A federally funded organization responsible for administering billions of dollars in annual funding to expand internet connectivity for schools, libraries, and rural healthcare facilities was spending over $2.3 million annually on Microsoft cloud subscriptions. With more than 700 employees and 3,000 managed devices across multiple locations, the organization’s IT environment had grown steadily — but its licensing had grown faster.
When federal budget pressures intensified in early 2025, leadership needed to cut costs fast without compromising the mission-critical systems that support national broadband programs. UMS had already been embedded as the agency’s managed service provider for software asset management since 2023. That existing relationship meant the team could move immediately — no ramp-up, no discovery phase, just a direct dive into the data.
Within two months, UMS right-sized the entire Microsoft 365 licensing estate, cutting annual M365 spend by 39% and delivering $879K in annual savings — $1.76M projected over the two-year contract window.
The Challenge
The organization’s Microsoft 365 licensing had ballooned during a major contractor-supported initiative involving hundreds of external workers. When the project concluded, no one reclaimed or adjusted the subscriptions. The result was a sprawling licensing estate with three compounding problems:
- Orphaned premium licenses — Over 2,100 high-tier G3 subscriptions remained assigned to accounts with little or no activity. Many of these belonged to contractors who had already left the organization, but whose licenses were never deprovisioned.
- Massively over-provisioned conferencing — Audio conferencing capacity had been purchased at multiples of actual headcount. Entire license blocks sat completely unassigned, representing tens of thousands of dollars in recurring monthly spend for capacity no one used.
- Misallocated compliance add-ons — Expensive security and compliance tiers had been broadly deployed across the organization without an activation review. Many accounts never enabled the features these licenses unlocked, yet the organization was paying full price for every seat.
The challenge wasn’t just the waste itself — it was the lack of visibility. The IT team didn’t have a clear picture of which licenses were active, which users actually needed premium tiers, and which subscriptions could be safely removed. Without that clarity, leadership was stuck: they couldn’t cut costs without risking operational disruption to programs serving millions of Americans.
What UMS Did
Because UMS was already managing the agency’s software estate under a multi-year managed service agreement, the team had direct access to the Microsoft admin portal, historical usage data, and procurement records. This eliminated weeks of onboarding that a new vendor would have required.
Step 1: Usage Analysis UMS pulled M365 usage reports and cross-referenced assigned licenses against actual activity data across Office, Teams, SharePoint, and OneDrive over the previous 180 days. Every user account was categorized by activity level — active, low-usage, or dormant — and mapped to their assigned license tier. This immediately surfaced the gap between what the organization was paying for and what people were actually using.
Step 2: Waste Identification The analysis revealed three major savings categories — each tied to a clear root cause:
| Category | Root Cause | Scale of Waste |
|---|---|---|
| Premium cloud licenses (G3/G5) | Completed contractor project never reclaimed | 55% of G3 licenses unused or misallocated |
| Audio conferencing | Provisioned at multiples of actual headcount | Thousands of seats with zero assignments |
| Compliance add-ons | Broadly deployed without activation review | 95% reduction achievable |
The total addressable waste represented more than half of the organization’s entire M365 budget — a finding that was both alarming and actionable, because every dollar traced back to a specific subscription that could be downgraded or removed.
Step 3: Right-Sizing UMS mapped each user’s actual role and usage pattern to the lowest-cost license tier that preserved their workflow and security requirements. Users who only needed email and basic Office apps were moved to lower-cost tiers. Dormant accounts were deprovisioned entirely. Conferencing and compliance add-ons were scoped to the roles that actually required them. Critically, no active users lost access to tools they were using day-to-day.
Step 4: Phased Implementation Rather than making sweeping changes overnight, UMS worked directly with the client’s IT and procurement teams to phase reductions into the annual Microsoft true-up cycle. This approach ensured full alignment with Enterprise Agreement contract terms, avoided mid-cycle reconciliation penalties, and gave internal teams time to validate each change before it went live. The entire implementation was completed within the existing managed service engagement — no additional contracts, no surprise costs.
Results
| Metric | Before | After | Impact |
|---|---|---|---|
| G3 license count | 3,900 | 1,761 | 55% reduction |
| G5 Compliance add-on | 500 | 23 | 95% reduction |
| Annual M365 cost savings | — | — | $879K saved per year |
| Projected 2-year savings | — | — | $1.76M verified |
The savings were immediate and verifiable. The first monthly invoice after implementation reflected the full cost reduction, and the projected two-year figure was validated through internal program records and Microsoft billing reconciliation.
Key insight: The entire M365 analysis was completed in approximately 2 months using a small team — a fraction of the time and cost of traditional perpetual licensing audits. This engagement reinforced a broader industry shift: for most organizations, the highest-ROI optimization work is now in cloud subscriptions, not on-premises server licensing.
Beyond M365: Ongoing Optimization
The M365 right-sizing was the highest-impact initiative, but it wasn’t the only area UMS addressed. As the agency’s ongoing managed service provider, UMS also identified additional cloud cost reduction opportunities across the broader software estate — including a WebEx-to-Teams migration analysis that surfaced potential additional savings by consolidating collaboration tools onto the existing Microsoft platform, and a review of the organization’s $140K annual Microsoft Enterprise Support contract to ensure coverage levels matched actual support utilization.
What Made This Work
Three factors differentiated this engagement from a typical one-time audit:
- Embedded relationship — UMS had been managing the agency’s software estate since 2023 under a multi-year managed service agreement. That meant zero ramp-up time, existing trust with IT leadership, and immediate access to the data needed for analysis.
- Usage-based methodology — Instead of relying on contract entitlements or vendor reports, UMS built the optimization model from actual 180-day usage data. This made every recommendation defensible and reduced internal pushback.
- Governance built in — The engagement didn’t end with a savings report. UMS established ongoing usage reviews and automated alerts for inactive accounts, creating a sustainable process that prevents licensing sprawl from recurring after the next contractor surge or organizational change.
See also: How NYC has saved $800M+ over 25 years through a similar long-term optimization partnership.