OneDrive Alerts: Stay Ahead of Crucial Updates to Protect Your Files!

Key insights

• OneDrive Retention Policy Updates: Starting January 27, 2025, unlicensed OneDrive accounts older than 93 days will be archived or permanently deleted. Archived accounts will incur reactivation fees and monthly storage costs.
• Current vs Future State: Currently, data can be retained indefinitely for unlicensed accounts. In the future, all unlicensed accounts will be archived after 93 days unless a custom retention policy is applied.
• Cost Implications: Reactivating archived accounts will cost $0.60/GB for activation and $0.05/GB per month for storage. Organizations with multiple archived accounts could face significant charges.
• No Automatic Enrollment in Fees: Organizations won't automatically pay additional fees unless they choose to reactivate archived data beyond the set retention period.
• Identifying Unlicensed Accounts: Use the SharePoint admin center to generate reports on unlicensed OneDrive accounts. This helps in managing potential archiving and deletion actions.
• Options for Organizations: Consider signing waivers with clients for potential fees, using third-party backups, or assigning licenses to specific users to avoid archiving costs.

Introduction to OneDrive Retention Policy Changes

Microsoft has announced significant updates to the OneDrive retention policies, which are set to take effect on January 27, 2025. These changes are expected to impact how organizations manage deleted accounts and data retention. In a recent YouTube video, Nick Ross [MVP] (T-Minus365) provides a comprehensive breakdown of these updates, emphasizing the importance of understanding the implications for your OneDrive data. The video covers several key areas, including what the changes mean for data management, how they affect existing retention policies, and the necessary steps to ensure compliance and avoid data loss.

Understanding Current vs. Future State

Currently, when a user is deleted or processed through the user deletion wizard, their OneDrive data is preserved for 30 days before being moved to a recycle bin. Administrators can recover this data using PowerShell for up to 93 days. Custom retention policies can be configured in the SharePoint Admin Center or the Compliance Admin Center, allowing data to be retained indefinitely for unlicensed users. However, Microsoft aims to address a loophole that allows organizations to avoid paying for storage on data preserved through retention policies or unlicensed users who are not deleted. This loophole is particularly beneficial for companies with high employee turnover, as they might have numerous disabled accounts consuming storage without incurring costs.

Future State: New Retention and Deletion Policies

Starting January 27, 2025, the default retention and deletion policies will remain unchanged for deleted users. However, if there are retention policies beyond the default 30 days, OneDrive accounts from deleted users will be archived after 93 days. Additionally, any unlicensed accounts will also be archived after 93 days, regardless of existing retention policies. Accessing files from archived accounts will incur an activation fee of $0.60 per GB, with a monthly storage fee of $0.05 per GB for all archived accounts. For example, if an organization has 100 unlicensed OneDrive accounts, each consuming 1 TB, the total cost for reactivating a specific account would include a one-time reactivation fee of $614.40 and a monthly storage fee of $5,120 starting from October 2025.

What Happens If No Action Is Taken?

Organizations will not be automatically enrolled in additional payments. However, unlicensed OneDrive accounts older than 93 days will be archived and inaccessible unless reactivated with the associated costs. If these accounts do not have a custom retention policy, the data will be moved to the recycle bin for another 93 days before being permanently deleted. To manage these changes, organizations can identify unlicensed OneDrive accounts using the SharePoint admin center. By generating a report of unlicensed accounts, administrators can better prepare for the upcoming policy changes.

Options for Managing OneDrive Accounts

Organizations have several options for managing OneDrive accounts in light of the new policies:

• Inform Customers: As part of the user offboarding process, granting access to another user, typically a manager, for 30 days can suffice for data retrieval. This period includes an additional 93 days for recovery from the recycle bin.
• Sign a Waiver: Clients can sign a waiver agreeing to pay fees for additional storage if needed. This approach clarifies potential costs and ensures compliance with retention policies.
• Use Third-Party Backup: Implementing a third-party backup solution allows organizations to restore data into a SharePoint site if necessary.
• Assign a Single License: Reactivating a single user's OneDrive by re-adding a license can avoid triggering Microsoft 365 backup billing, which charges for all archived data.

These options provide flexibility in managing data retention while balancing costs and compliance requirements.

Conclusion and Recommendations

The upcoming changes to OneDrive retention policies present both challenges and opportunities for organizations. By understanding the current versus future state of data management and considering various options for handling unlicensed accounts, organizations can make informed decisions to ensure compliance and avoid data loss. It is crucial for IT administrators and decision-makers to stay informed about these changes and proactively manage their OneDrive setups. By doing so, they can minimize disruptions and maintain efficient data management practices.

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