Microsoft 365 Licenses
M365 E3 or F3? M365 vs. O365? What do I choose for my organization? UGHH…
Choosing Microsoft 365 licenses can be a very daunting task. It also doesn’t help that Microsoft likes to change its licensing scheme and naming almost every year. HA!
Now, this article is for enterprise-level Microsoft licenses - not for home use, and it isn’t going to tell you exactly what you should purchase or not purchase. However, there will be some recommendations based on a company’s requirements and needs. Also, it’s worth noting that prices will change depending when you’re reading this.
As of March of 2024, Microsoft has Microsoft 365 (M365) and Office 365 (O365) licenses. The difference between M365 and O365 is that M365 is a cloud-based service that brings together productivity apps with advanced device management, intelligent security, and innovative online services. O365 only includes apps such as Outlook, Word, Excel, PowerPoint, along with services such as Exchange, OneDrive, SharePoint, and Teams. In short, M365 is more powerful than O365 licenses. If you’re going to use Intune, then it’s best to get one of the M365 licenses. There’s also the M365 Business licenses for small and medium businesses if you have no more than 300 employees that need a login with email access, which I prefer you go with M365 Business Premium if you plan to use Intune. M365 Business Premium and M365 E3 are very similar. The main differences between the 2 are the cap of 300 users for the Business Premium and the fact that it only supports Exchange Plan 1 (50GB) vs. M365 E3, supporting Exchange Plan 2 (100GB) - a larger mailbox size.
Let’s say you do decide to go with M365 licenses, now you have to narrow down to do you want to go with the “E” tier or “F” tier? “E” stands for Enterprise, and “F” stands for Frontline. There are other differences, but the main differences between “E” and “F” is Mailbox Size and Desktop Apps. This means anyone with the “F” licenses will have a cap at 2GB for the their mailbox and they can only use the apps online - no Outlook on the Desktop, and etc.
Think of it like this:
“Frontline employees, e.g. field technicians or nurses, they don’t need to have Desktop applications because they’re mostly in the field working. They’re also least likely to use emails because they’re more often than not checking their “ticketing” systems from either their tablets or cell phones on what they need to do next or where to go. However, someone in the office - sitting behind a desk - would more likely to check email and be working out of a computer.”
From the example above, you can see that splitting the licenses depending your organization’s needs is completely normal as long as you know what you’re doing.
It’s also worth noting that you don’t need to get the highest tier of licenses. However, don’t try getting the cheapest ones and do a bunch of add-ons because it will be very confusing if the adds-ons are not for everyone. It will also complicate your environment, which may not even save you in the long run because you’re wasting more time with training the team on assigning the licenses and/or troubleshooting the problem not realizing it’s a simple licensing mistake if someone mess up the assignment.
Talking about add-ons, you don’t necessarily need them unless you don’t have the features already. There’s the package version with M365 E5 Security, M365 E5 Compliance, M365 F5 Security, and/or M365 F5 Compliance, and there are various smaller add-ons such as Exchange Online Plan 1, Microsoft Defender for Endpoint Plan 1, Microsoft Entra ID Plan 1, and etc. For instance, if you have to get M365 F3 for Bob, but Bob needs more than 2GB for his mailbox, then you’ll need to add on either Exchange Online Plan 1 (50GB) or Exchange Online Plan 2 (100GB). Another example would be your organization has Spam Filter and Endpoint Security, then you don’t technically need E5 Security as an add-on.
Note: M365 F5 Security/Compliance can only be an add-on to M365 F1 or M365 F3- not to M365 E1/E3.
Here are some situations to help you grasp the concept of Microsoft Enterprise licenses a bit better. Before deciding your Microsoft licenses, set some requirements and ask yourself:
Are all employees working behind a desk? Do you have any field technicians?
Do you have any security applications already in place? Or are you looking to replace them to save cost and/or be more efficient? Please make sure to follow any compliance requirements that your company may need to adhere to.
Scenario 1: You have 300 employees. All sitting in the office - no field technicians. You just renew licenses for your security applications, so you don’t want to purchase Microsoft Security Licenses for now.
To make it simple, purchase the M365 Business Premium ($22/user/month). This license caps at 300 users, so you cannot purchase more than 300 licenses for M365 Business Premium. The main feature to note with this license is that it’s on Exchange Online Plan 1 (50GB mailbox). If you need a larger mailbox size, you can purchase add-ons with Exchange Online Plan 2 ($8/user/month)(100GB mailbox) for anyone that needs the larger mailbox size. Or you can get M365 E3 ($36/user/month) for those users because if your company will grow, then you’ll hit your 301st user in no time- pushing you past the M365 Business Premium cap of 300 users.
Scenario 2: You have 1,500 employees. All sitting in the office, and you want to potentially replace your security applications to meet your DLP compliance for Teams and endpoint because you don’t have any other applications that can manage them.
You can get M365 E5, which as of this article is $57/user/month with an annual commitment. This would be a much cheaper route than going with M365 E3 ($36/user/month), M365 E5 Security ($12/user/month), and M365 E5 Compliance ($12/user/month), which totaling $60/user/month.
Scenario 3: You have 500 employees. 10 is field technicians with no need for Desktop apps, and the remaining 490 are office workers. Your organization needs security but don’t need to meet any compliance requirements.
Option 1: Get M365 F3 ($8/user/month) for the 10 field technicians along with the F5 Security ($8/user/month). For the remaining 490 office workers, get them M365 E3 ($36/user/month) with the M365 E5 Security ($12/user/month) add-on.
Total Cost Annually: $284,160 = (10x8x12)+(10x8x12)+(490x36x12)+(490x12x12)
Option 2: If you want to cut cost, then you can get M365 F3 ($8/user/month) for the 10 field technicians along with the M365 F5 Security ($8/user/month). For the remaining 490 office workers, get 300 M365 Business Premium ($22/user/month) and 190 M365 E3 ($36/user/month) with 490 M365 E5 Security ($12/user/month) add-on. Again, please note the potential confusion for whoever assigning the licenses and the differences between M365 E3 and M365 Business Premium.
Total Cost Annually: $233,760 = (10x8x12)+(10x8x12)+(300x22x12)+(190x36x12)+(490x12x12)
Lastly, here are 2 matrixes from Microsoft - SMB and Enterprise levels. Please also check their website during your research because they update the matrixes once or twice a year.
Also, if you have a vendor that can sell cheaper licenses than Microsoft, then that would be extremely cost efficient, so shop around.
Thank you for stopping by. Best of luck down this rabbit hole my friend!
