Microsoft 365CIO BriefingsRetrospectives

CIO Brief: E3 or E5? Making the Microsoft 365 Security Licensing Decision

By OnCloudSec Research Team · Published Oct 6, 2026 · 1 min read

Retrospective: this article looks back at events from July 2017, written in 2026 with the benefit of hindsight.

The short version: Microsoft 365 E3 includes solid security basics. E5 adds advanced threat protection, risk-based identity controls and stronger compliance tools. Whether E5 is worth the difference depends on what you already own — and whether you will actually configure it.

The real question

E5 costs meaningfully more per user per month than E3. Across a few hundred users, that is a significant annual decision. But the bigger cost is often hidden: paying for security features nobody turns on.

When E5 usually makes sense

  • You do not have a modern endpoint detection and response tool or advanced email security, and would otherwise buy them separately.
  • You handle regulated or highly sensitive data and need stronger compliance tooling.
  • You want risk-based sign-in protection and just-in-time admin access.
  • You have — or will hire — people to configure and monitor these tools.

When E3 plus add-ons may be better

  • You already own a strong EDR and email security product you are happy with.
  • Only certain groups (admins, executives, finance) need advanced protection.
  • Your team does not have capacity to operate E5 tools yet.

Questions to ask your team

  • Which E5 features would we actually configure in the next six months?
  • What third-party tools could we retire if we moved to E5?
  • How much of what we already license is turned on today?

The decision

Ask for a license utilization review before any upgrade. Many companies discover they can raise their security significantly with features they already own — and then upgrade only the users who need more.

microsoft 365 e5 security impactMicrosoft 365 E5 launch2017

More on this story