Microsoft 365 E3 gives every user the Office apps, Exchange, SharePoint, OneDrive, Intune device management, Entra ID P1 and baseline security and compliance. Microsoft 365 E5 includes everything in E3 and adds Microsoft’s top-tier security stack (Defender for Endpoint P2, Defender for Office 365 P2, Defender for Identity, Defender for Cloud Apps, Entra ID P2), advanced Purview compliance tools, Teams Phone with audio conferencing, and Power BI Pro. Choose E3 when you need a well-managed productivity platform; choose E5 — or E3 plus targeted add-ons — when security operations, regulated data or enterprise voice are priorities.
E3 vs E5 side by side
| Area | Microsoft 365 E3 | Microsoft 365 E5 |
|---|---|---|
| Office apps, Exchange, SharePoint, OneDrive | Yes | Yes |
| Device management (Intune) | Yes | Yes |
| Identity | Entra ID P1 — Conditional Access, MFA | Entra ID P2 — adds risk-based access, PIM, access reviews |
| Endpoint security | Defender for Endpoint P1 (prevention) | Defender for Endpoint P2 (EDR, hunting) |
| Email security | Exchange Online Protection | Defender for Office 365 P2 — Safe Links, Safe Attachments, attack simulation |
| Identity threat detection | No | Defender for Identity |
| Cloud app security (CASB) | No | Defender for Cloud Apps |
| Compliance | Core DLP, retention, sensitivity labels | Insider risk, eDiscovery Premium, auto-labelling, advanced audit |
| Voice | Not included | Teams Phone and Audio Conferencing |
| Analytics | Not included | Power BI Pro |
Microsoft also sells E3 and E5 in “no Teams” versions in many markets, with Teams licensed separately. Check which variant your agreement covers before comparing quotes.
The real difference is security operations
Most organisations evaluating E5 are really evaluating the security bundle. E3 protects you; E5 lets you detect, investigate and respond. Defender for Endpoint P2 adds endpoint detection and response, Defender for Identity spots attacks against on-premises Active Directory, Defender for Office 365 P2 investigates phishing campaigns across mailboxes, and Entra ID P2 blocks risky sign-ins automatically. Together they feed a single incident view in Microsoft Defender XDR.
That capability only pays off if someone acts on it. If you have no security analyst and no managed security provider, many E5 alerts will go unread. Pair E5 with a SOC — internal or managed — or start with E3 and add automated controls first. Our comparison of Defender for Business and Defender for Endpoint explains the endpoint side in more detail, and Entra ID P1 vs P2 covers identity.
When E3 is enough
- You have fewer security requirements than a regulated bank, hospital or government entity.
- A third-party EDR, email gateway or SIEM already covers what E5 would add.
- You do not use Teams for phone calls and already have a BI tool.
- Budget is better spent on deployment quality — Conditional Access, Intune compliance, and Teams governance — than on unused features.
When E5 pays for itself
- You are consolidating several security tools (EDR, email security, CASB) into one Microsoft stack and can retire their licences.
- You hold regulated or highly sensitive data and need insider risk management, premium eDiscovery or advanced audit logs.
- You want to replace a legacy PBX with Teams Phone across offices.
- A regulator, insurer or parent company requires threat detection and response evidence.
The middle path: E3 plus add-ons
You do not have to choose all-or-nothing. Microsoft offers the E5 Security add-on (the Defender suite plus Entra ID P2) and the E5 Compliance add-on (advanced Purview capabilities) on top of E3. Licences can also be mixed: executives, finance and IT admins on E5; frontline and general staff on E3 or F3. A mixed model is often the most cost-effective option for UAE enterprises with a few hundred users, as long as security policies are designed with the licence boundaries in mind.
How to decide in five steps
- List the security, compliance and voice tools you pay for today and their renewal dates.
- Map each one to an E5 component and estimate what you could retire.
- Identify user groups with higher risk or regulatory exposure.
- Model three options: all E3, E3 plus add-ons, and mixed E3/E5.
- Factor in who will operate the tools — licences without operation are wasted spend.
Pricing changes over time and differs between direct, CSP and Enterprise Agreement purchasing, so validate numbers with a current quote. Our guide to the Microsoft services agreement in the UAE explains the purchasing routes.
Get an independent licence review
M365 Enterprise Hub helps organisations in the UAE and the US right-size Microsoft 365 enterprise plans — and then deploys the features properly so the licence delivers value. Smaller teams can also compare Microsoft 365 business plans. Contact us for a licence and security gap review.
Frequently Asked Questions
What is the main difference between Microsoft 365 E3 and E5?
E5 includes everything in E3 plus advanced security (Defender for Endpoint P2, Defender for Office 365 P2, Defender for Identity, Defender for Cloud Apps, Entra ID P2), advanced compliance tools, Teams Phone with audio conferencing, and Power BI Pro.
Is Microsoft 365 E5 worth it?
E5 is worth it when you will actively use its security operations and compliance features, or when it lets you retire other tools. Without a team or partner to act on alerts, E3 with targeted add-ons is often better value.
Can I mix E3 and E5 licences in one tenant?
Yes. Many organisations license high-risk users such as executives, finance and administrators on E5 and everyone else on E3. Policies must be scoped carefully so E5-only features apply to licensed users.
What is the Microsoft 365 E5 Security add-on?
It is an add-on for E3 customers that provides the E5 security capabilities — the Microsoft Defender suite and Entra ID P2 — without the compliance, voice and analytics components of full E5.
Does Microsoft 365 E3 include Defender?
E3 includes Defender for Endpoint Plan 1 and Exchange Online Protection. It does not include endpoint detection and response, Defender for Office 365 Plan 2, Defender for Identity or Defender for Cloud Apps, which come with E5.
Is Microsoft 365 E3 the same as Office 365 E3?
No. Office 365 E3 covers the apps and online services. Microsoft 365 E3 adds Windows Enterprise, Intune, Entra ID P1 and additional security, making it a full workplace and device management bundle.