Starting January 27, 2025, Microsoft will change how unlicensed OneDrive accounts are managed. Any account left unlicensed for more than 93 days will be automatically archived and inaccessible to users. Organizations will also face new fees: $0.60 per GB for reactivating accounts and $0.05 per GB per month for storing archived accounts.
These changes could create challenges for organizations, especially those with high employee turnover or a practice of keeping data from former employees. Without proper planning, companies may lose access to important business data or face high costs to retrieve it.
To help you prepare for the 2025 changes, we have created a guide that explains how to navigate compliance with these new changes to avoid being hit by surprise charges to your account.
Inside this article:
The new policy enforces a strict 93-day limit for unlicensed accounts before they are automatically archived. Once archived, these accounts cannot be accessed by users or administrators unless specific actions are taken. Organizations will have three options to manage these accounts:
For organizations with a lot of archived data, costs can add up quickly. For example, if you have 100 unlicensed OneDrive accounts with 1TB each, reactivating one account would cost $614.40, while storing all accounts would cost $5,120 per month.
With these changes, Microsoft is addressing a major loophole in its storage policies. Right now, organizations can keep data forever by using retention policies or leaving unlicensed user accounts active without deleting them. This has led to cases where companies with 100 active employees are also holding onto 500 disabled accounts with 10TB of storage—without paying extra.
The new policy is designed to improve security, simplify compliance, and reduce confusion and file duplication. Unlicensed accounts can pose security risks, so this update encourages better data management practices.
Organizations need to act quickly to address these changes, which go beyond storage costs and impact data access, compliance, and business continuity. Here’s how the new policy will affect you:
To prepare for these changes starting January 27, 2025, organizations should:
It’s essential to complete these updates by the January 2025 deadline to avoid unexpected costs or losing access to important data. Focus on smart migration strategies by moving critical data to active SharePoint libraries or licensed OneDrive accounts while ensuring access rights stay intact.
Preparing for the upcoming OneDrive changes requires a clear plan. Organizations need to audit their unlicensed accounts and set up data management strategies before automatic archival starts on January 27.
If this isn't addressed in time, the financial impact could be significant. For example, an organization with 100 unlicensed 1TB accounts might face monthly storage fees of $5,120 and reactivation costs of $614.40 per account. Plus, the 24-hour wait for reactivation could disrupt business operations.
Organizations have three main options:
The best choice will depend on factors like data retention policies, budgets, and operational needs.
The manual approach works best for smaller organizations with fewer unlicensed accounts and manageable amounts of data. This method requires administrators to review accounts, analyze data, and make decisions on retention or deletion individually.
While it gives precise control, it can be time-consuming and prone to mistakes in larger organizations. Still, here’s a step-by-step guide for administrators. (You can also download our detailed Unlicensed OneDrive Account Auditing Checklist for easier reference.)
1. Access and Export Unlicensed OneDrive Account Report
Go to the SharePoint admin center and find the "Reports" section. Click on "OneDrive usage" and filter for unlicensed accounts. Export the report to Excel for analysis.
Make sure you have the required permissions, usually as a Global Administrator or SharePoint Administrator. The report will show important details like account owners, storage usage, and last activity dates.
2. Analyze Account Data and Usage Patterns
Open the exported Excel file to sort the data by last activity date and storage usage. Look for accounts that have been inactive for a long time or are nearing the 93-day threshold. Focus on accounts with large data volumes, as they may lead to higher archival fees. Add extra columns to organize accounts by department, project, or other relevant categories to make decision-making easier.
3. Review Retention Policies and Legal Holds
Check the unlicensed accounts against your organization's retention policies and legal holds. Go to the Microsoft 365 compliance center to review active retention policies. Identify any accounts covered by these policies or legal holds, as they may need special handling. Work with your legal team to ensure compliance with data retention rules and decide on the best approach for these accounts.
4. Assess Data Criticality and Business Value
For each unlicensed account, assess how important the stored data is to your organization. This may mean reaching out to department heads or project managers to confirm if the data is still needed. Think about factors like active projects, historical records, and possible future use. Then, create a prioritized list of accounts based on how critical their data is to help guide your decisions.
5. Determine Appropriate Action for Each Account
Review each account and decide whether to reactivate with a license, delete, or prepare for archival. For accounts with important data, consider moving the content to active SharePoint sites or other users' OneDrive accounts. Estimate the costs of reactivating or archiving accounts with large data volumes. Make sure to document your decisions and the reasons behind them for future reference and audits.
6. Execute Chosen Actions Before the Deadline
Make sure to complete these tasks before the January 2025 deadline. To reactivate accounts, assign the necessary licenses in the Microsoft 365 admin center. For data migration, use the SharePoint Migration Tool or PowerShell scripts to move content to the right locations. If deleting accounts, ensure you have proper backups and follow your organization's data deletion policies. Keep track of your progress to make sure everything is done on time.
7. Document Decisions and Maintain Audit Trail
Keep a clear record of all actions taken for each unlicensed account. Include information like the account owner, data volume, decisions made, actions taken, and the date of execution. Store this record securely and make it accessible to relevant stakeholders. This audit trail is essential for compliance and can help address any future questions about how specific accounts or data were handled.
8. Establish New Procedures for Departing Employees
Create and enforce policies for managing OneDrive accounts when employees leave. Include a clear timeline for deactivating accounts, reviewing data, and migrating or deleting content. Develop a simple checklist for HR and IT teams to follow during offboarding. Consider setting up automated workflows to start these steps as soon as an employee’s departure is recorded in the HR system.
Get governance best practices for managing OneDrive, SharePoint, Teams, and more in CoreView’s Microsoft 365 Governance Best Practices Guide.
Managing unlicensed OneDrive accounts manually can be a challenge, especially for large organizations.
With CoreView, you get instant visibility and automated management of unlicensed OneDrive accounts, helping organizations stay ready for the January 2025 changes.
Here’s how CoreView supports effective OneDrive management:
Organizations using CoreView have successfully managed millions of OneDrive accounts, cutting down on administrative work while staying compliant with Microsoft’s policies. CoreView’s automation tools save time, reduce manual effort, and provide complete control over your OneDrive environment.
Learn how CoreView’s OneDrive account management tools can help you prepare for these upcoming OneDrive changes.
