Many companies face the same challenge as they switch to the cloud – understanding Office 365 licensing options.

There are many services and service bundles to choose from depending on your business size, needs and goals.

Selecting the right option is crucial to maximise your investment's value. However, this task can be challenging, especially since it's not something you typically do frequently, on a weekly or monthly basis.

This article will give you a broad overview of this topic, focusing on the most frequently chosen options. Please Note that all information can change and is subject to Microsoft updates and agreements.

Read on to learn about Office 365 licensing options for enterprise, the services available in each of them and some tips for choosing the right license for your business.

Microsoft 365 or Office 365?

The most important thing to understand is that Office applications have become an integral component of the Microsoft 365 platform.

M365 extends the capabilities of Microsoft’s suite of modern workplace products by adding certain security services and features (e.g. Microsoft Defender). It also incorporates the capabilities of Power Platform to allow users to automate repeatable tasks or create custom low-code applications.

While Microsoft 365 is a bundle of services including Office 365, plus several other services including Windows 10 Enterprise and Enterprise Mobility & Security, Office 365 is a cloud-based suite of productivity apps such as Outlook, Word, PowerPoint, and more.

Simply put, Microsoft 365 is more than Office 365, but all the services we all know well are still there. Whether you buy one or the other depends on your needs, so let’s look at the available options.

A quick overview of Office 365 licenses

All Office 365 licenses are subscriptions. It works exactly as in the case of cell phone licenses. You can use them as long as you want to on a pay as you go basis.

To make a long story short, you can buy the suite through several licensing programs such as:

  • Enterprise Agreement
  • Web Direct (Microsoft Online Subscription Program or MOSP)
  • MPSA
  • Open
  • Cloud Solution Provider

Remember that choosing the right agreement is not only about the proper licensing of payment terms. It is also about additional financing for your cloud deployment. There are resources like the Digital Partner of Record or Office 365 adoption funds. We won’t cover them here, but feel free to get in touch if you’d like to know more.

Types of enterprise licenses

There are three main types of modern workplace licenses:

  • Business plans – limited to 300 users
  • Enterprise plans – without feature or user number limitations
  • Frontline worker plans – essentials for mobile or remote employees.

There are also special options for government and nonprofit use.

Business Enterprise Frontline

Up to 300 users, business suite only 300+ users, all features available No user limit, specific service range

For smaller companies For large organisations For mobile/remote employees

$6-$22 per user/month
(annual contract) $10-$38 per user/month
(annual contract) $2.25-$8 per user/month
(annual contract)

Services available within Office 365 suites

In each suite, there are numerous services and features. Let’s go through the key ones briefly.

  • Office apps for PC, Mac, mobile– basic office productivity services, such as Word, Excel, PowerPoint, etc.
  • Office Online– a web version of Office that allows viewing and editing Office files.
  • Exchange Online– an e-mail service that provides inbox, calendar, address book, tasks and security features.
  • Teams– a communicator with instant messaging, online meetings, as well as file-sharing and collaboration.
  • OneDrive– allows you to access, share and sync your personal files in the browser and on any device.
  • SharePoint– allows for building intranets, searching content, and analysing data.
  • Yammer(now Viva Engage) – your enterprise social network – a great tool for internal communication and offloading your inbox.
  • Stream– your internal YouTube with high-performance video streaming and mobile access.
  • Planner– if you are looking for a modern task management tool similar to Asana then this is the service.
  • Groups– in my opinion, the best enterprise collaboration workspace on the market. It integrates Exchange Online, SharePoint, Skype and Planner. Your team can use conversations, files, notes, calendar, and tasks – all in one place.
  • Delve– allows you to search for files and people easily, and is powered by Artificial Intelligence and Office Graph.
  • Basic data analytics– gives you the ability to use a free, limited version of Power BI and provides information about your Office 365 usage.
  • Advanced data analytics– gives you more capabilities with Power BI Pro, Excel services, and Personal Productivity Analytics.

Additional features

Most plans have basic security features such as multi-factor authentication capabilities.

With Exchange Online you also get a state-of-the-art spam and malware filter. Simple e-discovery, data loss prevention (DLP) and document encryption are also included.

Advanced threat protection gives you more configuration options for data loss prevention, conditional access and advanced malware scanner.

Finally, customer Lockbox included in E5 suites allows you to grant access to your data for the support team.

Office 365 Business plans

Now that we’re clear on the features, let’s see what Office 365 Business suites hide inside.

We have four plans here:

  • Basic, which contains web and online versions of Word, Excel, and PowerPoint, and 50GB of email hosting.
  • Standard that offers all collaboration and communication services, as well as desktop productivity apps.
  • Premium, which offers all the features of the previous two plans and advanced security capabilities.
  • Apps for Business, an essential business service package that includes desktop app versions and 1 TB of cloud storage per user.

Note that all of these options are limited to 300 users.

Feature Business Basic Business Standard Business Premium Apps for Business

Suitability For basic use and file sharing For basic collaboration For advanced collaboration For on-premises use

Office client

+ + +

Office online Word, Excel, PowerPoint, Outlook only All services

All services

Cloud storage for personal files + + + +

Teams + +

+

Intranet + +

+

Email + + + +

Advanced threat protection

-

+

PC and mobile device management

-

+

Office 365 Enterprise

Now, let’s take a look at the Enterprise plans. There are four main options here:

  • E1– it gives you Office Online and a significant number of communication and collaboration services. Apart from what you got in Business Essentials, you also have Stream and work management apps like Planner or To Do.
  • E3 – it extends E1 with data analytics, additional security features and Office client.
  • E5– best all-in-one productivity suite, which adds complete protection, Power BI Pro, Advanced DLP and user activity monitoring.
  • Apps for enterprise – includes key business services and cloud file storage but no email.

Feature Office 365 E1 Office 365 E3 Office 365 E5 Apps for enterprise

Suitability Basic collaboration Advanced collaboration Collaboration, analytics and security Essential document collaboration

Office client

+ + +

Office online + +

+

Personal storage + + + +

Communication + +

+

Intranet + +

+

Email + +

+

Social network + +

+

Data analytics

-

+

Threat & information protection

Limited

+

Advanced compliance

Limited

+

Office 365 Frontline

For employees primarily using mobile devices, e.g. people working directly with customers or out in the field, there are Frontline plans available. Here, we have two options – one for basic collaboration and another with stronger security and Power Platform capabilities to automate workflows.

  Microsoft 365 F1 Microsoft 365 F3

Suitability Basic collaboration Advanced collaboration

Email Exchange Online only Exchange Online + Outlook

Office Mobile/Online Read-only +

Teams + +

Intranet + +

Social network + +

Power Apps

+

Intelligent security

+

 

Q&A

There are some questions which are frequently asked by customers. Perhaps the answers to these will help you too.

 

What is the difference between Microsoft 365 Business and Microsoft 365 Apps?

The Apps suite is a limited option that doesn’t include Exchange Online email or Teams. It is fine if you only need an Office 365 client to work with your files. Depending on your plan, Business suites also have more advanced analytics and security features.

 

Is the Office client the only difference between E1 and E3?

No – far from it. There are many more security options in E3 such as email and document encryption and DLP (Data Loss Prevention). You also have better control of your inboxes, mail flow, and data analytics. E3 gives you access to on-premises enterprise licenses whereas E1 offers only a standard license.

 

Which plan is the best for me?

Always start with the users. Are there less than 300? Then Business suites are likely to be ethe most suitable. More than that? Go for Enterprise.

As to which particular plan to choose – it always depends on your business needs. Talk to your people, find out what they use daily, and let that inform your choice.

 

How best to choose?

Start with a business need or a problem. Then, try to solve it with the cloud. If you do it the other way around – start with cloud features and try to find a need for them – you will fail. It won’t be a spectacular fail, though – you probably just won’t make the most of your budget for the project.

 

What do others choose most frequently?

The usual mix of plans we recommend is E1 + E3 or E1 + E5. That’s right – you can mix and match if you need to.

Options for buying Office 365 plans

This is just a snapshot of the options available when it comes to buying Office 365. As we’ve seen are three main Office 365 suites (in addition to Microsoft 365 options): Business, Enterprise and Frontline.

Within the Business Suite, 3 plans are available: Basic, Standard and Premium. The Standard plan doesn’t include an Office client but has email and Yammer. Premium also covers advanced analytics and security.

The Enterprise suite has 3 main plans: E1, E3, and E5. E1 doesn’t include Office client or information protection. E3 has most of the necessary features. If you’d like to have additional functionalities, such as Teams phone system or audio conferencing, consider the E5 license.

In essence, the more expensive the plan, the more options you have for collaboration, data analytics and security. But this isn’t necessarily always the case t. It can be difficult to figure out exactly what you need, which is why you can always reach out to us for help.

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