Have you heard the term, “eating your own dog food?” Microsoft manager Paul Maritz wrote an e-mail in 1988 that created the term and loosely it means… use what you sell.
I took the challenge to heart a while back and decided that if I was going to sell cloud services I needed to use them myself. This idea really took off for me with Office 365 this year. As I started talking to more and more clients about the benefits of cloud-based e-mail I first signed up for Business Productivity Online Services (BPOS, the precursor to Office 365) and then the beta of Office 365. I used BPOS and the beta as test beds to learn the products and to assess their viability for my clients. I wasn’t ready to migrate to them internally yet however.
Eventually, just as Office 365 was releasing my first client wanted to get moving. I had been talking to them about it for months. My experience with the beta had been good so we went ahead. I signed up for the full product and started moving over e-mail at the same time I was installing it for this client and actively selling the product to my other clients. I figured it was time to eat my own dog food.
So, here’s what happened: my client had some growing pains but Office 365 has turned out to be a good solution for them; I’ve had several other clients express interest and installed it for them successfully; I love using it internally and am recommending it to anyone that listens. I did learn some lessons though:
- Doing your research really pays off. It did for me! I avoided several land mines by doing a beta assessment first.
- The entry-level Office 365 SKU (P1) doesn’t come with phone support. It isn’t worth the $4/mo savings… get the E1 SKU, you won’t regret it. There’s also a 50-user cap for the P1 SKU.
- You cannot switch from the P1 to E1 SKU. Tell me it ain’t so! This was a real bummer for me. I still don’t understand why. I’m sure there’s a good technical reason. You have to do a full migration to move between these SKUs.
- I know Office 365 is supposed to be easier than self-hosted Exchange, but it’s no cakewalk and still requires significant technical knowledge and capability. Your average tech-savvy client isn’t going to do a migration without assistance. Some of the migration stuff gets pretty complex. Besides, most businesses just don’t *want* to do the administration. They have other stuff to worry about… like running their business and making money.
- The amount of money you’ll make on Office 365 (aside from ancillary services) is negligible until you get in to hundreds of deployed licenses. Don’t plan to make your money on monthly recurring revenue. It’s a 6% share per year plus 12% if you’re the initial partner of record that signs up the client. That’s a maximum of 18% the first year plus 6% per every year after. Make your money on services, that’s all I can say about it. It’s not nearly as profitable as providing a hosting service if you do that. If you do provide hosting services plan on this being a big competitor! Stress the customization options you offer that Office 365 does not.
- A properly run and well maintained Exchange server doesn’t take much more work to service than Office 365. You’ll still get the bulk of your work on user adds/deletes, adding new domain names and aliases and on the user-side support of Outlook. You just don’t need to monitor the hardware any more. Oh, and you have a new administrative interface to learn.
- Including Microsoft Office in your Office 365 subscription seems like a good idea and it may be for some clients that have very seasonal workforces. Do the math before you decide on this course though. You have other options for subscription based Microsoft Office, like Open Value Subscription and sometimes Services Provider License Agreement (SPLA).
- There’s no private branding or resale of Office 365. It’s 100% direct bill from Microsoft. You don’t get to mark it up. This makes it hard to include in a fully managed service agreement by the way. Microsoft really needs to fix this to increase adoption by Managed Service Providers (MSPs).
- Just like any service IT WILL GO DOWN. Make sure your clients understand that 99.9% of the possible 8,760 hours in a year equals about 9 hours per year of down time. That’s a full day and then some and it could happen at any time. Just the same, it’s likely to be much more reliable and secure than self-hosted Exchange for most small businesses and may make sense for larger ones as well.
- It comes with some nifty additional products you may or may not use. Bear in mind that you don’t get as much of each product with each Office 365 SKU so learn your product before you sell it. Also, don’t try to sell Lync to people using Office Communication Server as an onsite VoIP unified communications system. There’s no integration with the public communications infrastructure yet. That means for right now it’s an internal-only system. Cool, but not blow-me-outta-the-water awesome.
I like Office 365. I’ve tried Google Apps and while that worked okay, Office 365 just feels more like a business solution to me. It’s been reliable and pretty easy to set up. Most days I don’t even notice I’m not hosting my own Exchange server any more. And isn’t that the idea? Apparently, dog food ain’t so bad!
Are there any best practices with regard to Office 365 that you’ve found and I’ve missed? How many seats do you have on Office 365 and how has it been as a profit center for your business? Let us know with your comments!
The Small & Medium Business Case for Office 365 – An Evaluation of Microsoft’s Cloud E-mail and Collaboration Services
For some background on Office 365 see my previous post http://blog.redwoodnetworks.com/2011/04/what-makes-sense-in-cloud-today.html. I’ll assume that everyone is passing familiar with hosted e-mail and collaboration services for the purposes of this article though.
Like Punxsutawney Phil, the economy saw its shadow in 2010 and returned to its hole for another 6 weeks (months) of winter. Spring is here now, though. Businesses are spending money and hiring again and they’ve learned a few things. First of all, they’re a little more cautious… especially with regards to technology and purchasing systems that require a great deal of ongoing maintenance. They continue to be interested in new ways of doing more with less. What’s new, though, is that they are willing to take some calculated risks, give some new ideas a try.
I’m going to make some generalizations about businesses… see if any of this sounds like your business:
- You have limited capital assets to invest on computer technology, software and services.
- You need to keep up with technology trends within reason… to keep in line with vendors, partners, clients, etc.
- You require solutions that are reliable, business tested, and easy to manage.
- You have one or more in house computer servers now providing e-mail and collaboration services.
- Your organization includes several people that require the ability to not only send e-mail but to collaborate with each other and external users efficiently.
- You’ve delayed renewing your systems for the last couple years due to the recession but you just can’t wait any more. Your systems are aging and it’s just time to upgrade.
Does any of this sound familiar? If so, this is a great time for you to evaluate some of the maturing solutions for hosted e-mail and collaboration services. Small and medium-sized business have had it hammered in to their heads over the last 10 years that they can now do all the things that large businesses can do with technology: they can have their own e-mail; they can have web portals, not just plain old websites; they can host web training and deliver presentations to hundreds remotely; they can have instant messaging and unified communications systems that deliver voicemail messages to their e-mail inboxes.
There’s a problem though. All of these solutions require a LOT of maintenance. And experts to maintain them. Not to mention that the solutions themselves are not cheap. They’re much more affordable than they used to be, but it’s still hard to part with capital. Didn’t we just have a recession? And are we really SURE it’s done? How can businesses take advantage of all of these technologies that extend productivity and give critical advantages over competition… but do it without the large investments and risky baggage they come with?
Well, they’re in luck. If you really have been hiding in a hole for the last 3 or 4 years you’ve missed a revolution in computer technology. It’s called Cloud Computing and Microsoft is there in spades with their new Office 365 product. When I say new though, don’t get the wrong idea. This is not a version 1 product. Hosted e-mail and collaboration services have been around for several years now.
Back to the business case for Office 365 then. Let’s talk about some of the reasons why businesses have NOT been moving in droves to hosted cloud services up to now.
Road Block #1: The Solutions are Just Not Mature.
Your business cannot depend on a hosted service you cannot control. Hosted solutions aren’t reliable and are probably not secure. Also, the service level agreements are not sufficient and they’re just not ready for prime time.
Microsoft deployed its first hosted Exchange e-mail service (the 1.0 product) in 2002, re-released it in 2006 (Exchange Hosted Services – the 2.0 product) and expanded it to include the collaboration product Sharepoint 2007 (Exchange and Sharepoint Online – the 3.0 product), finally reaching the current product – Business Productivity Online Services (or BPOS – the 4.0 product) in November 2008. Office 365 is expected to release fully in the US around mid-year 2011.
So, if you look at the full history of hosted Microsoft online services, Office 365 is most definitely NOT a version 1 or even version 2 product. It’s a mature and well-thought-out suite of services with offerings that are appealing to a broad range of business types and sizes. With everyone’s concern (often for good reason) over trying version 1 products it’s important to understand just how mature hosted “cloud” services have become over the last 5 years.
Road Block #2: Access to Adequate Internet Connections
Up until recently, many small businesses struggled with obtaining reliable and speedy internet service. This kept them from considering hosted solutions because of the perceived low quality of those services.
With the expansion of cable companies in to the business space and the resulting innovation by the phone companies, small businesses now have extraordinary options for high-speed, reliable internet services. T1? Old news. Got fiber? No? Check it out.
Road Block #3: Didn’t We Buy that Last Year?
Pre-existing investments by medium-sized businesses in some of the very technologies being moved to the cloud have kept them from fully investigating outsourcing those services. There’s a lot of infrastructure that was purchased to enable some of these solutions and you can’t just throw it away!
Microsoft Office Communications (OCS) server and Sharepoint have both experienced a renaissance in medium businesses over the last 5 years. Integration of phone systems with OCSSharepoint has become a major productivity tool on par with e-mail in many offices.
Many of these investments are now aging. Staff has been downsized during the recession. Businesses want to keep these capabilities but do it with less staff and capital investment in infrastructure that needs refreshing every three to five years. The online solutions have matured and now offer many if not all of the same features as their more traditional cousins. If it’s time for a tech refresh, it’s time for an online services evaluation!
So, with most of the major road blocks removed, why haven’t businesses been moving to the cloud in droves? Expertise. The industry requires a new generation of consultants and engineers that specialize in Cloud Infrastructure Services. They’re coming, believe me. Those who see the writing on the wall are already well in to delivering these services to their clients, but full penetration will take some time yet. There is a fundamental shift in how Information Technology is delivered. Microsoft calls it “Software Plus Services.” You won’t see onsite computer servers, software and services disappear from businesses entirely, at least not for a long while. But, the slow movement of services to the cloud has begun and will only accelerate.
Back to the business case again then. You can now:
- Pay for your e-mail, collaboration portal, instant messaging, and meeting/web conferencing solutions via a monthly subscription that is a true expense and saves you from calculating depreciation of assets.
- Obtain all of these services without a major capital investment.
- Bring capabilities that only large enterprises previously had available to small and medium businesses quickly and easily.
- Future-proof your technology – don’t invest in new technology that will be obsolete again within 5 years. These services include all upgrades – performed invisibly in the background and without major interruptions (mostly) in service.
- Access services from anywhere – it’s incredibly easy now to open a new office. Who cares about connecting to the servers in your old office, it’s all hosted online!
- Access more and better solutions – the rate of development for new applications, services and solutions on the web is much faster than the traditional model. A company can create a product and have it deployed to customers overnight now. React faster with more relevant solutions than ever before.
- Right-size your solutions. Need more seats? Add them and they’re available within minutes. Downsize? Remove some seats and pay less next month. This is an absolute revelation to seasonal businesses.
How much does all this cost? An arm and a leg, right? Not at all! The entry level product with 99.9% guaranteed uptime and limited support is available for only $6 per user per month. For larger businesses with more substantial needs or those with higher SLA requirements there are solutions that range in price up to $27 per user per month. The upper-level options also include a license of Microsoft Office Professional Plus for each user. This is yet another way to move a capital expenditure in to the expense category.
So, while not every “cloud” offering is worth evaluating, the Microsoft Office 365 services coming to market in the next several months are mature services worth a hard look by small and medium-sized businesses. Cloud services are ready and they’re here. You should be actively looking at them and figuring out how they will change your business. You can be sure that your competitors are.
Credit for the history of Office 365 goes to Zdnet’s Mary Jo Foley’s blog: The road to Microsoft Office 365: The past.