Microsoft's Office 365: More than the delivery of a new platform

Microsoft is in a very critical period with their fiscal year ending this week, as my colleague Duncan Jones recently wrote. But today, Steve Ballmer is announcing one of Microsoft’s most important products in the company’s history – Office 365. Sound like an embellishment? It’s not – and it’s because Office 365’s release is not just the launch of a new technical solution for customers, but also a change in the relationship with their customers. Microsoft’s Office 365 is the single biggest change to the Microsoft customer relationship since introduction of Software Assurance and the modern Enterprise Agreement in 2001.

For those that are blissfully unaware of Microsoft licensing, Software Assurance is Microsoft’s software maintenance relationship with customers and represents a large part of Microsoft’s predictable annual income. I wrote earlier about the how cloud services like Windows Intune change the nature of this relationship– from one based on rights to upgrades and later releases of software, which for some customers had questionable predictable value – to one where a customer sees more predictable value by delivering benefits and services that truly offset internal costs. We know that we sink large sums of time and money into running email and collaboration services ourselves. Microsoft takes on far more responsibility and Office 365 exemplifies that motion. Cloud services solve Microsoft’s greatest challenge, building an annuity relationship with a customer that will be less risky continue to deliver.

I’m going to focus on what this means to an infrastructure and operation professional. For the past several years, my colleague Ted Schadler and I have written about what this trend means to Infrastructure & Operations pros along with their Content & Collaboration-focused peers who are charged with defining an enterprise collaboration strategy.  If you’re not asking yourself if the cloud is right for your company, your CFO, CIO, or other another executive will. Why? The costs are very appealing and always start the conversation – but an evaluation of the fit for your company today ultimately will guide a move between vendor platforms, or to the cloud. Even if the cloud isn’t ready for you today, the evaluation is critical in understanding the gaps that exist for your organization today, and what needs to change in the marketplace before you make a move. The right evaluation includes several steps, including an assessment of your workforce, application integration requirements, your own costs, security, and regulatory requirements.

An analysis of your employee requirements entails answering questions like: Do they need offline access and an installed email client, or will web access suffice? What size email box do they need? Do they need to be archived for compliance purposes? In addition to running a comparative cost analysis to measure your own internal costs vs a those of a provider, determining your security and regulatory requirements is also critical. In fact, those typically top the list of customer questions. In a smart move, Microsoft also introduced the Trust Center, a site to help give guidance to customers about where the platform stands on these issues.

Finally, it’s important to recognize it’s not just people who use your email and collaboration platforms – it’s the backend ERP, finance, and other LOB apps that do as well. Email and collaboration tools are also supported by services like archiving and eDiscovery, encryption, and antivirus/antispam. There’s a broader family of communication tools as well, even FAX systems play a role. While much of the focus on Office 365 is on the office productivity tools, it’s the backend platforms like Exchange, SharePoint, and Lync and how they integrate with these other systems and services which drive customer decisions.

These steps not only determine the feasibility of a move, but how you can segment your workforce to take advantage of either a hybrid approach where you retain on-premises email infrastructure for some users, and transition larger groups to a cloud service and take advantage of the better economics. Also, it can yield opportunities to provision users at some of the less expensive price points – the cheapest of which is cheaper than even Google.

I mentioned it in an earlier post, but we’ve recently published two new reports that go far more in depth: Onefocusing on some of the emerging best practices in the evaluation and migration to cloud-based email platforms, as well as a Forrester Market Overviewlooking beyond the platform vendors themselves like Google, IBM, and Microsoft, and including  third-party hosters and telecoms. I encourage I&O pros to take a look and let us know what you think. It will be hard to shake the Redmond giant from their strong lead in the marketplace. Office 365’s success will ultimately be driven by the strength of Microsoft’s broader platforms as well as the large partner ecosystem.

What do you think? Are you making a move? Sticking with Microsoft? Going Google?