Cloud vendors tout their service offerings as a way customers can save money. Microsoft positions Office 365 the same, but does it always work out that way? I’ve asked technical decision-makers from many companies both large and small about this matter, and the responses I’ve garnered have been all over the map. What’s most surprising, however, is how several of the companies I talked with have found Office 365 to be more (not less) expensive than amortizing the total cost of ownership (TCO) of on-client deployed Microsoft Office software.
One large enterprise I’ve had some dealings with recently estimates that they spend tens of thousands of dollars per year on their Office 365 subscription. This huge figure represents a combination of three cost centers in their IT operations. First, there is the cost of licensing the Office 365 subscription itself which varies depending on the type of subscription the customer chooses to implement. This cost can be difficult to quantify since it may vary over time as Microsoft decides to introduce new plans, merge plans together, or drop existing plans. While one of the benefits that all cloud services providers tout to their customers is having “predictable expenses” for using their services, the reality, of course, is that nothing seems to stay the same very long in our rapidly changing and evolving cloud-based world.
Don’t forget about bandwidth
The second cost area beside licensing is of course bandwidth. Any cloud service you use is only as good as the bandwidth pipe that connects you to your provider’s services, and we all know that Internet connectivity costs also tend to fluctuate over time as Internet service providers merge, acquire, or become acquired by other providers. From the point of view of companies selling cloud services, Internet bandwidth is cheap and ubiquitous. This is a fantasy of course, as anyone who has tried to negotiate provider contracts for a large enterprise.
A third cost which is often not factored into the total cost package for a cloud service like Office 365 is the overhead administrative cost of planning, implementing, managing, monitoring, and troubleshooting the cloud service from the customer end of things. Why is this important? And why can’t this cost simply be rolled into the overall overhead of administrative IT for the company? Part of the problem is that, as I said previously, cloud services tend to quickly change and evolve over time, and as a result of this, they sometimes break when a new feature or capability is introduced, or when an old function is retired. So while cloud providers also flaunt their services as being not only cost-predictable, they also peddle them as being robust and reliable. But for anyone who has used a cloud service for more than a year can testify, this just isn’t true. A classic example of this kind of thing happening occurred in the summer of 2017 when a number of Office 365 customers suddenly found themselves unable to use this service because of Microsoft having quietly redesigned the Office 365 login portal without thoroughly testing it first and providing their customers with adequate instruction or forewarning. While this kind of thing doesn’t happen very often, it can make or break the bottom line for a business living on the edge.
Unrelated issues that affect Office 365
Then there are all kinds of unrelated issues involving your network and your Internet service provider’s network that can affect the usability of Office 365 and other cloud services from the point of view of your employees as they try to get their work done. Things like when you find out your company is going to be acquired by another company and to integrate your on-premises systems into their datacenter you’ll need to change the IP addressing of your servers. While doing this sort of thing can be a royal pain, it can also result in interruptions with your cloud services because of such changes. Or take the time when your ISP decides to migrate their DNS servers to a cloud-based DNS service provider. One would think that changing the client DNS settings on all your desktops and laptops would be sufficient, but then you find out that you need to re-create a whole set of DNS records online so your employees can continue to access the cloud services your users use to do their work. Or how about the time when your users started telling you that their attachments weren’t getting through in their email messages. Or the time when you upgraded your client systems to the newer version of Windows 10 and discovered that Office 365 performance gradually degraded over time when users sent or received their email using the Microsoft Edge web browser. Or how about the time…
I think you get the picture. IT administration is a cost center for an organization, not a revenue generator, and anything that needs to be installed, monitored, or maintained needs time, energy, and money devoted to it. And trying to fix problems with cloud apps and services can actually be more frustrating and more time consuming than troubleshooting on-premises servers and applications because it’s no longer just one party (your IT person or group) that has to deal with the problem but two parties who have to work together — you and the support desk of the cloud provider you are leasing services from. And we all know how the quality of tech support in general from most vendors of all types has been steadily declining in recent years.
Hell’s bells and whistles
Many companies who buy into subscriptions for cloud services like Office 365 often find over time that they don’t even make much use of the extra bells and whistles built into the online version of Office compared to the versions they previously deployed as on-premises software. This actually exacerbates the problem of cost for these cloud services since you’re ending up paying for stuff you don’t actually use. The only solution in my mind to optimizing the value of what you’re getting with a service like Office 365 is to be ruthlessly honest with not just some but all of the cost elements involved in migrating to, administering, and using the cloud platform. In the movie world ruthless people tend to be deceitful and dishonest; in business, however, it’s often the only way for a company to survive.
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