Every year around this time “experts” sit around and make predictions about all sorts of things. In some spaces like world politics, this is truly a guessing game. When it comes to Microsoft, it involves more of trying “to read the tea leaves.” Even with the breathtaking pace of change, there are still pretty good signs of where the technology is going.

Customers Drive the Pace of Innovation

Over the past few years I have sensed a true paradigm shift at Microsoft. Whether speaking to developers, managers or executives, you hear the same narrative. They want to know what customers want and need and are working to have that drive innovation and development.

This is by no means a perfect system. Microsoft is a huge company trying to balance customer requests against feature sprawl and the desire to be an innovator. What is perhaps the most telling sign of this new approach is the speed of change in Office 365. Updates -- large and small -- are pushed out on a monthly or even weekly basis and are based largely on customer feedback and requests. This finally puts Microsoft on par with its competitors in this regard.

Conversely, this is causing customers to evolve their practices. A vivid example of this is the gap between SharePoint and Office 365. Although is it widely speculated that Microsoft will announce an updated version for on-premises installation at the Ignite conference, it is likely that it includes features and fixes that have long ago been rolled out for Office 365. Customers are being put into a spot where they must choose to adopt Office 365 or be left behind.

Hybrid Becomes the Norm

The pace of change leaves many medium and larger organizations in an interesting predicament: On the one hand, they have significant investments in IT departments with established roles and upgrade procedures. On the other, Microsoft is offering an enticing option to outsource these roles and practices for a fraction of the cost. In their last financial report, Microsoft reported that commercial cloud revenue (including O365 and Azure) grew 128 percent over last year, while Office Commercial products and services revenue grew 5 percent as customers transitioned to Office 365.

Clearly the trend is to move, but there are two main points of resistance. First, although some applications like Exchange are relatively “easy” to push to the cloud due to the standardized implementations, others (SharePoint comes to mind) have been highly customized to meet specific business tasks. In order to support SharePoint for the masses, Microsoft has correctly cut down or in most cases eliminated the customizations that are supported in O365. So moving a highly customized SharePoint environment to the cloud is impractical without rewriting it from scratch using the Office 365 App model.

The second point of resistance is information compliance and control. Although it could be argued that Microsoft is better at protecting data than an average IT department, there are specific regulations and business needs that would be best served by keeping certain information within a corporate firewall. This won't likely change in the near future.

The compromise in these situations is to implement a hybrid implementation of Office 365. Organizations will need to carefully choose which applications and information should remain under IT control and then move the rest. Microsoft already provides basic integration such as single sign-on and cross-environment search for Hybrid implementations. It is widely anticipated that further integrations will be released in 2015 allowing for seamless integration of on-premises and cloud based environments.

New Role for IT Administrators

Unlike smaller organizations where one or two individuals manage the entire technology infrastructure, medium and larger ones have well established disciplines including Exchange, SharePoint and File System management. Individuals who specialize in one area have unique skills beyond simple management of these services. They focus on advanced functions such as tuning, optimization, backup, disaster recovery and upgrades.

One of the core benefits of Office 365 is that these advanced functions are taken over by Microsoft. With the heavy lifting removed, Office 365 Administration Portal and PowerShell scripts are relegated to basic service management. On the flip side, an Office 365 Administrator has control of the entire tenancy including basic user and group management, Exchange, SharePoint, OneDrive, Yammer and Lync.

Although some organizations will choose to maintain certain services in-house (see Hybrid is the Norm), the need for specialized IT roles will be greatly reduced, if not eliminated. Administrators will need to become generalists that manage a host of daily activities in Office 365.

The Beginning of the End of File Systems

When I think back to the early days of corporate networks, one of the biggest rewards was the availability of shared drives. IT would create these drives for department or group use and each person would get a small allocation of personal storage (the ubiquitous “H:” drive). These would be available as soon as you logged into the network and since physical storage on computers was limited and prone to loss, shared drives became a business essential.

In 2014, Microsoft announced that each OneDrive for Business user will get 1 TB of space in Office 365, which should be more than enough for anyone (with exception of some very unique cases). Couple that with the ability to sync from multiple devices and then collaborate with users inside and outside an organization, and the argument for moving file systems to the cloud becomes persuasive.

However, there are still obstacles to making this a reality. For one, migrating existing content to the cloud has a variety of challenges including the amount of time it takes and type and size of files supported. Secondly, OneDrive for Business is still deficient in ease of use as compared to rivals such as Dropbox and Box. However, 2015 should see several innovations out of Redmond that will reduce or eliminate these barriers. Once this happens OneDrive, (and partially SharePoint), will take over for traditional on-premises file systems.

Emergence of Workflows in the Cloud

For customers who implemented workflow technology with their SharePoint instances, it is arguably the most valuable part of their environment resulting in greater user adoption and a rapid return on investment. For Office 365, Microsoft made a conscious effort to decouple the workflow technology from SharePoint, leveraging the Windows Workflow Foundation 4.5 (WF 4.5) that runs in Azure and is extendable via web service (third party vendors such as Nintex® followed a similar path). The idea is to decouple workflows from SharePoint Online due to scalability and performance limitations.

The pitfall of course, is that existing workflows are not easily portable to Office 365 without third party tools, raising the specter that they may need to be re-written from scratch. On the other hand, the new architecture offers the capability to integrate activities between different Office 365 services as well as external service providers such as Salesforce and SAP, opening the door to simple integration between heterogeneous systems. Look for workflow technology to become a big part of Office 365 in 2015.

While nothing is set in stone, these are just a few of the things I see in the tea leaves of Office 365, and the future looks bright.