The road to Microsoft Office 365: The past

The road to Microsoft Office 365: The past

Summary: I'm kicking off a three-part series on the road to Office 365. Today, I'm looking at the early history of the products and people that put the cogs in motion for Microsoft's software-as-a-service play.


I'm kicking off today a three-part seriesabout Microsoft's Office 365, the company's software-as-a-service offering.

When Microsoft announced its plans for Office 365 in October of this year, few were cognizant of the five-plus years of groundwork that preceded the launch of its hosted-application platform. Few also seemed to understand why and how Microsoft is attempting to coalesce its varied hosted app offerings under a single brand and infrastructure. I'm hoping with this series to explain the past, present and future of one of the most important elements of Microsoft's cloud strategy.

Office 365 is the new name for the Microsoft services offerings currently known as Business Productivity Online Suite (BPOS), Live@edu and Office Live Small Business. Office 365 is in limited beta now and will be available to customers in the first half of calendar 2011. More nuts-and-bolts details about Office 365 are available via my ZDNet Webcast, "Office 365 Essentials," which is downloadable for free (with registration).

Laying the Office 365 Foundation

The idea of a suite of Microsoft-hosted applications isn't something new that the Softies dreamed up in response to Google Docs. Microsoft execs were pondering the possibilities of hosted applications as far back as 2003 to 2004, when Microsoft began making a handful of key strategic acquisitions in this arena.

Different business units at the company were pursuing parallel strategies. The reseller-channel-focused part of the company had fielded a hosted Exchange offering at the start of the decade, via which it was offering certain resellers and integrators the ability to resell to their users partner-hosted Microsoft Exchange. The Windows Live team had developed a hosted offering focused at the academic community, known as Live@edu. And the Office Live team had fashioned a small-business-centric set of Microsoft-hosted wares, known as Office Live Small Business (OLSB), which included e-mail, domain hosting and Web-site development tools.

(click on the timeline image above to enlarge)

Eron Kelly, Senior Director for Office 365, remembered Microsoft was looking for ways to grow its Office-centric businesses around mid-decade. Hosting seemed like an attractive option, but the question was whether Microsoft should buy or build -- or do a little of both -- to get more deeply into this arena.

Microsoft's real-time communications unit already had purchased hosted conferencing vendor Placeware in 2003. In 2005, the Redmondians bought FrontBridge, a secure-messaging service provider.

"By late 2005/early 2006, we saw a clear value proposition in running Exchange for our customers," Kelly recalled. "We could offer customers economies of scale and skill, and also make more money for Microsoft."

Microsoft execs already were envisioning the business and technical opportunities of providing not just hosted e-mail, but also instant-messaging, presence, and other related services, Kelly said. Microsoft officials were referring to this concept as CCS, or communications and collaboration services.

While the product teams were launching their fledgling hosted offerings, things also were happening internally -- on the Microsoft Information Technology (MSIT) side of the house. By 2005, explorations had begun around the idea of Microsoft running multiple services for large customers, including Microsoft itself. MSIT was testing a pilot of Microsoft-hosted Exchange, SharePoint and Live Communications Services with Energizer Holdings.

The primary champion behind Microsoft's burgeoning Online Services push was the former president of Microsoft's Business Division, Jeff Raikes. But Microsoft's outgoing Chief Software Architect Ray Ozzie played a role in the company's .hosted services push, as well, according to Kelly.

Ozzie joined Microsoft in 2005, and his subsequent "Internet Services Disruption" memo "was wind in our sails," Kelly said. "His view was closely aligned with ours and we met with Ray often, even though he was spending a lot of time on the consumer side (and on the Live@edu piece) of Microsoft's business," Kelly said.

"We talked at the early stage about decisions and their long-term impact on Microsoft. We spent a lot of time early-on with (CEO) Steve (Ballmer), Raikes and (former Office chief Steven) Elop," said Kelly. "The thinking was this (Microsoft's Online Services) was the first instance of what Microsoft would ultimately become."

Late 2008: BPOS is Born

By the time 2007 rolled around, Microsoft quietly was offering Microsoft-hosted versions of Exchange,  SharePoint and Live Meeting (the result of Microsoft's Placeware acquisition) to the first few paying customers, which included Energizer, XL Capital and a handful of other enterprise accounts. It wasn't until late 2008, however, that Microsoft officially launched BPOS, its bundle of these services, as a package.

At this stage in Microsoft's Online Services life, BPOS was a side business for Microsoft. The company was still leading with software, not services. And no one was talking (yet) about being "all in" with the cloud.

The Microsoft product teams delivered its on-premises versions of Exchange, SharePoint and Communications Server to its Online Services teams and those teams then began work on bringing a subset of the services in these products to customers who were willing to try using them in the form of Microsoft-hosted services. The lag time between the time a software feature was available as a service feature was (and still is, at this point), substantial. The majority of current BPOS customers don't have access to the features Microsoft rolled out months ago with Exchange 2010 and  SharePoint 2010, for example. (Those features are now slated to debut when Office 365 launches next year.)

Going forward, however, the plan is to develop software and hosted services in tandem, Kelly said. By getting new features into services more quickly, new advances in each of the piece parts of BPOS/Office 365 will be available to customers more immediately.

"As the Exchange, SharePoint and Communication (Lync) teams take more ownership, once a server is ready, we expect the delta (between software and service delivery times) to diminish," he said. "The idea in the future is to have things come out at the same time, but not to force all (teams) to be on the same train."

How is Microsoft planning to speed up its delivery schedule? What's changing, besides the brand names, as Microsoft moves from BPOS to Office 365? I'll tackle these questions and more in tomorrow's installment of this series.

Topics: Collaboration, Microsoft, Software


Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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  • year 2001 : .net xml web services

    the tech from MS was there to go all out for SOA.
    but it failed to move its own apps towards that [possibly because it would affect its old 'software as product' business model].
  • we missed u for a full week

    did u go into a cave to dissect office365 ? no news about much anticipated kinect , wp7 sales or performance ?
  • Office 365 is looking AWESOME

    Thank you too Mary for the background. The understanding and experience that Microsoft has shown in aligning its core productivity suite into a services offering will make everything else pale in comparison.<br><br>Seeing how Google recently just cobbled together a list of disconnected applications, acquired hodge-podge over the last few years, most not even out of beta, to provide some semblance of an enterprise collection makes it quite clear that this is going to be Microsoft's game to lose.<br><br>Looking forward to the next installments.
  • Six Years

    Six years to bring the product online? These days that doesn't make them innovators, it makes them roadkill.
    • Six years? That's nothing!

      @curph <br><br>So tell me, how long has it taken YOU to bring a multi million dollar productivity suite, intranet portal services, and enterprise-class communication business into a cloud-connected platform using multi million dollar datacenters at multiple locations worldwide, hmm??
  • World's best funded Cloud Washers

    Microsoft doesn't offer cloud computing. They offer hosted server products. The current version of BPOS runs 2007 server products, so the next version will run 2010 server products? It's nearly 2011 and it will likely be half way over before the 2010 version of BPOS comes out - it's outdated before it's even available. Dedicated BPOS is even worse, it's simply a single-tenant client/server ASP offering. Microsoft doesn't have real cloud offerings because they're too busy with SharePoint 2010, Exchange 2010, the next version of Communications Server (Lync Server), Office 2010 ... all on-premise software products, but they're "all in"? Ray Ozzie didn't seem to think so.

    Google just rolled 60+ additional services into the Google Apps infrastructure. They'll have like 300 new features rolled into the core suite this year. The Google Apps for Government suite received FISMA certification. The Education suite hit the 10 million user mark. That's the power of multi-tenancy and a 100% focus on delivering web-based technology services.

    Microsoft builds server products. Google delivers technology services. One defines the past, the other the future.
    • What is Google's business model?


      Every Microsoft customer is a paying customer. Can you honestly say that about Google (aside from selling their privacy for ads)?
    • RE: The road to Microsoft Office 365: The past

      @PatKelly <br><br>You hit the nail right on the head...BPOS/Ofice365 are hosted server apps right out of the ASP past. One look at Ms. Foley's timeline is all you need to know to figure that out. No wonder it took Microsoft all summer to patch BPOS. The ASP model has been obsolesced by the development of multi-tenancy and single-image software, which are true hallmarks or cloud computing. A lot of hosters are busy "cloud washing" their hosted applications and Microsoft is no different. Yes, Google is able to update/upgrade their IT services behind the scenes so all users immediately see a new feature, control or widget, which they can get information on and begin using. You are quite right in your observation that Google delivers IT services and Microsoft builds server software. How could it possibly be otherwise? Even the talented Mr. Ozzie could not substantially alter Microsoft's DNA when it comes to cloud computing. However, I do think Windows Azure will be his legacy, but that's another subject.
    • RE: The road to Microsoft Office 365: The past

      @PatKelly <br>60+ additional services....<br>have you looked at their "products". A joke of 3rd party products that offer nothing more than single login and that is it.<br>Google apps have not changed in last 5yrs and the only "business" paying for it are start-ups and government institutions who need to save $ at any cost. Education institutions are also struggling in accepting influx of students so a cheep way to support 'student needs' it to unload it to Google.<br> Think about that for a while and why is this the case.<br><br>I can't wait to see this product live that truly offers 'office' experience not bunch of javascript powered text areas.<br>I am sure MS will also fail but at least it will offer some platform that people are not afraid to switch due to familiarity. Whether or not they have the Right infrastructure to support it all...probably not when compared to Google. Will the product 'feel' better...probably so.<br>Cloud computing concept has been around for a while...a long while and look how slow it has made its way into businesses. There is more to it than just 2.0 ajax apps.
  • RE: The road to Microsoft Office 365: The past

    Skydrive is great, easy to use and integrates with the web and desktop versions of Office. The interfaces are polished and familiar. I just tried Mesh and the 5GB of file sync storage that let me get rid of Groove for one of my users. Those files are also available through Live and don't take away from your 25 GB of Skydrive storage.

    I really like the tools Microsoft is providing but I do have a hard time finding answers to my questions. They have forums and communities but I need Administrator and Deployment guides. If they do have a complete Admin guide I haven't found it. Also the pricing is up in the air. Office 365 Education will have a free offering but other parts will have a fee (probably sharepoint and such). Not knowing the numbers means I have to put off deployment until next year. By then, I'll have to go back and see if Google Apps is a better fit.

    I'd love a hosted Exchange/Office solution. I could save a lot of money by turning our mail server into a file server but not knowing how pricing will shake out keeps us from being an early adopter.
    • RE: The road to Microsoft Office 365: The past

      "I'd love a hosted Exchange/Office solution. "
      I second that...that RAID could be used for more useful stuff than providing fluff for the stores :)
  • But does it work in the Boonies ??

    Much of the time my work or document processing is done far away from internet service. Since we often move I depend upon an aircard and the heavily wooded area we frequent are not good for a satelite service. So... how does one still work if all their docs are in a cloud or on someones server and you do not have a (reliable) internet connection. (If fact it took three attempts to send this message)
    • RE: The road to Microsoft Office 365: The past

      I suggest some sort of offline cache with offline apps downloaded the first time the service is used, and then synced when online. That way you could go to a better connection download it all and then only have to make occasional syncs with the cloud. (like email in the old days when everyone had 14400 bps modems)
  • Office 365... always up.... except Feb 29...

    ...don't use it that day...we are not sure it works...

  • RE: The road to Microsoft Office 365: The past

    thanks you very much uyelik i??in
  • RE: The road to Microsoft Office 365: The past

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