Your software licensing agreements might not be an obvious choice for savings. But when you consider that a 30-person SME can typically have around 25 to 60 it’s not hard to see how managing them properly could cut your IT costs by thousands each year.
In essence, it should be a relatively straightforward saving to make. But because of the way software licences are priced, most companies don’t pick the best option for them – which is an easy mistake.
Broadly speaking, licences are priced according to sector – charity, NFP, education, or standard business. Each comes with different pricing structures, feature bundles and discount programmes.
But what we often see is organisations defaulting to whatever feels safe or familiar, creating widespread overspend, missed entitlements and lost savings at the setup phase.
In that instance, licensing is as much a financial control issue as it is an IT issue. And without strategic oversight, organisations waste money on licenses they don’t need or already had access to.
The biggest sources of licensing waste we uncover
When we conduct licensing audits, we typically find that companies either have unused licences, use the wrong tier, or have misapplied programmes. The first two erode budget, but the third creates the largest financial impact. It happens when licences are poorly managed or when teams are unfamiliar with the features in their existing subscription.
As a result, organisations buy additional products that duplicate those they already have but aren’t using. In some cases, this has doubled licensing spend without delivering any additional business value.
Why Microsoft is a problem
Because it’s the most common operating system, most companies will have Microsoft licences of some sort. We often see organisations misclassify themselves in that respect, especially across the charity, NFP, education and commercial sectors.
Even something simple like selecting the Enterprise licensing tier, when the Business Premium tier would better, has overlooked implications. The latter, for example, is better for most businesses because it includes things like conditional access and means you don’t pay extra for capabilities that are bundled in from the outset. That way there’s no unnecessary annual overspend.
For charities and organisations eligible for NFP pricing, the biggest hurdle is usually how the business is registered. Understanding eligibility can unlock meaningful long-term savings.
Why NFPs and charities miss out on savings
It’s not common knowledge that NFPs and charities can apply for special licence agreements that come with significant discounts. And even when they are aware that such programmes exist, the application process is complex, unclear and prohibitive.
It results in companies dropping the application before savings are realised, even when they’re eligible. Microsoft’s Azure sponsorship programme, for example, provides around £1500 annual allowance to eligible organisations. But because it changes the programme and partners so often, opportunities are frequently missed or overlooked.
We keep an eye on developments like that, guiding clients through the entire process and turning missed opportunities into actual financial gains.
Real-world savings: from enterprise spend to smarter licensing
Microsoft is a good place to start for licensing savings, and aligning your company with the right licence tier is a particularly low hanging fruit. If you’re on the wrong tier, you can make immediate savings without considering special status or discount programmes.
Recently, we found that a client was paying £22 a user per month for Microsoft E3 licensing, which is an enterprise programme. After reviewing their actual needs, we moved them to Business Premium, which was £16.90 per user per month. In addition to saving them £612 a year, it improved access to key features like device management and conditional access.
Cost reductions, more often than not, come from correct tier alignment, regardless of charity or NFP eligibility.
Financial control: review your licences regularly
Like anything else you pay for, and like any other aspect of your business, your licences should be monitored regularly. It’s not a case of renew and forget. If you have an active renewal process, you’ll manage licences more effectively and the associated costs that come with them.
As staff come and go, for example, you can keep an eye on who does and doesn’t need access to your software. This means that you don’t overpay for access that isn’t required, nor for privileges that aren’t needed.
As a rule, we recommend a quarterly review of licences, and a full review a month before annual renewals are due. It ensures that underused services don’t quietly inflate costs, nor are you paying for duplicate tools.
Moreover, it should help you to identify where you can make savings with your software providers and negotiate reductions accordingly. When handled strategically, these negotiated discounts often represent some of the most overlooked savings outside the Microsoft ecosystem.
Why licensing strategy is now a CFO-level issue
As SaaS estates expand, licence structures multiply, and auto-renewals lock in spend, licensing decisions now have a direct and material impact on operating margins.
Misapplied programmes, incorrect licence tiers, and unmanaged renewals don’t just create technical inefficiencies, they embed avoidable costs. In some cases, overspend compounds year on year simply because no one has clear ownership of optimisation.
Through that lens, licensing is a controllable financial lever, and one that can release immediate savings, improve forecasting accuracy, and prevent waste before it becomes structural.
Think you might be overspending on your software? Download Nutbourne’s CFO Survival Guide eBook, which outlines strategies for regaining control of software costs, renewals, and licensing complexity.