Purpose
Licenses control access to Microsoft cloud services (Microsoft 365, EMS, Dynamics 365, etc.). Each user consuming a service must have an active license.
Traditional (User-Level) Licensing
Historically, licenses were assigned per user, requiring manual or scripted updates during onboarding/offboarding — inefficient at scale.
Group-Based Licensing
Solution: Assign licenses to security groups instead of individuals. Entra ID automatically applies or removes licenses when users join or leave groups.
Example: Contoso’s “Marketing” group is assigned Microsoft 365 E3. When new interns are added to Marketing, licenses are automatically provisioned.
License Requirements
Key Features
| Feature | Description |
|---|---|
| Assign to security groups (cloud or synced). | Entra auto-applies licenses to members. |
| Disable specific service plans. | Useful to phase out unused features (e.g., disable Yammer). |
| Automatic updates. | New users gain licenses within minutes. |
| Multi-source inheritance. | A user in multiple licensed groups consumes only one license per product. |
| Licensing errors tracked. | Admins can view and resolve issues in the portal. |
| Usage location enforcement. | Determines legal availability of services. |