The road to Office 365: The future

Today is the third and final installment of my "Road to Office 365" series. Today is a look ahead at what's coming on the infrastructure, product and outreach fronts.
Written by Mary Jo Foley, Senior Contributing Editor

Today is part three of a three-part series about Microsoft’s Office 365, the company’s software-as-a-service offering. (In part one, I focused on the history of the platform. In part two, I discussed the evolving services culture at Microsoft.)

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).

Unifying the underpinnings

Office 365 is, in part, a rebranding of a number of Microsoft's existing Online Services. But it's more than that; it's a make-over of a number of Microsoft's highest profile software-as-a-service offerings.

In the first half of 2011, when the company begins moving existing and new customers to Office 365, there will be lots of balls in the air. The Redmondians will need to keep their existing hosted services up and running (hopefully with few to no interruptions) as they update the underlying platform infrastructure. They'll be implementing to new provisioning and commerce mechanisms, plus adding the first of a number of the new SharePoint, Exchange and Lync communications features that they've been promising for the past several months.

The end goal is for Microsoft to be able to take advantage of efficiencies of scale. Currently, Microsoft's various Online Services teams each has its own schedule for providing updates to their respective platforms. With Office 365, Microsoft is shooting to align the update schedules for BPOS, Live@Edu and Office Live Small Business.

"We can release features every quarter," said Eron Kelly, Senior Director for Office 365. Microsoft currently is delivering updates to its Business Productivity Online Suite (BPOS) offering in the February/March; June/July; Fall; and just before year-end time frames.

To get to this point, the Office 365 team needs to move BPOS, Live@edu and Office Live Small Business customers onto a new Online Service Delivery Platform (OSDP). That platform consists of shared hosting infrastructure, commerce, user-experience/user interface, digital marketing and marketplace components. This will give the newly rebranded Office 365 services -- small business, enterprise, education, federal, etc. -- more consistency and provide tighter integration.

(click on the diagram to enlarge)

The actual products that comprise these offerings -- SharePoint Online, Exchange Online and Lync Online -- also all will be getting refreshes which introduce various pieces of software functionality that Microsoft rolled out for their software counterparts over the past year-plus. As I've reported before, the services aren't going to get every new feature introduced in the software; Microsoft has a staged rollout plan for which featues will be added to the services. As part of the Office 365 rollout, the Live Meeting conferencing service is going away (though it still will be available for purchase as a standalone product for those who want it) and will be replaced by the audio/video conferencing that is part of Lync.

(I've published some Microsoft slides from this past summer, detailing which features will be added when for SharePoint Online, Exchange Online and Communications Online, which is now known as Lync. Microsoft may have updated these roadmaps since then, but I don't have any more current information.)

In the second half of 2011, Microsoft is going to add its CRM Online offering to Office 365. Details on what this will look like for customers and partners, in terms of licensing and pricing, are few and far between at this point. Currently, the CRM Online team has its own infrastructure, billing system, etc. Microsoft's Kelly said once it is added to the suite, CRM Online will become another "experience" from a customer perspective. In other words, CRM will become another "tenant" running on the OSDP, he explained.

Reading from the book of customer experience

The other product piece of Office 365 -- locally installed Office Professional Plus -- is going to be an optional add-on to the services to the hosted services bundle. The reason Microsoft opted for the highest-end (and most pricey) Office SKU is that it surfaces all of the functionality that Office 365 users may want/need to access, the Softies said.

"Office Professional is the place where so many of the (Office 365) capabilities can come to light," said Chris Barry, Director of Microsoft Office Product Management. From early on in its hosted-app strategy, "we knew where the user experience would be," Barry added.

Barry said there's a possibility that Microsoft might offer other Office SKU options  (like Student and Home, for example) for different customer segments, given that something like Office Professional Plus is overkill for most students. But for now, he had nothing more definitive to say.

While Office 365 is not "Office in the cloud," per se, the bundle does signal a change in Microsoft's procurement process. Starting November 1 of this year, Microsoft made changes to its volume license Enterprise Agreements via an optional amendment, Barry noted. The amendment makes it easier for customers to acquire software, services and/or a combination of the two, he said. It also shifts the previous device-based licensing to per-user, he said.

In addition to changing the license agreements themselves, Microsoft is also changing the way it "sells" services to the field and channel, who've grown used to selling boxed product and Enterprise Agreements. The Online Services team authored an actual book about the customer UX/experience, which is read by all of the team's engineers and business managers, according to Morgan Cole, a Director with Office 365. (I asked to read a copy, but no go.)

"It's a whole different relationship with the customer now," when it comes to services, Cole said. "The customer experience becomes the entire life cycle; it's not just learn and try and buy. It's a whole end-to-end solution."

As part of this shift, Microsoft also is changing how it communicates with its Online Services customers, Cole said. That communication pattern also now includes a much bigger community element, meaning customers talking to customers, not just product managers talking at customers.

"We learned a lot from our Live@edu team" about communication, Cole said. "But we're also looking at the rest of the industry for lessons learned" around programs like community rewards programs, he said.

As we go forward, we're looking to "constantly improve our contactability," Cole said. With services, "it's a relationship-marketing thing."

That's it for my "Road to Office 365" series. I'm curious what you readers still find confusing or would like to know about Microsoft's next-generation hosted services offering. Share your feedback in the talkbacks below.

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