How to Find and Reclaim Unused Microsoft 365 Licences

Unlock the reports first

Before you can do anything useful in the Microsoft 365 admin centre's usage reports, you need to turn off the default anonymisation. By default, Microsoft hides usernames, display names, and site URLs across all usage data, which means your reports show rows of "Anonymised User 1, 2, 3..." rather than actual people. That makes it impossible to take action.

Go to admin.microsoft.com, navigate to Settings → Org Settings → Reports, and tick the box next to Display concealed user, group, and site names in all reports. Save the change. It takes a few minutes to propagate. This is a tenant-wide setting and is logged as an audit event in Microsoft Purview, so your compliance team should be aware of it.

You will need Global Admin, Reports Reader, or a similar admin role to change this setting and to view the underlying user-level data.

Find inactive users in the Usage dashboard

With de-anonymisation on, head to Reports → Usage in admin.microsoft.com. The report you want is Active Users: Microsoft 365 Services. Set the date range to 90 days. This view shows every licensed user and which services they have touched: Exchange, SharePoint, OneDrive, Teams, and the desktop apps.

Export this to CSV, open it in Excel, and filter for users where every service column shows zero activity. These are your candidates for reclamation. Industry data consistently shows around a quarter of assigned licences in a typical mid-market tenant sit on accounts with no meaningful activity in the past 30 days. In a 200-person organisation on Microsoft 365 Business Premium at around £20 per user per month, that is roughly £1,000 per month in dead weight.

Before you remove anything, cross-check against Users → Active Users. Filter by licence type, click into each inactive account, and look at the Licences and apps tab. Some accounts are genuinely inactive because of job role: a warehouse operative who never logs in to a desktop might still need a licence for mobile email. Context matters.

Check what you have actually bought

Inactive assigned users are only part of the picture. There is often a second pool of waste that organisations completely overlook: licences that have been purchased but never assigned to anyone at all. These show up in Billing → Licences in admin.microsoft.com. Every subscription row shows total seats purchased alongside how many are currently assigned. The gap between those two numbers is pure spend with zero return.

This happens for predictable reasons. A company signs a three-year agreement and overestimates headcount growth. Or someone buys a block of add-ons for a project that never fully rolled out. Or a previous IT provider set up the tenant and bought more seats than needed as a buffer. Whatever the cause, the admin centre will show you the gap immediately.

If you are within the annual terms of your Microsoft agreement, you can often reduce seat counts at renewal. If you are on a monthly arrangement, you can reduce immediately. Either way, knowing the number is the starting point.

Fix the leak at offboarding

Inactive users and unassigned seats are symptoms. The root cause, for most organisations, is offboarding. When someone leaves a company, their Microsoft 365 account and licence routinely gets left in place for weeks or months. HR notifies the line manager. The line manager forgets to raise an IT ticket. The account sits there, licensed and active, until someone eventually notices it during a periodic review.

The fix is structural rather than technical. Build licence de-provisioning into your standard leaver process. The moment an employee's departure is confirmed in your HR system or People team's workflow, there should be a direct step that triggers account disablement and licence removal in Microsoft 365. This does not have to be automated via Power Automate (though it can be): even a simple checklist item in your offboarding process, assigned to IT on the leaving date, closes the gap.

If you do want to automate it, the combination of an HR system trigger feeding a Power Automate flow that calls the Microsoft Graph API to disable the account and strip the licence is reliable and repeatable. You can build that workflow without writing a single line of code using standard Power Automate connectors.

Right-size before your next renewal

Beyond individual inactive accounts, it is worth reviewing whether people have the right licence tier. A common pattern in mid-market firms is everyone being on the same plan: typically Business Premium or E3. Some of those users genuinely need that tier. Others, perhaps a receptionist or a warehouse supervisor, need email, Teams, and maybe SharePoint access but have no use for the full desktop app suite, Intune device management, or advanced compliance tools.

Downgrading those users to a lighter plan, such as Microsoft 365 Business Basic or F1 depending on their role, can cut the per-seat cost significantly. The Microsoft 365 admin centre's usage reports give you exactly the data to make that call: look at which apps each user is actually running, and match the licence tier to actual usage rather than defaulting everyone to the highest tier for convenience.

With Microsoft raising prices on several plans from July 2026, timing this exercise before your next renewal is particularly worthwhile. A few hours of analysis now can meaningfully reduce what you commit to for the next 12 months.

Wrapping Up

The Microsoft 365 admin centre has everything you need to identify wasted licence spend: the Usage dashboard for inactive users, the Billing section for unassigned seats, and the Active Users report for right-sizing decisions. The tools are there; the work is knowing where to look and acting on what you find.

Most organisations that go through this exercise properly find they can reduce their Microsoft 365 spend by 15 to 25 percent without removing a single capability anyone actually uses. The savings go straight back into budget for things that do deliver value.

If you want a thorough, independent view of your tenant's licence health, Cloudbliss offers a fixed-price M365 Licence Health Check from £995. We review your full licence estate, identify inactive accounts, unassigned seats, and right-sizing opportunities, and give you a clear action list with estimated savings. No retainer, no scope creep. Find out more at cloudbliss.co.uk.