Productivity in the Cloud – Part 1: Introducing Microsoft Office 365

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The online productivity suite formerly known as BPOS (Business Productivity Online Suite) has morphed into Office 365 – which, if not exactly the catchiest name in the universe, is at least less unwieldy. Microsoft has declared itself “all in” with cloud computing, and since Office is one of the company’s biggest sellers and money-makers, the success of this cloudified version is important. In this article, we’ll examine the Office cloud service, what it includes, how it differs (and doesn’t) from using traditional Office programs, and where it might fit into your long-term business strategy.

In later articles in this series, I’ll look in greater detail at the Microsoft Exchange Online, SharePoint Online, Lync Online and Office Web Apps services.

Office 365 vs. BPOS

BPOS was designed to provide businesses with a way to get the benefits of Microsoft Exchange, SharePoint, Office Communications Server and Office Live Meeting without the high initial cost of purchasing the hardware and software to run those servers in-house. By delivering this combination of messaging and collaboration tools as a service, Microsoft could fill a company’s email, calendaring, document sharing, presence, and instant messaging needs, as well as audio calling and video conferencing – at the price of $10 per user per month.

It’s not difficult to do the math: When you add up the licensing costs for each of those server products, along with the cost of the hardware to run them, you come up with a number that’s a significant upfront investment for small and midsized businesses. Then when you add in the administrative overhead, including the time required to keep all the products updated, it’s easy to see that even if you have 500 users, $5000/month may be a very reasonable price to pay.

So what does Office 365 bring to the table, other than a new moniker? Well, it integrates BPOS with Office Web Apps – and the enterprise version also includes licensing for Office Professional Plus, with the traditional local Office applications working in conjunction with the web apps. It upgrades the servers on which the service runs to the latest versions, which means you get the extra features and functionalities of those versions. Pricing changes, too. Small businesses will pay less for Office 365 than for BPOS, just $6 per user per month. Enterprise customers will pay more, at $24 per user per month. There is also expected to be an education-specific version for educational institutions.

How this fits into Microsoft’s cloud strategy

Despite the “all in” rhetoric, Microsoft has indicated in numerous ways that the company sees the cloud computing as an extension of desktop computing, not as a replacement for it. Some have criticized this supposedly “halfway” approach, but others believe it’s exactly the right route to go. The cloud is not yet reliable enough (nor proven secure enough) to trust it for all of an organization’s work. Anyone who has experienced an Internet outage knows how frustrating it would be if all work ground to a halt for the duration.

That’s undoubtedly one reason Office 365 still relies on a local version of Office – so users will still be able to be productive even when offline. The other reason is performance. Small business users need to have Office 2007 SP2 or Office 2010; that’s listed as part of the system requirements. And as mentioned, Office Professional Plus is included with the enterprise service.

IT goes to the cloud

It’s the IT portion of productivity, then, that’s going to the cloud if you choose to move to the service-based Office 365. You get Exchange Online, SharePoint Online and the newly renamed Lync Online (which was formerly Office Communications Online). These are based on the very latest versions of the products (e.g., Exchange 2010 SP1). Moving these services to the cloud makes more sense to businesses than putting all of the user productivity apps there, because in many ways mail, collaboration and calling/conferencing are cloud-based by their very nature. In other words, if you’re communicating with people other than those inside your organization, your email messages and other communications already must travel through the cloud to complete the transaction (unlike composing a Word document or putting together a PowerPoint presentation, which you can accomplish entirely offline).

Cloud-based email services are already the norm for many users, for both personal and business accounts. More and more small businesses, colleges, etc. are getting rid of their on-premise email servers and having their users send and receive mail via Gmail, Hotmail or some other web mail solution. Some advantages of Exchange Online include:

  • Data backup: you no longer have to worry about backing up your Exchange server because it’s being replicated, on an ongoing basis, to data centers that are in different locations. If you added in the cost of providing such off-site backup, your cost for running your own servers would go up even more.
  • You don’t have to worry about anti-virus and anti-spam protection because Microsoft does it for you.
  • Users get the same familiar Outlook experience that they’re used to, thus you don’t have to spend time training them on a new system.
  • As with your local Exchange server, it works across platforms, with your PCs, Macs, Windows Phone (WinMo and Windows Phone 7), iPhone, Android, Blackberry, etc. Users can also access their mail via all the popular web browsers.
  • Supports up to 25 GB of storage per user mailbox and large attachments (up to 25 MB).
  • You can, of course, use your own domain for your Office 365 email.

Many companies have considered the idea of using SharePoint to share and collaborate on documents, presentations, etc. but have hesitated to do so because of the IT learning curve for deploying and managing a SharePoint server. With SharePoint Online, users get all the advantages – MySites for sharing and managing documents, shared document libraries with calendars and task lists to keep teams on the same page, Intranet and Extranet sites for sharing within and outside the organization, and integration with Office applications.

Perhaps the most intimidating of all, to small IT departments is the thought of setting up a communications server to enable instant messaging, audio and video calling and conferencing and presence tracking. Lync Online is the solution that allows you to provide users in a small or midsize business with the same sophisticated communications tools that enterprise users enjoy. Lync will initially support:

  • Audio/video federation for calls from one PC to another within the company
  • Online meetings (audio and video), including web conferencing
  • Integration with Exchange Online for voicemail and presence

Support for Lync to PSTN calls will be added later.

It’s also possible to get licenses to use an on-premises Lync server to replace your existing PBX system, in conjunction with using Lync Online to IM, conferencing and presence.

An important consideration is the storage of user data. When you subscribe to BPOS or Office 365, data is stored in one of Microsoft’s datacenters, which are located all around the world. This assures geo-redundancy, in case a natural disaster or other local incident should affect one location. You can read about Microsoft’s datacenters on the Microsoft Global Foundation Services web site.

Making the transition

Microsoft is attempting to make it easy for companies to transition to their cloud based services. They’ve even set up an Office 365 Transition Center to provide information on what customers need to do in order to start using Office 365. You’ll need to ensure that your client systems are compatible with the service. This means you need Windows XP SP3, Vista SP2, Windows 7, or Mac OS X 10.5 or above. XP Home Edition can be used but won’t support federated identity. Linux is not supported. You’ll need to install the Lync client on Windows or the Communicator for Mac client on OS X. You’ll also need Office 2007 SP2 or Office 2010 on Windows, or Office 2008 or 2011 for Mac installed on the client computers. Remember that if you get the enterprise edition of Office 365, Office 2010 Professional Plus comes with it. You can add Office Professional Plus to the small business plan on a subscription basis for $12 per user per month.

Office Professional Plus includes:

  • Word
  • Excel
  • PowerPoint
  • OneNote
  • PowerPoint
  • Publisher
  • Access
  • InfoPath
  • SharePoint Workspace
  • Lync

Office Professional Plus is downloaded from, licensed by and updated via the cloud, but it runs locally (for better performance). This means you still need a “thick client” machine; the apps are not running in the cloud, but are integrated with it.

You’ll be able to make configuration settings through the Administration Center and My Company Portal. This is accessed via the web, and requires IE 7 or above, Firefox 3.x or Safari 4.x. Users can access the Outlook Web App with any of those same browsers, or with Chrome 3 or above. For those who must use another browser (such as Opera), there is a light version of Outlook Web App that works with most browsers.

If your company already subscribes to the BPOS services, the transition is easy. Microsoft will add the new features and functionality at the datacenter level. You don’t have to migrate your data. If you have clients using Office 2003, you will need to upgrade them to Office 2007 SP2 or Office 2010. You’ll also need to upgrade from Office Communicator 2007 R2 to Lync.  Also note that Office 365 does not support IE 6, which shouldn’t be an issue since computers running XP SP3 or above would presumably be running at least IE 7. Microsoft recommends that you go ahead and upgrade the clients prior to transitioning to Office 365.

BPOS currently uses a sign-in application that will not be supported by Office 365. Instead, you’ll use a service connector application that automates end-user configurations. The service connector application is free of charge. It downloads and installs any patches and updates that may be required on the client software.

Note that BPOS customers must transition to Office 365 within 12 months after the release of the service update. You can choose to run a pilot phase first, to get acquainted with the new service and iron out any difficulties, before rolling it out to all of your users.

Getting on board

It was recently announced by Steve Ballmer and Mayor Michael Bloomberg that New York City has upgrade to Office 365, and that it’s expected to save the city $10 million per year. With 100,000 municipal workers covered, that’s quite a coup for Microsoft.

The final version of Office 365 is expected to be released in 2011. Meanwhile, you can sign up for the beta to try out all these services, but only a limited number will be accepted so hurry if you’re interested:

If you prefer to let someone else do the testing, sit back and relax, and I’ll be bringing you more detailed information on each of the components of Office 365, based on testing of the beta.

If you would like to read the next part in this article series please sign up to our Real-Time Article Update newsletter.

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