On 2 April 2014 an interesting thing will happen.  Telstra will lose its exclusive monopoly to distribute Office 365 in Australia.   While Telstra may have the best mobile phone network, they can be sometimes difficult to deal with.  As such, the IT channel hasn’t been rushing to work with them.  In only a few short months, registered IT resellers will be able to resell Office 365 licenses to their customers, and given the price advantage, we will likely see a rapid uptake.

For those not familiar with Microsoft’s terminology, Office 365 is their answer to Google Apps.  The product combines web access to your office documents, as well as a client for most PC and mobile device platforms. Each license allows you to use Office on up to 5 unique devices, which could include your laptop, smartphone, tablet and even on a terminal server. While the license is more expensive than Google’s alternative, Office remains the standard in business productivity tools.

Clearly Microsoft is betting on its future being in the Cloud, and thanks to price pressures from Google has priced this product aggressively.  From a cost standpoint, the proposition looks very compelling.  Most business customers would see savings of around 40% per month compared to the Microsoft’s traditional subscription model (known as SPLA in the trade) for Office alone.  There may even be other savings in reduced server hardware and licensing costs.  The other advantage is that user subscriptions can be added or removed each month so you only pay for what you use. This will  benefit customers that with to scale up and/or down quickly.

However there are a few trade-off that you should discuss with your IT Service provider:

1. Return On Investment.  Office 365 is a subscription service, so you need to pay for it in perpetuity as long as you want to access you data.  If you were to buy the equivalent Office 2013 license outright, you would have it paid off in around 3.5 years.  As Microsoft releases a new office version around every 3 years or so, it’s not surprising they set the pricing at this level.
2. Data Location.  For Australian customers, data stored on Office 365 (or Sky Drive) is actually stored on servers in Singapore and Hong Kong. There is no option to have it stored locally.  This may have implications for customers that need to ensure Data Sovereignty from a legal perspective.  Also, it means that the cloud application may not respond as quickly as it would if the servers were hosted locally. If you’re interested in learning more about this you can find the privacy policy for Office 365 here.
3. Third Party integration.  Many companies have a line of business application that has plugins to integrate Office functionality.  Applications that are a few years old may not even integrate at all, and all too often customers do not plan for this loss of functionality until it is too late, resulting in lost productivity, or a costly roll back to the original system.  It’s best to check with your application vendor first before embarking on a cloud migration.
4. End User Support.   Large corporations are rarely known for providing the highest levels of customer service and support, and until April would have been the only option.  Fortunately there is a thriving industry of Managed IT Service providers that will rapidly fill this void.

Given Microsoft’s discounted pricing, we will certainly see many companies carefully considering an upgrade to Office 365. However it isn’t simply a ‘drop-in’ replacement for the other versions of Office, so be sure to have a chat with your IT company or give us a call on (02) 8412 0000 to see if Office 365 is right for your business.