In a previous blog post, I wrote about the group-based licensing model being an all or none proposition.

Group Based Licensing – an all or none proposition… | TIMMCMIC

When I wrote this post the majority of escalations I was receiving were had a common theme. A group assigned more than one licenses and one of the licenses in the group had no more available licenses.

Recently, I’ve received several escalations where the symptoms are the same but the circumstances are different. A review of the audit logs associated with the users who fail to receive a license indicates that not enough licenses exist. The failure though is not that the license is valid with zero licenses, but one of the licenses on the group is in a suspended or warning status.

Customers may, during a renewal, upgrade the licenses that they have purchased. For example, a renewal may include upgrading from M365 E3 licenses to M365 E5 licenses. Depending on when the renewal is processed, it is possible that the licenses will overlap. The E5 will become active before the E3 expires.

When licenses overlap, group based licensing provides an excellent opportunity to add the new license while still retaining the old license on the user. Although I prefer swapping the licenses personally, many organizations desire to have the dual license assignment to introduce the E5 before removing the E3. Note: This works as long as there is no overlapping service plans.

The issue is that the E3 licenses, in this example, is not removed from the group prior to it entering a suspended status. When a license has entered a suspended status, although it remains valid within the tenant no further license assignments will occur. Therefore, the all or none implementation of group based licensing occurs and new users added to the group receive no licenses. The audit log error leads you to believe that you are out of a specific license, yet when looking at the new license you are assigning there are plenty of free licenses available. Suspended licenses have a count of zero regardless of how many were available at the time the license went into a suspended state.

If you are leveraging a migration between licenses using the dual license approach, it is important that the original licenses be removed from the group prior to the license entering a suspended state. Although the service will eventually clean up all expired licenses from the tenant, while the license exists in a suspended state and appears on a group license assignment will stop.