4 min read

Microsoft 365 licences and options explained

itfoundations Originally posted on June 25, 2020
Last updated on December 13, 2024

Microsoft 365

Learn about the Microsoft 365 licence options for small and medium-sized businesses.

Microsoft 365 licence history
Microsoft licence options explained
Microsoft 365 exceptional use cases
Microsoft 365 Security features
Additional Microsoft 365 licences to boost security or productivity

1. Microsoft 365 licence history

Microsoft licences used to be fairly simple to understand. If you wanted Office, you bought the latest release of Microsoft's Office product. In June 2011 Microsoft changed the game when they introduced the option to subscribe to your Office package. This helped cash flow and ensured users always had the most up-to-date version of apps.

As 'the cloud' grew Microsoft introduced new online versions of their applications, as well as countless other cloud services. Things started to get quite muddy.

In 2020, Microsoft effectively dropped the Office 365 brand name and replaced it with Microsoft 365.  Microsoft chose to drop the ‘Office 365’ moniker to show that it offers so much more than the Office apps we use each day.

As part of the Microsoft 365 re-brand they also chose to rename their various business subscription licences. The list below explains how the various new licences mapped back to their old names.

Office 365 Business became Microsoft Apps for Business
Office 365 Business Essentials became Microsoft 365 Business Basic
Office 365 Business Premium became Microsoft 365 Business Standard
Microsoft 365 Business became Microsoft 365 Business Premium

Microsoft offers licences on a subscription basis with monthly or annual terms. Typically monthly terms are 20% more expensive. They can be purchased directly from Microsoft or from Microsoft Solution Partners such as ourselves.

2. Microsoft licence options explained

The various licences available for small and medium-sized businesses are varied, but essentially each step up adds more applications, complexity, granularity, and security.

The graphic below gives a handy visual guide to the benefits of each licence.

Microsoft 365 licences

At a simplistic level the packages breakdown like this:

Licence	Apps	Cloud services	Security
Apps for Business	Mobile, web and desktop core apps	None	None
Business Basics	Mobile and web apps only	Teams, SharePoint, OneDrive and Exchange	Basic
Business Standard	Mobile, web and desktop core apps	Same as Basics plus Clipchamp and Loop	Basic
Business Premium	Mobile, web and desktop core apps	Same as standard plus EntraID, Intune, Defender and Purview	Comprehensive

In the lower tiers, the biggest differentiator is the apps that are available to the end user.

As the tiers increase, the included additional products, services, and security options improve with only Business Premium providing comprehensive protection for your business' data.

Apps for Business only provides Microsoft Office applications and no related services or security. It is perfect for businesses that use an alternative platform for emails, storage and collaboration (e.g. Google) but would like to use the Microsoft Office suite.

Business Basics includes web applications only (no desktop apps) and Microsoft 365 web services but minimal security. This is typically used by frontline workers who don't use a dedicated computer or laptop, instead relying on mobile and the web. It has very limited security and therefore we recommend that additional security products are added (Microsoft or third-party) to provide the necessary protection.

Microsoft Business Standard has the same core functionality as Business Basic but includes the desktop applications. It's effectively Business Basic plus Apps for Business. Again, due to the limited security, we would recommend Business Premium or that additional security is added to achieve the necessary protection.

Business Premium includes the functionality of Business Standard but with a full suite of additional security to protect the user and their devices. IT Foundations recommends Microsoft 365 Business Premium as a minimum for our customers for this very reason.

3. Microsoft 365 exceptional use cases

There are caveats to the statement that everyone should have a Business Premium licence. If someone only accesses email on a mobile phone you could argue that they may only need Business Basics with a handful of security bolt-ons. At the enterprise level, this is taken care of by the F1 and F3 licences aimed at frontline workers but as they are enterprise-level licences they don't mix very easily with the business-level ones. Sadly there isn't a small and medium-sized business equivalent.

4. Microsoft 365 Security features

We mentioned a number of times that Business Premium is the best option because it includes comprehensive security options. These include:

EntraID provides a range of identity management features. It facilitates secure access to business applications and resources. This includes features like multi-factor authentication, and role-based access control, which helps manage who can access what within the organisation.
Intune helps organisations manage and secure their devices and applications. With Intune, businesses can ensure that employees can access company resources securely from any device, whether it's a smartphone, tablet, or computer. It allows IT administrators to set up policies for device security, manage app installations, and monitor compliance with company standards.
Defender is a security tool that helps protect your devices and data from various online threats. It offers real-time antivirus protection, scanning your computer for malware, viruses, and other harmful software. Importantly, it includes features like phishing protection to keep your personal information safe when browsing the web, and a firewall to block unauthorised access to your device.
Purview is a tool that helps manage and protect data and information. It provides a platform for data security, governance, and compliance, making it easier to keep track of and safeguard sensitive information. With Purview, businesses can gain visibility into their data, ensure it is properly managed throughout its lifecycle, and meet regulatory requirements.

5. Additional Microsoft licences to boost security or productivity

In addition to the core subscriptions outlined above, Microsoft also offers add-on licenses for many of the features, including the security options, that are only included in Business Premium.

By the time you add a few of these additions, you are paying more than the price of the Business Premium licence. That's why Business Premium licence is good value.

Microsoft has cleverly positioned their products so that Business Premium should be the only licence anyone buys for computer users in small and medium-sized businesses.

Teams Premium

Teams is a very useful tool and many businesses around the globe now rely heavily on it for productivity and communication. Microsoft's Teams Premium licence unlocks a slew of extras in the app. Many of these features help run webinars and provide additional controls for presentation and collaboration, but we think the single biggest benefit is transcription and summarisation.

A Teams Premium licence does away with the need for a notetaker. Its ability to understand and transcribe text is very impressive. Once a meeting is finished it will summarise everything that was said and pull out the actions for each person. Many of our customers have found this feature alone to be revolutionary.

Our blog about Teams Premium explains the power (and the limitations) of the service.

Copilot

In 2023 Microsoft launched Copilot. Microsoft's AI implementation which is now baked into all Microsoft's 365 products and Windows. Copilot's basic functionality is quite limited but paired with a commercial licence, you can tap into your organisation's data and start to make AI really work for you.

Our blog about Microsoft Copilot looks at how it can help your business be more efficient.

When paired with a Teams Premium licence it even unlocks the ability to query meetings transcriptions mid-meeting and ask it for summaries of what's been said so far or where issues are still unresolved.

Next Steps...

Microsoft 365 Business Premium includes all of Microsoft 365 core services, cloud services, desktop apps and advanced security. If you would like to discuss your Microsoft licensing options, then please contact us and will be able to advise you on your requirements.