Microsoft released earnings for Q3, 2013 recently and the numbers for its online services clearly indicate that it pays to bet on cloud-based services.
US$ 1 billion US -- that’s Office 365’s annual revenue run rate. According to Microsoft, one in four enterprise customers have Office 365 seats, that’s 25% of Microsoft customers using Office 365 in some fashion. Maybe it’s for Office, or Exchange, or maybe it’s for SharePoint. Although some people have questioned the number because it’s not backed up with details, the fact still remains that enterprise customers are taking a long hard look at cloud-based services.
A recent Gartner report states that 60% of surveyed enterprises are increasing IT budgets for investment in public clouds over the next couple of years. Its seems that more and more vendors are introducing pure cloud services or cloud-services in addition to on premises software. There are a number of good reasons for small to mid-sized organizations to move to cloud-based infrastructures and services and there’s no shortage of advice out there explaining why.
But the cloud is just as beneficial to large enterprises and the savings are just as real. So let’s take a look at four big reasons I think enterprises should consider the move to Office 365:
1. It’s cheaper than on premises
Many will tell you that it’s a lot cheaper to go with Office 365 and pay subscription pricing than buy the on premises versions of Exchange, Office 2013, SharePoint 2013, Lync and so on, along with the servers, and the support people to manage them. Monthly rates for Office 365 mid to enterprise users range from US$ 8.20 per user/month to US$ 23.20 per user/month. On the high side, that’s roughly US$ 300/user for the year.
Now consider what you pay for SharePoint on premises. First you have your base server environment, including your Web, Application and Database servers (minimum of 1 database and Web Server). Then you have a SQL Server Database license, and a SharePoint license for each instance of SharePoint running. Then you have to pay for Client Access Licenses (CAL) for each internal user. There’s a fair chunk of change to work out.
It’s possible that your overall costs might start to even out over the long term, because your infrastructure and software costs aren't the same every year, but Office 365 is a great way to get up and running quickly with the least amount of money for a great deal of functionality.
2. You don’t need dedicated Microsoft admins/consultants
Another big advantage of going the Office 365 route is that you don’t need to have a team of administrators and architects on staff -- the environment is already up and running. SharePoint administrators and architects aren't cheap, and they aren't necessarily available in large quantities. The same is true for Lync and Exchange specialists. In many cases these specialists are grown in house with a lot money spent on training and a lot of trial and error when things are actually being designed, built and implemented. I’m not saying that’s a bad thing, but that can be an expensive thing. And it can lead to delays in getting your environment up and running.
With Office 365 all the grunt work is done for you and it’s managed for you as part of your subscription costs. All you need to do is focus on what’s important to you -- the content and how it’s managed.
3. You’ll get updates much more regularly
Let’s face it, it takes a long time to get updates to an on premises version of SharePoint, or any other Microsoft product for that matter. Service packs come out with small things, but major changes to these platforms happen every couple of years when Microsoft comes out with a new version. This is the reality of working with Microsoft products. Unless you’re on Office 365.
Microsoft commits to regularly updating Office 365. A good example of this is the upcoming integration between Office 365 and Yammer. Summer integration with SharePoint online is already planned, with deeper integration expected in the fall. For the on premises version, Microsoft has indicated it will provide guidance on integration approaches, but you won’t see any actual product updates that you can easily implement.
If you want to stay on top of new functionality or be able to take advantage of changes with respect to technologies or new approaches for business processes, you want to be on Office 365.
4. Enterprise grade reliability
Office 365 comes with a financially-backed 99.9% up-time guarantee for midsized and enterprise plans and there’s a dedicated staff of developers and operations to help you work through any issues you may have.
Data is stored in a redundant environment completely separate from the service itself and your information is not mined for any purposes. Office 365 supports a number of security and compliance standards such as: SAS 70 / SSAE16 Assessments, ISO 27001 certified, HIPPA, FISMA and more. When you sign up for Office 365 you get your own SLA (service level agreement) outlining how you are supported.
Wait, There is More
These are four compelling reasons for moving to Office 365, but is it for everyone? No. Enterprises need to remember that a cloud-hosted version of Office, Lync, SharePoint, Exchange -- that’s not just for small businesses. Enterprises can safely move to the cloud and find high levels of reliability and support. Some would make the case that enterprises can afford an on premises installation of SharePoint or Exchange, but even large organizations have limited budgets these days and most would prefer to spend money where the value is the greatest -- the information they create and manage.
I've given you four good reasons to consider Office 365, but a quick Bing search will quickly give you more. So take some time and have a look around.
Title image courtesy of Souchon Yves (Shutterstock)
Editor's Note: Decided to make the move? Then read Steven's suggestions for migrating to Office 365 in 4 Considerations for Migrating to Office 365 and SharePoint Online