How do I leverage group-based licensing for optimizing license management in Microsoft Entra ID (formerly Azure AD)?

Microsoft's suite of paid cloud services, including Microsoft 365, Enterprise Mobility + Security, Dynamics 365, and similar offerings, necessitates licenses for access. Administrators handle license management via management portals like Office or Azure, as well as through PowerShell cmdlets. Serving as the backbone for identity management across Microsoft Cloud services, Microsoft Entra ID stores crucial information regarding license assignment statuses for users.

Within Microsoft Entra ID, group-based licensing offers the capability to allocate one or more product licenses to a designated group. Microsoft Entra ID guarantees that all group members receive the assigned licenses. As new members join the group, they automatically inherit the relevant licenses. Conversely, when members depart from the group, their licenses are revoked. This streamlined licensing approach obviates the necessity for automating license management through PowerShell, thus alleviating the need to adjust licenses individually based on organizational or departmental changes.

Licensing requirements

For each user utilizing group-based licensing, it's essential to possess one of the following licenses:

• A paid or trial subscription for Microsoft Entra ID P1 and higher.
• A paid or trial edition of Microsoft 365 Business Premium, Office 365 Enterprise E3, Office 365 A3, Office 365 GCC G3, Office 365 E3 for GCCH, or Office 365 E3 for DOD, and beyond.

Required number of licenses

For any groups allocated a license, it's imperative to have a license for every individual member. While it's not mandatory to assign a license to each member individually, you must possess enough licenses to cover all group members. For instance, if your tenant comprises 1,000 unique members within licensed groups, you must hold a minimum of 1,000 licenses to comply with the licensing agreement.

Features

• You have the flexibility to assign licenses to any security group within Microsoft Entra ID. These security groups can originate from on-premises sources and be synchronized using Microsoft Entra Connect. Additionally, you have the option to create security groups directly within Microsoft Entra ID, known as cloud-only groups, or generate them automatically through the dynamic group feature in Microsoft Entra.
• When a product license is allocated to a group, administrators have the option to deactivate one or more service plans within that product. This action is commonly taken when the organization is not yet prepared to utilize specific services included in the product. For instance, an administrator might assign Microsoft 365 to a department while temporarily disabling the Yammer service.
• User-level licensing is provided for all Microsoft Cloud services, encompassing Microsoft 365 products, Enterprise Mobility + Security, and Dynamics 365.
• Now, group-based licensing can be accessed via both the Azure portal and the Microsoft Admin center.
• Microsoft Entra ID automatically adjusts licenses in response to changes in group membership. Generally, these adjustments take effect within minutes of membership alterations.
• Users can belong to multiple groups with designated license policies, and they may also possess licenses directly assigned to them, independent of any groups. Consequently, the user's licensing status is a composite of all assigned product and service licenses. In cases where a user is assigned the same license from multiple origins, the license is counted only once towards consumption.
• At times, assigning licenses to a user may encounter obstacles. This could arise from insufficient available licenses within the tenant or conflicts arising from simultaneously assigned services. Administrators have access to details regarding users for whom Microsoft Entra ID encountered difficulties in fully processing group licenses. With this information at hand, administrators can implement appropriate corrective measures.

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