Method 180 negotiates hundreds of Microsoft Enterprise Agreements (EA) on behalf of its clients every year. As a result, our licensing specialists have a unique insight into the way enterprise organizations are actually using and deploying Office 365. Microsoft has been reporting robust sales numbers for Office 365 (http://www.zdnet.com/article/microsofts-q1-shines-office-365-leads-results/ ) but are enterprise businesses actually deploying it? The observations I am about to share with you are based on Method 180’s experiences with our clients and partners and are specific to Office 365 cloud based deployments. I make this distinction as these observations do not take into account 3rd party partner hosted solutions as this is not Office 365 (just traditional hosting).
Enterprise Clients are buying Office 365.
This much is obvious when you look at the sales numbers that Microsoft is reporting. It’s important to differentiate between sales numbers and actual deployment numbers, as the sales numbers can be misleading. For example, even Windows Vista sold well (Software Assurance sales and OEM) but organizations were not deploying it. It’s almost impossible to have a Microsoft EA discussion without Microsoft leading with Office 365 and in particular the E3 and E4 SKUs (https://products.office.com/en-ca/business/compare-more-office-365-for-business-plans ). Microsoft account teams are obviously highly motivated to ensure that Office 365 is key part of every renewal and are leading every Enterprise Agreement discussion with it. Our customer experiences demonstrate that if they receive enough pushback, they will frequently incentivize this offering to ensure it is sold. In fact, we see that Microsoft will generally offer significantly better concessions on Office 365 than they will on traditional on premises deals. Method 180 encourages it’s customers to keep an open mind about buying Office 365. In addition to the concessions, it can drive and can be leveraged to reduce the quantities of Office needed as each user can install Office on 5 PCs or Macs, 5 tablets (Windows, iPad, and Android), and 5 phones. I also wrote a blog post (https://www.method180.com/should-you-maintain-software-assurance-on-microsoft-office/) a few months back on how you can further leverage the Office component sku’s to further reduce your costs.
Enterprise Clients aren’t embarking on mass deployments.
So clients are buying Office 365 but are they deploying it enterprise-wide, as the hype would have you believe? Not in our experience. Most of Method 180’s clients recognize that they will migrate to the cloud at some point in the future but it will be at their own pace. Driven by their business requirements and not commercial hype. In our opinion, this strategy makes sense and what we do see are clients migrating on a user based basis. By this I mean, they identify a subset of users based on roles which make sense to gradually migrate to Office 365. This role-based deployment is tied to a ramping Office 365 procurement strategy in which Office 365 licenses are purchased as they are deployed but not prior to deployment. The wonderful thing about cloud-based services is that you should not need to purchase them prior to deploying them. However, Microsoft account teams prefer to lead the sales process with proposals that show the entire organization moving at once to an Office 365 E3 or E4. Unless the deal you are being offered is too good to be true I would be cautious about paying for a full-scale transition to a cloud based environment until you are ready to actually move. The key is not paying for more than you can consume at the time.
Clients are deploying Exchange Online more readily than other Office 365 components
Not surprisingly clients are choosing to deploy the easiest and most risk free elements of Office 365; Exchange Online. This is the one component of Office 365 that we see deployed with some regularity. The basis for this is that email is probably the simplest workload to migrate to the cloud with minimal disruptions. Email that is in the cloud or hosted is basically a commodity at this point and organizations have had time to consider taking it off site for years. Having said this, depending on your industry you may have regulatory or security rules which could be barrier to this sort of transition. The other components of Office 365 are far more complex to move to the cloud without losing custom functionality. For example SharePoint hosted in Office 365 must exist in a multi tenet server environment. The Office 365 multi tenet server environment requires minimal means you can say goodbye to most customizations or workflows your business likely depends on. If you are only using SharePoint as a glorified cloud based file repository you should have minimal issues however.
Enterprise clients have complex environments
This is kind of a no brainer but it’s worth mentioning. Your environments are complex with detailed workflows and plugins that can be show stoppers for an Office 365 cloud deployment. The Office 365 cloud model is more of a one size fit all in terms of leeway for customization of Office 365 applications such as SharePoint for example. The more complex your environment, the more work and risk there will be in order to move cloud bases services. Also, odds are the transition will not be seamless and there will be bumps in the road. We strongly encourage our clients to closely read the Microsoft Online Terms and Conditions (http://www.microsoft.com/licensing/products/products.aspx ) to ensure that they are comfortable with them. Having said that, there is also no doubt that Microsoft’s cloud services will continue to improve as they innovate and further develop them.
On Premise deployments aren’t dead
If you’ve read this far, you will realize that despite the hype and the newswire reports of Office 365 success stories, Method 180 is not seeing it’s clients embark on organization wide deployments. There is still a large segment of the end user and IT community population that makes sense to remain deployed in an on premise fashion. Almost every single client we speak with is planning for a move to the cloud in some form or fashion. The key word here is planning. They are carefully, and in my opinion, wisely taking their time and letting others operate on the bleeding edge of Office 365 deployments. It’s also true that feature parity doesn’t exist when you are comparing cloud vs on premise versions of the software. Furthermore, as Microsoft continues to innovate, I assume that there will be much greater differences between cloud and on premise versions.
If anyone expected that the transition to cloud services would usher in an era of licensing simplicity, they must be quite crestfallen. Quite the opposite has happened as Office 365 licensing has added several layers of complexity onto what was already a series of confusing and complex licensing programs and options from Microsoft. Now more than ever expert guidance is required in order to secure the best possible deals and contain costs.
Method 180 specialises in helping our clients negotiate best in class terms and conditions. Our Microsoft licensing experts have negotiated over $1B in Microsoft contracts and are focussed on getting you the best possible deal while understanding your complex business requirements. Contact us today for a free initial consultation to see how we can help you!