. This lead time allows you to audit usage, plan adjustments, and secure internal buy-in for downsizing well before entering renewal negotiations.

Which Microsoft products are most often shelfware?
Common culprits include the extra security and compliance features in Microsoft 365 E5 plans (if they weren’t fully adopted), Power BI Pro licenses that were assigned broadly but not actively used, and Visio or Project subscriptions that remain dormant for many users.

Can shelfware be removed mid-term?
In general, no. Most EA contracts do not allow you to drop or reduce licenses in the middle of the term. Reductions usually can only be made at the renewal point (typically every three years). That’s why it’s critical to true-down and eliminate shelfware during the renewal process.

How does eliminating shelfware help negotiations?
Clearing out shelfware resets your spending baseline to a lower, more realistic level. This not only saves you money but also gives you leverage – Microsoft has to work harder to earn your business on new value rather than relying on your overspending. In negotiations, a leaner profile means you can push for better discounts and focus your budget on high-value services instead of waste.