Microsoft Revamps Its Guidance for Data Lifecycle and Records Management Licensing

Move to Clarify Microsoft 365 Compliance Licensing

Many of the new features created for Microsoft 365 compliance technology, like allowing Data Loss Prevention policies to use trainable classifiers, rely on high-end or add-on licenses. Microsoft doesn’t develop much new for the baseline Office 365 E3 enterprise plan. Everything seems to be bundled into Office 365 E5 or Microsoft 365 E5 or a new service plan.

This isn’t by accident. Microsoft is trying to drive the average revenue per user (ARPU) higher to increase cloud revenues and margin, something that CFO Amy Hood emphasizes to the market analysts every time Microsoft discusses its quarterly results. Making new features available only in high-end plans seems to be working. In their FY22 Q4 results, Microsoft reported that 12% of its Office 365 installed base now uses E5 and cloud revenues reached an annualized run rate of $100 billion.

Microsoft 365 Compliance Licensing Defined via Capability

It’s putting it mildly to say that Microsoft licensing guidelines for its compliance offerings were opaque. Confusing, misleading, inaccurate, poorly worded, and just plain wrong are other descriptions rightfully applied to Microsoft 365 compliance licensing over the years. Things weren’t helped by the way that many compliance features ignored licensing completely and allowed anyone who wanted to use a feature to go ahead and use it. Of course, using something without the right license isn’t the most intelligent strategy, especially when a software vendor tightens its code and introduces license restrictions, which is the case now.

I’ve been critical about Microsoft’s slipshod approach to licensing for Microsoft 365 compliance and security products in the past. Improvements have been coming, especially the introduction of a helpful spreadsheet to help tenants understand when they needed licenses for different features. The spreadsheet is now available in versions covering Enterprise and Frontline worker plans and Small to Medium Business plans.

Now, Microsoft has revamped their documentation for licensing guidance for Microsoft Purview Data Lifecycle and Records Management (Figure 1) to make it much clearer and easier to understand the licensing requirements for features like retention policies and retention labels. The new documentation clearly sets out the capabilities of a feature and what licenses are needed to use those capabilities.

Microsoft passes the message about Data Lifecycle and Records management
Figure 1: Microsoft passes the message about Data Lifecycle and Records management

For instance, if you want to use adaptive scopes to find locations to apply retention policies, you need Office 365 E5, Microsoft 365 E5, or either of the Microsoft 365 E5 compliance or information protection and governance add-ons. The same licenses are needed to when retention labels have settings that start retention after an event, trigger a disposition review or apply a new label when the retention period ends, or marks items as records or regulatory records.

Microsoft’s Definition of Automatic Label Processing

I like the new way of clearly setting out when advanced licenses are needed to use a feature, even if it highlights the absurdity of requiring E5 licenses to apply a default retention label to a SharePoint Online document library (Figure 2), folder, or document set. I know that Microsoft considers this to be automatic processing, and a case can be argued that the act of assigning a retention label to a document when a user uploads it to a library is automatic, but it’s hardly in the same category as auto-label policies which use artificial intelligence and machine learning (trainable classifiers) to find documents to label.

Microsoft 365 Compliance Licensing: Is defining a default retention label for a SharePoint Online document library "automatic processing"
Figure 2: Is defining a default retention label for a SharePoint Online document library “automatic processing”

Microsoft is going down the same path with default sensitivity labels for document libraries (now in preview). I don’t agree with that decision either, but it’s likely to be the case when the feature reaches general availability.

Clarity is Best When Discussing Microsoft 365 Compliance Licensing

Now that Microsoft has clarified its license requirements for Microsoft Purview Data Lifecycle and Records Management, let’s hope that the trend continues across all aspects of Microsoft 365. Maybe even the folks who sometimes come up with the most convoluted text for message center announcements could sign up to improve their messaging. That would be very helpful indeed.

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