The Real Cost of Underutilized E5 Licenses 

Microsoft 365 E5 is positioned as the most powerful license in the Microsoft ecosystem. It is a bundled powerhouse offering Teams Phone (cloud PBX), security, compliance, and analytics features. Yet the numbers tell a starkly different story: over 23% of E5 licenses go inactive, and 27% are unassigned, according to CoreView’s Microsoft 365 License Optimization Report (source). 

Even more alarming? 38% of E5 users could be downgraded to lower-tier licenses based on actual usage — raising important questions about the real E5 license cost and value for enterprises.

So why are global enterprises bleeding value from a premium subscription they’ve already paid for? 

The Problem Behind the License: Understanding E5 License Cost Waste 

1. Hybrid Voice Architectures: The Overlooked Driver of E5 License Cost Waste

One of the largest contributors to E5 underutilization is what we call the hybrid communications trap. Enterprises often embrace Microsoft Teams for meetings and collaboration but continue using a separate PBX or cloud voice provider (like Cisco, Zoom Phone, or Avaya) for calling. 

The problem? Microsoft Teams Phone (Cloud PBX) is already included in E5. But without activation, it becomes a dormant asset, leading to redundant spending and missed ROI. 

You’re essentially paying twice: once for Teams Phone (via E5), and again for the legacy or third-party platform that still handles your calls. 

This setup not only duplicates systems — it also undermines the value of your E5 investment. When Teams Phone remains inactive, your E5 license cost delivers zero return.

In our experience working with enterprise clients, here are the most common reasons we’ve seen for this underutilization: 

• Long-term voice contracts: Many enterprises are locked into multi-year carrier or PBX vendor agreements, creating real or perceived switching costs. 
• Organizational silos: Teams Phone activation often falls between the cracks as M365 admins manage collaboration tools, while a separate telecom team owns voice, and they rarely coordinate license strategy. 
• Migration complexity fears: Porting numbers, replicating call flows, handling emergency services, and ensuring global voice coverage feels too risky or complex for many IT teams. 
• Perceived lack of internal expertise: 42% of organizations cite a lack of skilled staff to manage Teams Phone or unified communications projects, according to Microsoft’s TEI Report on E5 (source). 
• Legacy comfort zone: Even with the cost argument clear, many executives follow an “if it’s not broken, don’t fix it” approach to telephony, especially in regulated industries or with global operations 

A common misconception preventing many organizations from activating Teams Phone is that PSTN calling in Teams requires purchasing Microsoft Calling Plans. 

You Don’t Need Microsoft Calling Plan to Optimize Teams Phone Cost

There are multiple ways to bring dial tone into Teams and most of ZIRO’s clients prefer more flexible, scalable models that align with their existing telecom stack. 

Here’s a look at the available PSTN connectivity options: 

ZIRO’s Direct Routing as a Service (DRaaS) simplifies your Teams Phone setup, providing maximum flexibility with no headaches while helping enterprises unlock the full value of their Microsoft E5 license. We handle everything: 

• SBC management and configuration 
• Carrier management and preferred rates 
• Legacy PBX support and migration 
• Extension dialing without complex rules 
• 99.99% uptime with secure voice encryption 

Our team has completed thousands of successful migrations, delivering transparent, scalable solutions that fit your exact needs. Whether you bring your own carrier or need end-to-end support, ZIRO ensures a fast, hassle-free deployment. 

2. Migration Is Complex — So Enterprises Stall 

So why don’t companies just flip the switch on Teams Phone? According to Microsoft’s Total Economic Impact Report on E5, 40.8% of organizations report excessive time spent managing and troubleshooting licenses (source). 

Activating Teams Phone isn’t just a toggle: 

• It can require SIP trunk migration 
• It often involves number porting and complex routing logic 
• It must integrate with existing emergency calling, call recording, or CRM workflows 

The result? Strategic inertia (a delay in executing a ready strategy due to internal hesitation or lack of operational confidence). IT knows Teams Phone is sitting there ready to go but operational confidence is missing. 

Closing the Operational Gap with Automation That Actually Works 

For organizations facing operational hesitation around Teams Phone rollout, provisioning tools offers a way forward. 

With ZIRO’s Platform for Microsoft Teams, you can 

• Real-time phone number assignment and voice policy enforcement 
• Automatic validation of usage location and region compliance 
• Cross-platform dial plan visibility across Teams and Cisco 
• Active Directory sync to ensure downstream SBC routing consistency 
• And a zero-script, no-template interface accessible to Tier 1 helpdesk staff 

With ZIRO Platform, what once took months of planning and cross-team coordination can now be executed in days — securely, at scale, and without disruption. 

3. License Waste Is the Silent Drain on IT Budgets 

E5 includes more than Teams Phone but even beyond voice, license waste is widespread: 

• 23% of E5 licenses are inactive 
• 27% are unassigned 
• 38% could be downgraded to E1 based on actual usage 

That’s not just inefficiency; that’s millions of dollars per year left on the table in a 1,000+ seat enterprise. 

You don’t need another license; you need to activate the one you’ve already invested in. 

If Teams Phone is still sitting dormant in your environment, the challenge isn’t technical — it’s strategic. With the right provisioning, routing, and support in place, E5 can finally start delivering what it promised. And that’s when the ROI isn’t theoretical anymore; it’s visible, measurable, and working across your organization.