By Vincent Brasseur
Office 365 is a Microsoft Cloud offering built around the Microsoft Office platform. It enables end users to access applications and documents through the conventional office applications installed on a computer but also using an internet browser. It delivers great value and benefits: product use rights have been repeatedly adjusted over time to make Office 365 more attractive. For enterprises, it is a subscription-based service with an annual commitment that comes in a few different flavors:
- Business Class email $4.00 per user per month
- Office 365 Enterprise E1 $8.00 per user per month with email, file sharing, web conferencing, enterprise social and Office Web applications
- Office 365 Enterprise E3: $20.00 per user per month with additional features such as a Desktop version of many Office products and eDiscovery center
- Office 365 Enterprise E4: $22.00 per user per month with enterprise voice capabilities to replace or enhance a PBX
Note that Microsoft Project and Visio are only offered via individual subscriptions.
Microsoft Office 365 is priced per user, not per device. One of its major benefits is to allow any user up to five installations of the products on five different computers, one of which could be used with the Remote Desktop Services (RDS) role enabled. Additionally, the license allows five installations of Microsoft Office Mobile software on the user’s smartphone devices and unlimited access from any device using Office Web applications.
Microsoft has reported a tremendous success with Office 365. Back in May of last year, it was reported that more than one million Home Premium edition subscriptions were sold in the first 100 days. At that time, Microsoft also indicated to Redmond ChannelPartner that 90 percent of Office 365 customers are from organizations that have less than 50 employees. Any product in this space is likely to first be more successful with small organizations as it reduces upfront investment and management. It offers best of breed products at a very competitive price compared to a perpetual license, with all the flexibility of a Software as a Service (SaaS) subscription. Microsoft has also been successful with some large organizations, for instance they announced in October a 50,000 user deal for Microsoft Office 365 with the US Army.
Most large organizations have not yet moved to Office 365. They want to stay in control of their IT and the product releases that are installed on their desktops. They also want to make use of their existing perpetual licenses. Moving to Office 365 on tens of thousands of desktops will come at a cost. Microsoft Office 365 is certified for ISO 27001, EU Safe Harbor, HIPAA compliance, etc. to guarantee the security and privacy of documents stored in its datacenter. However, many organizations have their own rules preventing them from moving sensitive data to the cloud. In some cases, regional or local legislations prevent the use of cloud based storage outside of a country or a region. Finally, despite being compliant with the EU Safe harbor regulation, it seems that the US government can force a US based company such as Microsoft to hand over data stored in one of their subsidiaries throughout the world.
Office 365 simplifies license management. There is no need to count device installations or usage, only users. Office 365 self-checks that products are not installed more than five times by the same user. It addresses many scenarios— from remote use and mobile use to Bring Your Own Device (BYOD). [On a related note-- this Redmond ChannelPartner article indicates that "the signs point to Microsoft requiring an Office 365 subscription to use Office apps on Android and iPad tablets."] As it is an annual commitment, customers need to closely review the number of licenses needed, especially when the subscriptions are about to be renewed. There are a couple of caveats with Office 365 in this regard. The first is to monitor the use of the licenses. Some users may only use Office Web applications and may need only an E1 subscription ($8 per month) compared to an E3 (($20 per month). Users come and go within the organization so reclaiming licenses must be part of the day-to-day activity of the Office 365 User Administrator. Compliance issues can still occur when organizations assign more licenses to users than their subscriptions permit. In this case, de-installation or new purchases must happen.
Large organizations are likely to stick with their perpetual licenses for some time. They may implement limited use of Office 365 for specific users. They renew their Enterprise Agreement every three years and many times skip a software update as they plan to keep using older versions of the software products for some period of time. Moving these organizations to Office 365 would help smooth out Microsoft’s license revenue and preserve their market share. To facilitate this migration, in September Microsoft introduced the opportunity for the value added reseller (VAR) channel to sell and manage the Office 365 licenses for enterprise customers.
There are many competitors on the market such as Google Apps, OpenOffice.org or FreeOffice. Microsoft has the advantage of having a huge customer base with perpetual licenses and a very attractive offer with Office 365. Microsoft’s ability to transition enterprise customers to Office 365 will determine its overall success in the market.
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