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Author:
Floris Klaver
Floris entered Microsoft Licensing in 2011. Seasoned in simplifying highly complex contracts and licensing environments for large and global organizations.
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Shadow IT in Microsoft 365 ... Shadow IT in Microsoft 365 and Azure: How to Detect and Control Hidden Costs
Author:
Floris Klaver
Cloud has made IT more accessible than ever and that’s both a blessing and a curse. Employees can activate Microsoft 365 services or spin up Azure workloads in minutes, often even without IT’s knowledge.
The result is shadow IT: unapproved, untracked usage that creates compliance risks and drives unexpected costs.
In 2025, shadow IT is no longer just about rogue apps. It’s deeply embedded in Microsoft 365 and Azure licensing.
What Shadow IT Looks Like in Microsoft 365 and Azure
Shadow IT in the Microsoft ecosystem often hides in plain sight:
- Microsoft 365: Dormant Teams Phone licenses, unused Power BI Pro seats, duplicated subscriptions across the same user.
- Azure: Test environments left running, orphaned VMs or storage, or unmonitored workloads that don’t map to business need.
- Add-ons: Security, Viva, and compliance add-ons applied broadly when only a small group needs them.
These aren’t intentional violations. They’re the natural outcome of fast-moving digital workplaces. But they add up quickly.
The Risks of Shadow IT
- Cost overruns: Even 5–10% unused licenses in a 10,000-seat environment translates into hundreds of thousands wasted annually.
- Compliance exposure: Users consuming services without proper licensing or governance creates audit risk. Think of how easy it would be to mislicense Microsoft’s tenant-wide security features.
- Loss of visibility: IT and procurement lose control of who has access to what, making renewals guesswork.
Why Traditional Audits Miss the Problem
Most organizations only perform point-in-time reviews before a renewal or during an internal cost-cutting exercise. By then, shadow IT has already been accumulating for months or years.
A one-off audit can tell you where waste exists today. But it won’t prevent shadow IT from creeping back tomorrow. You should build this process into your day to day practice as an IT team. You also need to correctly define it in your organizations’ governance.
How LicenseQ Hub Helps
LicenseQ Hub is built to shine a light on shadow IT across Microsoft 365 and Azure. It provides:
- User-level visibility into what licenses are active, what’s being used, and what’s dormant.
- AI-powered profiling that spots misaligned licenses automatically (e.g., frontline staff with unused E3 licenses).
- Alerts for license drift, when employees change roles or services are activated without oversight.
- Continuous tracking, not just a one-time snapshot so organizations stay in control all year round.
In other words, LicenseQ Hub acts like a radar for hidden licensing costs.
Final Thoughts
Shadow IT isn’t going away. But with the right tools, you can detect it early, control the risks, and avoid paying for what you don’t need.
With LicenseQ Hub, organizations gain continuous visibility into Microsoft 365 and Azure turning shadow IT from a hidden liability into a managed process. Reach out today to request a free demo.