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Reducing M365 Storage Overage Fees

It turns out that storage in the cloud isn’t free after all. The financial reality may not be a surprise to all, but for many senior decision makers it’s coming as a shock, a monthly and increasingly intimidating shock. Digital Workspace owners are rushing to control M365 Storage Overage Fees.

What are M365 Storage Overage Fees?

M365 and O365 subscriptions include storage capacity: a shared 1TB for the organization and an additional 10GB per subscription. This is true for M365 E3 and E5, as well as O365 E1, E3, and E5 subscriptions.

If an organization exceeds their storage entitlement, they are required to Add Extra File Storage at a rate of approximately $0.20 per GB and month (or clean up their data footprint, or both).

Using these numbers, an organization with 40 000 subscriptions will have a file storage entitlement of just under 400TB in their SharePoint tenant; 400TB before they encounter Overage Fees. This sounds like serious capacity. When judged from the familiar perspective of Data Centers and File Servers you’d expect it to last well into the future. But M365 is different.

Do I need to plan for Overage Fees?

If you’re still asking this question, then you’re one of the lucky ones.

For an organization that began full-scale transition to the M365 eco-system some three years ago, Teams will now be established as the primary workspace and SharePoint Online the primary file storage platform. Storage consumption will now be accelerating at unfamiliar and worrying rates; driven by the usual increases in file sizes, by new opportunities to collaborate and share, and, most significantly, by the way SharePoint Online maintains file Versions (more on this later).

Let’s say that our hypothetical organization of 40 000 employees began their M365 journey by migrating 250TB of primary file data into the platform. Back when they were using NAS storage, they were accustomed to a modest 30% annual data growth rate. But the growth rate in SharePoint Online is quite different. The Director of Digital Workspace would have first encountered M365 Overage Fees towards the end of the first year. By the end of the second year, C-level executives would be familiar with the term as Total Cost of Ownership for additional storage approaches $1 million. By the end of the fourth year, if no remedial action was taken, the organization would have spent well over $5 million on M365 Overage Fees. And this is in addition to the cost of the M365 subscriptions themselves.

Why are growth rates different in M365?

M365’s Versioning feature is the single biggest factor driving SharePoint Online file data growth.

New lists and libraries are now, by default, configured to retain up to 500 Versions of each file. A new Version is created every time a file is saved (or AutoSaved), and each Version counts to storage consumption in full. This is critically important: SharePoint Online does not store changes between versions, it does not use SQL Server’s Shredded Storage feature, the full file is stored each time. I.e., a 6 MB PowerPoint file, edited for typos over the course of a week, could easily now exist in 500 versions with a total data footprint of almost 3 000 MB.

In our hypothetical organization we have assumed that the underlying data growth rate remains at 30%, and that each new file is stored in the backend as 3 Versions of equal size. The situation, and resulting financial impact, can obviously be far more dramatic.

The chart below is taken from a campaign Northern carried out together with a large European customer in June 2023. It shows the effect of Historical Versions on the overall data footprint in their top 1000 sites:

Across this company’s almost 1PB tenant, 72% of data was attributed to Historical Versions.

How does Northern reduce Storage Overage Fees?

Northern’s software is used to trim Version history for older files.

A record of changes in an individual file is seen as increasingly redundant as that file ages; as it becomes accepted, static, reference material. By keeping Historical Versions for recently modified files, and removing them for older files, the customer can still offer the Version feature to users, but restrict it to scenarios where it is expected to give value.

Working with each customer, using targeted analyses produced with Northern’s software, Northern provides recommendations on the appropriate retention schedule, including projected effects. When the schedule is agreed, Northern removes unwanted Historical Versions accordingly.

The retention schedule below is taken from the same June 2023 campaign referenced above:

Modification Date Range (months past) Historical Versions to Retain TB Targeted
0-3 months 10 33
3-6 months 5 29
6-12 months 1 95
12-24 months 1 167
24-36 months 1 40
>36 months 0 41

Implementing this schedule, the customer is on course to reduce their total file data footprint by almost 50% (and remove 100% of their Overage Fees). At the time of writing, work was expected to be completed in late August 2023, less than three months after the start of the campaign.

How can you get started?

At a high level, the steps are simply:

  1. Engage with Northern.
  2. Deploy Northern’s software in your environment.
  3. Decide on a version retention schedule (guided by analyses produced in Northern’s software).
  4. Execute on that schedule.

Results are usually achieved within the first month after project start.

With Overage Fees mounting and a solution so clearly presented, there is no time or cause for indecision. Contact Northern and book a time to get started.

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