🔑 Role-based Licensing: Optimizing IT Security Usage

By Eckhart Mehler, CISO, Cybersecurity Strategist, Global Risk and AI-Security Expert

Microsoft 365 E5 has evolved into a formidable cybersecurity platform. It combines advanced capabilities across identity protection (Entra ID P2), threat detection and response (Microsoft Defender XDR), data governance (Microsoft Purview), and insider-risk analytics. For organizations that need top-tier security, it’s unmatched.

But E5 comes at a cost—currently around $54.75 per user per month (excluding Teams). In contrast, many organizations already operate with Microsoft 365 E3 at roughly $33.75, which includes strong baseline protection, identity management via Entra ID P1, and core productivity tools. The additional $21 per user per month for E5 may seem justifiable from a CISO’s risk-averse perspective. After all, who wants to explain a breach when they opted for the cheaper license?

Yet blanket E5 deployment ignores a critical truth: not all employees represent equal risk. Security entitlement must be aligned with actual exposure, not job titles or departmental hierarchies.

🎯 A Risk-Based Licensing Mindset

Role-based licensing means assigning licenses based on risk exposure rather than organizational rank. Highly privileged or externally exposed roles—such as security analysts, cloud engineers, identity administrators, and executives with elevated profiles—should be prioritized for E5 or E5 Security add-ons.

Meanwhile, other employees who handle moderately sensitive data (HR, finance, legal, sales operations) can often operate effectively with E3 plus selective security add-ons. Frontline workers, manufacturing staff, and temporary personnel typically require minimal security features and may even be served by F-Series or E1 licensing.

This targeted allocation ensures that E5 capabilities are used where they matter most, without overspending on users whose work does not involve sensitive systems or data.

🛡️ What E5 Actually Adds Beyond E3

A common misconception is that E5 simply “adds more security.” In reality, it delivers specific, advanced capabilities:

• Identity Governance & Privileged Access: With Entra ID P2, organizations can enforce Just-In-Time (JIT) access, use Privileged Identity Management (PIM), and react dynamically to risky sign-ins.
• Extended Detection & Response: Defender XDR consolidates endpoint, email, identity, and SaaS signals to enable automated threat disruption.
• Data Protection & Insider Risk Management: Microsoft Purview adds deep information governance, eDiscovery (Premium), and behavioral analytics to detect data leaks and insider threats.
• Shadow IT & Cloud Session Control: Defender for Cloud Apps offers visibility and control over unsanctioned applications and cloud session behavior.

For organizations not needing the full E5 suite, the E5 Security add-on (which excludes services like Teams telephony or Power BI Pro) is a more focused and cost-effective alternative, especially when applied to E3 users who need enhanced protection without collaboration upgrades.

🧭 Implementing Role-Based Licensing – A Strategic Approach

1. Start with a Role Inventory

Map all business functions and roles to their associated IT risk. Consider factors such as access to privileged systems, data sensitivity, and the likelihood of being targeted. For example, cloud architects managing Azure resources face a vastly different threat landscape than internal support staff.

2. Use Dynamic Licensing Assignment

Entra supports dynamic security groups and group-based licensing. By tying license assignment to job functions, departments, or other HR attributes, you ensure users receive the correct security level automatically as they join, move, or leave roles.

3. Enforce Just-In-Time Access

Even among E5 users, privilege should never be permanent. Use PIM to limit admin role exposure and require MFA and approvals before elevating permissions temporarily.

4. Monitor License Utilization

Security capabilities are only valuable when actively used. Use telemetry from the Microsoft 365 admin center or Microsoft Graph API to identify unused licenses. If Defender XDR isn’t detecting activity from a device, mailbox, or identity for several weeks, that license may be wasted.

5. Pool E5 Licenses for Incident Response

Maintain a buffer of unassigned E5 licenses that can be temporarily assigned to first responders or incident managers during security events. After resolution, revoke elevated access and return users to E3 or other baseline licenses.

6. Conduct Quarterly License Governance Reviews

Bring together finance, HR, and security stakeholders to review license assignments, usage trends, and overall ROI. Adjust entitlements proactively based on shifting risks or business priorities.

🚦 Common Mistakes to Avoid

• Buying E5 for Everyone by Default: Without onboarding devices into Defender or enabling governance policies, licenses become expensive shelfware.
• Overloading E3 with Add-ons Haphazardly: Piecemeal add-ons can quietly surpass E5 pricing. Track cumulative license costs and evaluate whether a full E5 conversion would actually be cheaper.
• Assigning Licenses Based on Titles, Not Exposure: Don’t assume a “Director” needs E5 unless their access truly justifies it. Evaluate actual roles and privileges.
• Delaying Optimization Projects: Role-based licensing isn’t a future initiative—it’s a strategic enabler of FinOps and Zero Trust. The longer you wait, the more you overspend.

💡 Advanced Practices for 2025 and Beyond

• Adaptive Licensing: With Continuous Access Evaluation and risk-based conditional access, licenses can be elevated temporarily based on context—like executives traveling abroad or users showing anomalous behavior.
• Scoped Managed Detection: Microsoft’s evolving MDR models support coverage for specific user subsets. Pairing scoped detection with selective E5 licensing enables precise, cost-effective threat monitoring.
• License Automation: Use Power Automate flows to reclaim licenses from inactive users automatically. Integration with HR offboarding workflows ensures no licenses are left behind.
• FinOps Integration: Feed license usage data into broader IT financial dashboards. This allows boards and CIOs to see the real-time correlation between cost, coverage, and security risk reduction.

📌 Conclusion: Align Cost with Risk, Not Hierarchy

The ultimate goal is not to minimize spending at all costs—it’s to maximize security ROI. By deploying E5 only where justified by risk, and using dynamic tools to manage license lifecycles, you can reduce unnecessary costs by up to 70% without compromising your Zero Trust principles.

Security should be strategic, not synonymous with overspending. In a world of escalating threats, smarter—not more—licensing is the answer.

#MicrosoftSecurity #CISOInsights #FinOps #M365Licensing #ZeroTrust #RoleBasedAccess #E5Strategy #CyberSecurityLeadership

“The CISO Playbook: Mastering Cybersecurity Leadership, Strategy, and Innovation”, explore the evolving role of CISOs in today’s complex threat landscape. This series provides strategic guidance on positioning security leadership, leveraging cutting-edge technologies, and fostering a resilient security culture. Through practical insights and forward-thinking approaches, this collection empowers security leaders to navigate challenges, drive strategy and innovation, and shape the future of cybersecurity with confidence.

About the Author: Eckhart Mehler is a leading CISO, cybersecurity strategist, global risk and AI-security expert. Connect on LinkedIn and discover best in class CISO Thought Leadership.

This content is based on personal experiences and expertise. It was processed, structured with GPT-o1 but personally curated!