Why pick Office 365 over free cloud tools?

Microsoft has been offering business cloud services for some time, starting with its LiveMeeting conferencing product, and more recently its BPOS cloud servers.

LiveMeeting may have been easy to use, but BPOS needed as much as hand-holding as your own server farm.

Meanwhile the free and paid versions of Google Apps proved far easier to exploit and manage, while free tools such as Google Docs formed a useful ad hoc collaboration platform — making them popular with enterprises of all sizes.

Now Microsoft has released Office 365, its revamped and redesigned cloud service. A multi-tenant suite of the latest Office services and servers, Office 365 is designed to give users an easier way to run Exchange, SharePoint and its Lync voice, conferencing and messaging platform, without needing additional hardware and systems management. But will the new service allow Microsoft to compete with Google and the rest of the cloud world?

ZDNet UK talked to Microsoft UK's managing director Gordon Frazer and to Gurdeep Singh Pall, corporate vice president of the Office Lync and Speech, about how Microsoft plans to compete in the cloud, and how Office 365 will evolve.

Small businesses are using free services already. How will you get them to switch to a subscription service such as Office 365?
GF: You will see very small businesses use free mail services such as Hotmail and Gmail. But once somebody wants to get beyond basic email services — the ability to do real document sharing, co-authoring, those kinds of solutions — you step into a pay-for service, even if it's not Microsoft.

If somebody wants to have just basic free email, that option is available. But if you want to want to think about what you can really do with it, you have enterprise capability in email and SharePoint. The conversation is about richness and features, going beyond free email and basic services.

GSP: Some other workloads — for example, Lync Online — you can't get that free. You'd have to pay a lot of money to get that separately from Citrix or WebEx. Here those capabilities are part of the price.

Who can you connect to with Lync Online and how can you connect to business partners, suppliers, and customers that also use Lync?
GSP: By default, Office 365 will federate you to the Windows Live Messenger cloud — and to the AOL cloud. We will also have open federation, so any other company using Lync that wants to federate with Office 365-hosted tenants, they can do that. Beyond that, it depends on the other enterprise. Microsoft is already using Lync to federate with 2,000 companies.

The conversation is about richness and features, going beyond free email and basic services.

– Gordon Frazer, Microsoft

We support two modes of federation. Open federation is where the enterprise says I'm not going to have any whitelists or blacklists, you go in and say, "joe@intel.com" and automatically Lync will establish the connection to the other Lync server. Or you can have blacklists and whitelists.

When it comes to secure connections, we will assert versions. We will say we'll not support the lower version of Lync if it would be a security issue.

Do you handle all the digital certificates needed?
GSP: Office 365 handles certification as part of the provisioning process. All that is plumbed all the way through. Whether you're using Exchange or Lync Online or federation, we'll get all those certificates issued and you don't need to worry about that. I think there is enough suffering in the world already.

When will the upgrade to support voice come?
GSP: Voice capabilities — so you can have your phone number through Lync Online — are going to be coming after release, and we're on track for that. We've done a partnership with O2 to bring those capabilities to market. We're partnering with others that we're not ready to announce yet.

We think voice is going to become a really integrated capability. As a business owner you can go in, assign phone numbers, get your voicemail. With respect to Skype, we see this as...

...a very, very complementary business to Lync and to the business suite. But we're not going to give any details until the deal is finalised.

How will you update Office 365?
GSP: There are two pieces. There are improvements that have no end-user impact — fixing bugs or adding new capability that doesn't really surface in the interface. Those we will just keep doing.

When it comes it to major version upgrades, we realise large enterprises want to have control. If you're Marks & Spencer, you don't want to hear, "On 23 December we're upgrading you to the next version." So we give a period of time and let the customer choose and say, "I would like to wait until this particular time." So far, we've got really good feedback. Customers like the choice.

Or you can say, "I don't care. You can upgrade me any time you want to." In which case, we will just move you quickly from one version to the next.

Historically, our major releases have been in the two- to three-year range, but we're looking at what is the right cadence. I expect we will continue to evolve our thinking in the new services world, because in some ways some things get a lot easier, some things get more complex and you have to find the right balance for customers.

Take LiveMeeting — something my team has run. We have tens of thousands of customers, mission-critical usage and in many cases you touch bits on the desktop as well. We've learned over the years what works, what doesn't work and now we're figuring out how to take that learning and make that part of our process. The ability to be flexible, to give customers choice, is key. Anything else is not tenable.

Microsoft partners have traditionally set up servers for small businesses. Do cloud services such as Office 365 put them out of business?
GF: With a small business, the guy who shows up and helps do your basic IT infrastructure — I think there's going to be an evolution there, one way or another, whether it's about the move from on-premise to cloud or specifically Office 365.

Some of those partners will be in a position to add value in additional services. Today people spend time installing an Exchange server, provisioning email accounts. Some people may still use a partner to do that. We're already seeing services to get people into Office 365.

When it comes it to major version upgrades, we realise large enterprises want to have control.

– Gurdeep Singh Pall, Microsoft

Take a traditional SharePoint partner. They'll install SharePoint but more often they see their value as the customisation they can offer rather than just running the infrastructure. There'll be a lower cost of entry, reducing the overall cost of a solution by removing the capital costs.

Office 365 is not everything that everybody is going to do. There will still be other things. Their accounting system, their CRM system, their line-of-business applications. And they'll need to be integrated with Office 365. There's also Azure for other cloud services from partners.

GSP: When you look at integrating presence and click-to-call, those interfaces are now available to independent software vendors for targeting small businesses, which they could never do before. It's bringing features from medium businesses to small ones, with the value and innovation shifting to the next layer. And of course there's a need for vertical features.

What do small businesses get out of it?
GSP: Office back-end servers used to be accessible only to large enterprises that could actually deploy these capabilities. Today, these enterprise-grade services are available for small businesses as well. You actually leapfrog enterprises because enterprises have to go through the update cycles themselves and sometimes there can be a lag in getting new capabilities.

GF: It's an education thing, getting customers to understand what "better together" means for the desktop plus services in the cloud. There's been fantastic interest in the UK in the beta. There's a real demand out there. For the beta, the second largest number of users after the US was in the UK. We have Office 365 subscription plans that don't need Office, but with those that do, there's a better story.

We're reaching out with roadshows, with webinars, and with traditional channel partners to explain why the cloud makes sense for small business. Customers love Office, it's a brand that people trust and Office 365 has to deliver on that promise.