Transcript: The Pros and Cons of Office 365

Written by Tim Haight

I'm VP of Technology Services for CGNET. I love to travel and do IT strategic planning.

April 9, 2013

Dan Callahan talks about Office 365.Tim: Welcome to CG Net Tech Talk, our periodic discussion series of issues of interest to the foundation and nonprofit community.  Today we have as our guest, Dan Callahan, the Vice President of Product Management at CGNET, and he’s going to talk to us about how to decide whether or not to get Office 365.  Hi, Dan.

Dan:    Hi, Tim.  How are you today?

Tim:    Excellent, thank you.  By now, practically everybody has heard something about Office 365, but what do you consider to be the best description of it?

Dan:    Well, Office 365 is a little bit like all the blind men touching the elephant, because depending on who you ask, you can get a different answer.  So, I like to start out by pointing out for people that Office 365 is a moving target.  And what I mean by that is, like any software that is a service offering; it’s constantly changing.  So the capabilities evolve over time, and this is going to be important for people because if you’re looking up information on Office 365 and you find, for instance, something that maybe it doesn’t do today, you have to make sure that you are looking at current information because you may well find that the service has changed since the time that the  information you were looking at has been published.  And the product today and the service today is different than it was, say, six months ago.

Tim:    What would you say it is today?

Dan:    Oh, so today Office 365 is, it’s really a menu of services that Microsoft offers, and exactly what’s in those services is determined by the customer when they subscribe to the service.  So the elements of it are Exchange Online, which is used for messaging,  SharePoint Online, which is a document management and collaboration tool and Lync Online, which is an instant messaging presence and PC to PC voice or video calling.  And, then there’s also Office Web Apps, and these are web versions of Office applications like Word and Excel.  And then, some plans also include licenses for the  desktop application for Office 2010 or 2013.  So, exactly what Office 365 is depends on each customer because you can basically mix and match any of those items into a bundle that suits your needs.

Tim:    You can also get a Lync that can serve as your PBX.  Isn’t that true?

Dan:    Yes, that’s right. However, the Lync functionality that replaces your PBX is only available in the on-premise version of Lync.  It’s not available today in the online version.  There are, however, some voice-calling features that are included in Lync Online and, as I said earlier, Office 365 is an evolving service, so I would expect to continue to see an evolution of what kinds of voice-calling features are supported in Lync Online.

Tim:    So with all these different versions out there, that can get confusing.  How do you decide which version is right for you?

Dan:    Well, I think to figure out which version is right for you, the first thing is to understand what’s the sort of entry point,  in moving some of your services,  into the Cloud. And for many people that’s Exchange or their messaging.   They often start with that thinking, you know, “I’m ready to be done with managing Exchange servers on my own, or paying a hosting provider to host them and take care of them, and I’d rather just move all of that into the Cloud.  Let Microsoft take care of that.”  So, the first thing is, you know, what’s the anchor point in it, that attracts you to Office 365 to begin with?  And then what makes sense beyond that, is to really look at the economics of adding in some of these other services on an a la carte basis versus subscribing to one of the bundles that Microsoft offers.

Tim:    You mean you could start with Exchange and then you could add other things as you go along?

Dan:    Absolutely, yeah.  So you could, for instance, start with Exchange Online and just keep it at that if you want it.  You might decide, well, I’m gonna get Exchange Online and I like the idea of the instant messaging so I’m gonna add Lync Online to that.   And then you might find that actually the a la carte price of combining Exchange Online and Lync Online is actually more than the bundle price for one of the other packages that Microsoft offers.  And in that case you might decide, even if it’s just for economic reasons, to sign up for one of those bundles of services.

Tim:    So if you started off with just Exchange and you decided then to upgrade to a bundle, they’ll let you do that.

Dan:    Yeah, it’s very easy to upgrade, it’s very easy to, you know, add on or adjust your subscription.  And the nice thing is that in almost all cases you don’t have to restart as far as migrating your data from one plan to another as long as it’s in a Microsoft plan of one sort or another.  Then, for instance, when you add SharePoint Online to Exchange Online, you’re just adding that service and it doesn’t really affect your Exchange Online data store.

Tim:    Cool.  So, how much do these different things cost?

Dan:    Well, the answer to that question, of course, is it depends, and,  – this makes me sound like a consultant, I suppose –  but the answer really is it depends on what particular bundle you’re putting together.   I can tell you that the range of prices is as low as, $4.00 per user per month;  that’s if you’re buying just the standard version of Exchange Online.  And then if you were to get one of the more full-featured bundles from Microsoft, you might be paying up to $22.00 per user per month.  And then these are all, you know, what I call retail rates, meaning these are the rates that you see if you go to Microsoft’s Website and, you know, fish around and find some of the plans and see what the pricing is.

Tim:    So, a lot of our listeners are from non-profits.  How about non‑profit pricing?

Dan:    That’s a good question.  There is non‑profit pricing available, and it’s available to qualifying 501(c)(3) non‑profits in the U.S.  There’s a bit of a process to go through to apply for that and obtain that pricing.  And, I can answer that for any of your listeners that might be interested.  But with that non‑profit pricing that’s available, Microsoft does offer a couple of different plans.  So, in other words, you can’t just pick any service you want and apply a non‑profit discount to it.  They have just a couple of specific plans that they make available on a non‑profit basis.  However, those plans are very aggressively discounted from the retail rates, so they’re actually quite attractive.

Tim:    Okay. So now that we know the basics about Office 365, how should we decide whether or not to move there or whether we should stay with what we have?

Dan:    Well, the decision about whether you should move to Office 365 or stay with what you have,  it, it, it revolves around a couple of considerations and the first one, not surprisingly, is economics. What you’re going to be comparing typically here is what does it cost me to stand up a server, run it for three years, acquire both the hardware and the software licenses such as Exchange,  the CALs  and so on.  What’s that capital outlay versus what am I going to spend over say an equivalent three-year term if I sign up my users on a per user per month basis.  So, that’s the first one to look at and, of course, you want to look not only at the, the hardware and software costs, but you probably also want to think about what moving to a Cloud-based server like Office 365 is gonna do to your IT staff costs.  You know, are you gonna be spending more or less because you’re not paying attention to worrying about server upgrades for instance.  So, you wanna take those things into account.  There used to be a sort of a crossover point of about 250 users where if you were above that point, it probably made sense to continue running on premise or maybe a private Cloud-type of  Exchange service, versus Office 365.  But I found that now a lot of customers that are in, you know, 500 to 1,000 users are often finding it, you know, economical to move to Office 365.

Tim:    Though I suppose one of the considerations might be if you were at a point where you were thinking about upgrading Exchange.

Dan:    Yes, and we’ve seen a lot of customers come to us and express interest because they’re looking at upgrading, say, from Exchange 2003 or 2007 to the latest version of Exchange, and that’s sort of a natural point to look at a make-versus-buy decision.  And so in this case, to look and say, well, if I have to upgrade anyway, do I really wanna upgrade to another server which pretty much signs me up for three years of maintaining that server, or do I just wanna look at moving to Office 365.

Tim:    Well also, is it an issue if you’re thinking about upgrading to Office 2013?

Dan:    Well, that does play a factor into the consideration because Office 365 has plans that include subscriptions to the Office Productivity Suite.  This used to be the only Office in town,  in terms of nomenclature, and so if you’re also looking at, you know, if you have an organization and you’re looking at upgrading everybody’s desktops from Office 2007 or 2010 to Office 2013, then you want to take into account how much it’s gonna cost you to source that Office 2013 desktop software and compare that to what you’re paying if you were to sign up with one of these Office 365 plans where they provide you with the software for free as part of the subscription.

Tim:    Yeah, I understand they actually provide each user with five licenses, is that right?

Dan:    Yeah, they do.  You get five licenses of Office 2013 to use,  per user, and this is a really attractive offering because obviously, you can put one of those licenses on your desktop.  But then if you have a laptop, which many people also have, you can use one of the licenses for that, and you can use another license for, say, a home computer.  So, you can actually, you know, provide the same kind of Office experience for users whether they’re working in the office or on the road or at home.

Tim:    So, beyond the economics, what are some of the other things you oughta take into consideration?

Dan:    Well, there’s a couple of other things. One of them has to do with what kind of IT expertise you have in house.  And many organizations, particularly smaller ones, have at best a part-time IT person on staff,  and often that person is not really an IT administrator by training; it’s more a function that’s fallen to them.  So if you’re kind of light on the IT experience in‑house, then it often makes sense to look at Office 365 because you still need to worry about administering the service when it comes to setting up users and that kind of thing.  But, all of the details about running servers and backing them up and making sure the software’s current, you know, that is basically a function you turn over to Microsoft and let them worry about that.

Tim:    Right.  And they provide business continuity too, right?

Dan:    Yes, they do.  They have a 99.9 percent SLA they offer with the service and it’s financially backed, meaning that if they fail to meet that, you can basically ask them for some money back.

Tim:    Okay.  So, are there any other considerations we should think about?

Dan:    Well, there’s a couple of other things.  As I said, I’ve been seeing even some large organizations move to Office 365 and, of course, these people have plenty of trained IT staff in house.  And what I’m finding is that some of those organizations are basically saying, “I only have a certain amount of time in my day as an IT person, and I’m being, tasked more and more by the organization to think about how IT aligns with the business.” And they’re worrying about questions like how do we put together a social media strategy and how does that fit, and so on and so forth.  And some of these people are saying, “You know, I don’t really feel the need to be a server management utility anymore.  I’m gonna turn that over to somebody else, so I can worry about these other problems that are key to the business.”  So, you know, that’s a consideration in favor of moving to Office 365

There are some organizations who have a concern about the privacy of their data, and I’m not referring so much to whether Microsoft’s gonna look at their data, which, you know, they’re not. But some of these  organizations are concerned that maybe  a government is going to go to Microsoft and say, “I wanna get access to the data center and I wanna look at the messages of this particular organization.”  And so, I’ve seen some organizations that have elected, even though on all other counts Office 365 would make sense to them, to go ahead and keep their data on premise just ‘cause they’re wanting to make sure that, that they protect themselves against that kind of possibility.

Tim:    Do you have any way of knowing when you sign up for Office 365 what country your data is going to be hosted with?

Dan:    Um, in theory your data could be hosted anywhere; however, Microsoft,  by policy, will host your data in a data center that’s closest to your organization. And they do that mainly for reasons of minimizing any kind of latency and delay in terms of accessing your data.

Tim:    So there’s a pretty good chance that if you’re in the United States, for example, that your data would be hosted in the United States.

Dan:    That’s right.

Tim:    Okay.   Dan, this has been really great talking to you and I know that the Office 365 story goes on into questions of implementation and maintenance and things of that sort.  Maybe we could have you back another time to talk about those issues?

Dan:    Absolutely, Tim.  I’d be more than happy to do that.

Tim:    Well, thanks a lot and have a great day.





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