We all know the drill: Artificial Intelligence (AI) is changing the world. Granted, it has taken the business world by storm, pushing organizations of all sizes to adopt new tools that boost efficiency and sharpen their competitive edge. Among these tools, Microsoft 365 Copilot rises to the top, offering powerful productivity support through its seamless integration with the familiar Office 365 environment.
In the modern ‘Gold Rush’ to gain an edge on competition by adopting new technologies and boosting productivity, many businesses buy licenses for everything and every employee without much consideration. That enthusiasm often leads to “shelfware,” AI tools and software that go unused while the company continues to pay for them. Given the high cost of these solutions, it’s essential to invest in a way that actually delivers a return on investment. Consult with your IT support.
The problem is: You can’t improve what you don’t measure. For Microsoft 365 users, its Copilot feature can perform an audit that is essential for assessing and quantifying your adoption rates. A thorough review shows who is truly benefiting from and actively using the technology. It also guides smarter licensing decisions that reduce costs and improve overall efficiency.
Let’s consider this key question:
Are companies wasting money on AI?
New technologies present ample opportunities to throw money away. Here, we will focus on the most obvious waste: Excess licensing.
Those monthly or yearly licensing fees add up quickly. It’s important to implement automated access revocation for contractors who have fulfilled their contract. This is not just about better cybersecurity; it's a critical component of financial risk management and regulatory compliance.
The biggest risk in contractor management is relying on human memory to manually delete accounts and revoke permissions after a project ends. Forgotten accounts with lingering access, often referred to as ‘dormant’ or ‘ghost’ accounts, are a prime target for cyber-attackers. If an attacker compromises a dormant account, they can operate inside your network without detection, as no one is monitoring an ‘inactive’ user.
Many cybersecurity reports cite the Target data breach in 2013 as a stark illustration of this risk. Attackers gained initial entry into Target's network by compromising the credentials of a third-party HVAC contractor that had legitimate, yet overly permissive, access to the network for billing purposes. If Target had enforced the principle of least privilege, limiting the vendor's access only to the necessary billing system, the lateral movement that compromised millions of customer records could have been contained or prevented entirely.
One key solution is to leverage Microsoft Entra Conditional Access to set a sign-in frequency and instantly revoke access when a contractor is removed from the security group, thus eliminating the chance of lingering permissions. This automation ensures that you are consistently applying the principle of least privilege, significantly reducing your attack surface and demonstrating due diligence for auditors under regulations like GDPR or HIPAA. It turns a high-risk, manual task into a reliable, self-managing syAt first.
Buying licenses in bulk may seem like a convenient strategy since it simplifies the procurement process for your IT support department. However, this collective approach often ignores actual user behavior, since not every role needs the advanced features offered by Copilot.
The licensing waste in AI occurs when tools sit unused on employee dashboards. For example, a receptionist may have no need for advanced data-analysis capabilities, while a field technician might never open the desktop application at all.
Shelling out money for unused licenses drains your budget, so identifying and closing these gaps is essential to protecting your bottom line. The savings can then be redirected to higher-value initiatives where they’ll make the greatest impact.
How do I track user activity in Microsoft 365?
Microsoft includes built-in tools that make it easy to view and track your AI usage data. The Microsoft 365 admin center is the best place to start. From there, you can generate reports that track active usage over specific time periods and give you a clear view of engagement.
Starting from this dashboard, you can track various metrics such as enabled users, active users, adoption rates, trends, and so on. This makes it easy to identify employees who have never used AI features, or those whose limited usage may not justify the licensing cost.
This tracking allows you to make data-driven decisions and distinguish between power users and those who ignore the tool. This clarity not only allows for making efficient license purchases but also sets the stage for having conversations with department heads to determine why certain teams do not engage with AI tools.
What is the IT cost optimization framework?
After you have identified the waste, it’s time to take action. Start by reclaiming licenses from inactive users and reallocating them to employees who actually need them. This simple shift, making sure licenses go to those who use them, can significantly reduce your subscription costs.
Institute a formal request process for Copilot licenses. This ensures employees must justify their need for the tool, granting access only to those who truly require it and adding accountability to your spending.
IT cost optimization isn’t a one-time task; it’s an ongoing process that requires continuous refinement. Regularly reviewing these metrics, whether monthly or quarterly, helps keep your software spending efficient and under control.
Employee Training
Don’t just throw your employees into the deep end of the pool and expect them to swim. Low AI tool usage isn’t always about lack of interest. Sometimes, employees simply don’t need the tool, while other times they avoid it because they don’t know how to use it. Insufficient training can lead to frustration and poor adoption. This means that cutting licenses alone isn’t enough; investing in user training is equally important.
Your best bet is to survey staff and assess their comfort level with Copilot. For employees who find it confusing, provide self-paced tutorials or conduct training workshops that demonstrate practical use cases relevant to their daily tasks. When employees see clear value and convenience, they are much more likely to adopt the tool.
Here are some recommended steps to improve adoption:
Host lunch-and-learn sessions to demonstrate key features
Share success stories from power users within the company
Create a library of quick tip videos for common tasks
Appoint “Copilot Champions” in each department to help others
By investing in training, you can transform low usage into high value, turning what was once a wasted expense into a productivity-enhancing asset.
Develop a Clear Governance Policy
Regardless of being an excellent way to minimize Copilot license waste, setting rules for how your company handles AI tools is a necessity. A governance policy effectively brings order to your software management by outlining who qualifies for a license and setting expectations for usage and review cycles.
Define criteria based on job roles and responsibilities. For instance, content creators and data analysts get automatic access, while other roles might require manager approval, thus preventing the “free-for-all” mentality that leads to waste.
Your governance policy should be clearly communicated to all employees to ensure transparency regarding how decisions are being made. This way, a culture of responsibility regarding company resources is established.
Be Prepared for Renewal Season
Don’t wait until the day before renewal to check your Copilot AI. Schedule audits at least 90 days in advance to allow ample time to adjust your contract and license counts.
These audits also give you leverage during negotiations with vendors. By presenting data showing your actual needs, you put yourself in a strong position to right-size your contract and avoid getting locked into another year of paying for shelfware.
Manage Your Costs Wisely
Smart management of modern software costs demands both vigilance and data, particularly as most vendors move to subscription-based models for AI and software tools. With recurring expenses, letting subscriptions run unchecked is no longer an option. Regular Microsoft 365 Copilot audits safeguard your budget and ensure efficiency by aligning technology purchases with actual usage.
Stay in control of your licensing strategy by looking at the numbers, asking the hard questions, and ensuring that every dollar you spend contributes to your business’ growth. Smart management leads to a leaner and more productive organization.
Would you like help getting a handle on your AI tool spending? Reach out to our team for help with comprehensive Microsoft 365 Copilot audits and eliminate waste from your IT services budget. Contact us today to schedule your consultation.
Frequently Asked Questions
How much does an AI license cost?
There is a wide range here: An AI license can cost anywhere from $0 for basic tiers, to about $20 (per user, per month) for pro subscriptions, to over $500,000 for complex custom enterprise solutions. The exact price depends entirely on whether you are using off-the-shelf software, integrating APIs, or building a custom model.
How much do I need to pay for Microsoft 365?
It depends on which plan works best for you. Microsoft breaks it all down for you HERE.
Does AI actually make a profit?
This is a tricky one: The general idea is that running each AI model generates enough revenue to cover its own R&D costs. BUT, that surplus is outweighed by the costs of developing the next big model. So, despite making money on each model, companies can lose money each year.
How to start AI governance?
First, set up an AI governance board or include AI experts on existing governance boards. Consider setting up an ethics committee made up of internal stakeholders, cross-government stakeholders, sector experts and external stakeholders like Civil Society Organizations.
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