Microsoft 365 licensing determines which apps, security and compliance features each user gets, and it is one of the largest recurring IT costs for most enterprises. Enterprise organizations usually choose between Microsoft 365 E3 and E5, mix in frontline (F) plans and add-ons such as Copilot, Teams Phone or advanced security, and renew under an Enterprise Agreement or through a Cloud Solution Provider. Most tenants carry waste: unused licenses, users on plans richer than they need and overlapping add-ons.
This guide compares E3 and E5 and explains how Microsoft 365 license optimization works. RockTeam handles licensing as part of our Microsoft 365 consulting services and our software licensing, renewals and cost optimization practice.
| Area | Microsoft 365 E3 | E5 adds |
|---|---|---|
| Productivity | Microsoft 365 Apps, Exchange Online, SharePoint, OneDrive | Same apps |
| Identity | Microsoft Entra ID P1: conditional access, MFA | Entra ID P2: Identity Protection, Privileged Identity Management, access reviews |
| Email and collaboration security | Defender for Office 365 baseline protections | Defender for Office 365 Plan 2: threat investigation and attack simulation training |
| Endpoint security | Defender for Endpoint Plan 1 | Defender for Endpoint Plan 2: endpoint detection and response, threat hunting |
| Identity and cloud app security | Cloud app discovery | Defender for Identity and full Defender for Cloud Apps |
| Compliance | Core retention, DLP, sensitivity labels and eDiscovery | eDiscovery Premium, Insider Risk Management, Communication Compliance, endpoint DLP, premium audit |
| Analytics and voice | Add-ons | Power BI Pro and Teams Phone Standard included |
Teams availability in enterprise suites depends on your region and agreement, as some suites are sold with and without Teams. Confirm the exact SKUs with your licensing partner.
Many organizations mix plans: E5 for high-risk roles and administrators, E3 for most knowledge workers, F plans for frontline staff, plus targeted add-ons.
| Source of waste | Fix |
|---|---|
| Licenses assigned to departed or inactive users | Regular joiner, mover and leaver reviews and automated reclaim |
| Users on richer plans than they need | Usage-based plan assignment by role |
| Overlapping add-ons and third-party tools | Map features to tools and remove duplicates |
| Unused premium features | Deploy what you pay for or step down at renewal |
| Shelfware from past true-ups | Right size before the anniversary or renewal date |
| Copilot seats without adoption | Track usage and reassign or drop inactive seats |
Licensing decisions are security decisions: some protections recommended in a Microsoft 365 security assessment require E5 or specific add-ons. Copilot adds another license per user, so a Copilot readiness assessment should decide who gets it based on real use cases.
Paying for Microsoft 365 licenses you do not use?
RockTeam reviews your Microsoft 365 usage, models E3, E5 and add-on options and helps you renew with the right plan mix. Start with a no cost licensing review.
See Licensing and Cost OptimizationE5 adds advanced security and compliance to E3: Entra ID P2, Defender for Office 365 Plan 2, Defender for Endpoint Plan 2, Defender for Identity and Cloud Apps, eDiscovery Premium, Insider Risk Management and more, plus Power BI Pro and Teams Phone Standard.
Upgrade when you need several E5 security or compliance capabilities and will actually use them. Many organizations mix E5 for high-risk roles with E3 for most users.
Reclaim licenses from inactive users, match plans to roles using usage data, remove overlapping add-ons and tools, and right size counts before each renewal or anniversary.
It depends on region and agreement, because some enterprise suites are sold with and without Teams. Confirm current SKUs with your licensing partner before renewing.
Yes. RockTeam reviews usage and contracts, models plan options and supports your renewal, alongside licensing for HCL Domino and other enterprise software.
