ACT NOW: UPCOMING CHANGES IN DYNAMICS 365 LICENSE MANAGEMENT
Dynamics 365 License Enforcement: Act Now to Avoid Disruption by January 2026
Starting January 2026, Microsoft will introduce a new process for per-user license validation, ensuring that all assigned licenses are accurate and compliant. This process will follow a staged timeline based on your contract anniversary or renewal date.
As your trusted partner, Arquiconsult will guide and support you throughout this process, ensuring everything runs smoothly and on time. Act now to validate license assignments in the Microsoft 365 admin center and avoid operational disruption.
Key Dates You Can’t Ignore
- T-90 (90 days before your anniversary/renewal date)
We should work together to prepare for the upcoming validation, reviewing your current licenses and identifying any adjustments needed.
- T-30 (30 days before)
You’ll receive in-app notifications from Microsoft highlighting users without assigned licenses. Arquiconsult will assist you in addressing these alerts quickly and efficiently.
- T+15 (15 days after anniversary/renewal)
The license validation period begins, giving you 15 days to finalize assignments. Our team will be available to ensure compliance and resolve any issues promptly.
Why This Matters
Non-compliance can cause immediate access blocks for critical users, create audit and governance risks, and increase costs through misaligned licenses. This new process helps maintain compliance, optimize license usage, and avoid disruptions. With Arquiconsult by your side, you’ll have expert guidance every step of the way.
Common Pitfalls to Avoid
– Relying on legacy F&O license fields: the old calculation logic is deprecated—use PPAC/LCS.
– Overlooking duplicated privileges or inherited permissions that drive up license levels.
– Missing external users and service accounts in the analysis.
– Waiting until your license renewal date: request volumes spike and operational risk increases.
Additional Details on the New License Validation Model
- Validation is tenant-specific: Each tenant in your organization will have its own start date for the validation process. If you manage multiple tenants, expect separate timelines. Users need a license for every tenant they can log into. However, having multiple production environments under a single tenant does not require extra licenses.
- When will this apply to you? If your renewal happens before January 2026, the new model will take effect at your next contract renewal.
- Special cases and exceptions
- Users with the System Administrator role are exempt from licensing
- Guest users from other organizations must be licensed like any internal user.
- Service accounts don’t need a license unless they’re assigned roles that allow interactive or business operations.
- External access and automation: The multiplexing principle remains in force: if an external user interacts with Dynamics 365 data indirectly (e.g., through an app or automation), they must hold the same license as if they accessed the system directly.
- License enforcement applies only to Microsoft-managed environments.
- Customer-hosted environments (not enforced):
- VHD / VM images
- Cloud-hosted environments
- Local Business Data (D365 on-prem)
- Microsoft-managed environments (enforced):
- Unified Developer Environment (via PPAC)
- Unified Sandbox Environment (via PPAC)
- Sandbox Tier 2–5 (reporting in scope)
- Production (via LCS or PPAC)
- Customer-hosted environments (not enforced):
Contact our Management Service Team
FO.Managed.Services@arquiconsult.com
How to Prepare (Step-by-Step)
- Run license reports in PPAC and LCS (User License Consumption; Licenses usage summary).
- Validate role-to-license mapping; remediate duplicated privileges that elevate license requirements.
- Assign and verify licenses in the Microsoft 365 admin center (users and/or groups).
- Include external users and service accounts in your checks. Review multiplexing needs
- Book ASAP an audit with Arquiconsult and enable ongoing monitoring and alerts.
How Arquiconsult Helps
We combine licensing expertise with governance practices to reduce risk and spend:
License Assessment: Align roles ↔ licenses and remove duplicated privileges.
Optimization: Right-size base/attach mix to reduce spend.
Implementation Support: Microsoft 365 admin center assignment and PPAC/LCS reporting setup.
Managed Services: Continuous monitoring, alerts, and training for sustained compliance.
