Microsoft’s new licensing validation model for Dynamics 365 Finance & Operations is one of the most significant governance shifts since the platform moved to the cloud.

For years, organisations could rely on intent rather than strict enforcement: assign the roles you think users need, trust that your licensing aligns, and move on.

That era is over.

With licensing validation becoming stricter — and enforced based on your contract renewal date starting January 15, 2026 — organisations must rethink user access, security governance, and cost optimisation as a single integrated discipline.

This article breaks down the 10 most important things you must know to stay compliant, avoid unnecessary spend, and leverage the new model instead of being blindsided by it.

1. Licensing Validation Is Now Strict and Role-Based

Your user’s actual privileges now determine the license they must hold.

Not their job title.
Not what they use “most of the time.”
Not what you intended when assigning the role.

If any privilege or duty corresponds to a higher-tier license (Finance, SCM, Project Operations), Microsoft expects the user to hold it.

👉 Related reading:
D365 Finance — New Security Governance: 10 Things to Know
https://www.fitgapfinance.com/10-points-to-keep-in-mind-about-the-new-user-security-governance-in-d365-finance/

This shift forces organisations to clean up overly broad or outdated security models.

2. Some Modules Once Considered “ERP” Are Now Separate Products

Modules like Project Management and Accounting — historically part of the Finance ERP footprint — are now treated as independent products.

What this means in practice

A Finance user accessing project features may require additional licensing.

The good news:
You can often add a Project Operations Attach license instead of purchasing a second full base license.

Failing to re-evaluate cross-functional users is a guaranteed way to overpay.

👉 Another useful article:
Roles & Responsibilities in an ERP Project
https://www.fitgapfinance.com/roles-responsibilities-in-an-erp-implementation-project/

3. Role Design Now Directly Impacts Licensing Costs

Security and licensing are now inseparable.

• Broad roles = higher licensing tier
• Clean roles = lower cost + compliance

Key areas to fix quickly:

• Remove unused privileges and duties
• Avoid “just in case” duties
• Check functional roles that include configuration or posting duties
• Move approver roles to Team Member where appropriate

👉 Recommended reading:
Workflow Best Practices — D365 Finance
https://www.fitgapfinance.com/d365-finance-workflow-best-practices/

4. New License Validation Reports Help — If Your Roles Are Clean

The new Microsoft reports map:

• privileges → required license
• user roles → cost impact
• role composition → licensing changes

These reports are only valuable if your security model is clean.
Otherwise, they just confirm existing chaos.

Use them to:

• identify users eligible for Team Member
• detect hidden privileges
• model cost before adjusting roles

👉 See also:
D365 Finance — Environment Strategy
https://www.fitgapfinance.com/erp-implementation-environment-strategy/

5. Reporting Is Not Fully Functional for Entra ID Group Assignments

If you assign roles through Entra ID groups, reports may not detect all privileges.

• results may be incomplete
• optimisations require manual validation
• governance must track group access carefully

📌 Note: Microsoft resolved this issue in November 2025 for most tenants. Always verify in your own environment.

6. Licensing Starts With the Active User List in D365 Finance

Validation begins with the list of active users in D365, not Entra ID or HR.

Your cleanup checklist:

• disable users who leave immediately
• remove unused consultants/contractors
• eliminate stale test accounts
• reconcile monthly between HR, IT, and Finance

Bad user list = bad licensing = wasted money.

7. You Need a Formal Process for Assigning, Adjusting, and Removing Licenses

A structured lifecycle is mandatory:

• Onboarding: Role → License mapping
• Job changes: Optimise or downgrade
• Offboarding: Remove roles AND license

Neglect creates:

• unnecessary full licenses
• users keeping old privileges
• accumulated cost leakage

8. Consider Cross-Product Dependencies: CRM, Dataverse, Storage

Licensing decisions don't stop at ERP.

Watch for:

• CRM users who influence F&O license combinations
• Dataverse storage increases per license
• Cross-functional users requiring composite license setups

Evaluate your full Microsoft ecosystem, not just D365 Finance.

9. Update Your Role-Building Methodology

When building or modifying roles, always check:

• does a privilege escalate license tier?
• can an Attach license solve the need?
• should this role be Team Member?
• global vs. local role impact on license distribution

Role design is now a financial decision, not just an IT activity.

10. Prepare Early — Enforcement Begins at Your Contract Renewal

Enforcement starts January 15, 2026, but applies based on your contract renewal date.

Start preparing now:

• run trial validations
• clean roles
• understand reporting limitations
• analyse cross-functional needs
• inform Finance, IT, Audit
• update governance documents
• prepare communication plans

Starting late = chaos + overspend.

Final Thoughts

The new licensing model isn’t just compliance — it’s a chance to:

• avoid licensing surprises
• reduce unnecessary spend
• improve audit readiness
• strengthen security governance
• align licensing with real business processes

Handled correctly, this transition becomes an advantage instead of a problem.

📄 Templates to Help You Get Compliant Faster

These resources help teams fix roles, governance, and responsibilities quickly:

• ERP Project RACI Matrix (EN)
  https://fitgapfinance.gumroad.com/l/erp_raci_roles_responsabilities
• Matrice RACI ERP (FR)
  https://fitgapfinance.gumroad.com/l/erp_raci_roles_responsabilites_fr
• ERP Governance Toolkit — 7 Checklists
  https://fitgapfinance.gumroad.com/l/erp-governance-toolkit

🇫🇷 Lire en français
https://www.fitgapfinance.com/nouveau-licensing-d365-finance-10-points-essentiels/

© 2025 FitGap Finance Research Team — reproduction without permission prohibited.