Microsoft’s year ended with a flurry of activity on June 30. One of the trends we continue to see developing is the move towards the cloud and Office 365. It’s no secret that Microsoft has been pushing Office 365 hard in the last year or so, and has been offering price and funding incentives for current customers to make the leap. Microsoft’s cloud offerings suit some customers just fine; for other customers, we recommend sticking with the current perpetual licensing model. It really depends on the circumstances, and, of course, the cost. As I travel around the country talking to Microsoft customers about Office 365, I encounter some common themes/concerns/considerations around this offering. Read on for the four questions I’ve encountered most frequently.
- How do prices Office 365 compare to traditional perpetual licensing? First, Office 365 is a subscription service, so the cost never goes down. Those of you with traditional EA’s and Software Assurance (SA) know that costs tend to drop in year four as you renew. You don’t necessarily see the same drop in price with subscription licensing like Office 365. Therefore, sometimes when we look at the long term costs, Office 365 may be objectively higher. What is more difficult to determine however, is the cost savings of offloading administration of Exchange, SharePoint, and Lync servers to Microsoft’s cloud, as well as the cost of upgrading traditional software (Office, for instance) which would now be done automatically. This is difficult to quantify, but an obvious benefit of Office 365, and one major reason why organizations with small or overextended IT staff tend to favor the cloud. Our advice here is to look at total cost of ownership, not just licensing costs.
- I have been doing research on the Office 365 website. Microsoft offers so many options—how do I know which ones I should be considering? Office 365 comes in many different shapes and sizes—there are plenty of packages and bundles that can make things confusing. On the website (which is, by the way, not the most user friendly site that I have seen) there is Office 365 for Small Business, Office 365 for Midsize Business, Hosted Exchange, Kiosk Plans, Enterprise Plans, etc. All of these can be purchased directly through the website, but here are the only two that we see consistently through volume licensing—these are also the two that Microsoft will talk about the most:
- Plan E1 consists of Exchange Online Plan 1 (basic email and calendaring), SharePoint Online Plan 1 (document sharing and intranet), Lync Online Plans 1 and 2 (IM, presence, peer-to-peer voice and video, and Web conferencing)
- Plan E3 consists of Exchange Plans 1 and 2 (includes Exchange Enterprise functionality), SharePoint Online Plans 1 and 2 (most SharePoint Standard and Enterprise functionality), Lync Plans 1 and 2, and Office Pro Plus for Office 365. This is the plan that Microsoft tends to lead with.
- So do I need E1 or E3? Aside from the Enterprise functionality of Exchange and SharePoint, the major difference between E1 and E3 is Office Pro Plus. I have covered this in the past, but keep in mind that in Office 365 Plan E3, Office Pro Plus is pushed down from the cloud, but is still a local install. I find that consumers are evenly split on the E1 vs. E3 question. Many customers want to retain Office as a perpetual license, but just as many are opting to take this to the cloud.
- Microsoft has put an offer on the table for us to move to Office—should I take it? First, make sure do your homework. If you are considering either on-premise licensing or Office 365, work closely with your software advisor on the details—don’t rely solely on Microsoft. I can’t tell you how many times I have engaged with a customer who was ready to take the plunge into a perpetual EA or Office 365 EA but didn’t know the basics. And how would you? The most important decision-making criteria won’t be found on the website, and many consumers don’t even know what questions to ask. Microsoft is helpful in the process generally, but we always urge third party verification. For example, do you know what other companies in your industry or doing for licensing? Your software advisor should be able to tell you this.
As always, there is much more to the story, but not enough space to address everything. If you have any questions, you can always talk to an Account Manager or Microsoft Licensing Specialist. If you're thinking about Office 365, we recommend taking our Office 365 Online Readiness Assessment. This template was designed by our experts to answer your question: “Is my organization ready for Office 365?” Start Now!