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IT shops need direction from Microsoft on reaching cloud

Microsoft has released its first public beta of Office 365, a key piece of its cloud computing strategy. But IT shops wonder how they transition their earth-bound applications.

Microsoft inched closer to delivering Office 365 with the recent release of its first public beta. But IT shops need more details about how the company will help them transition from on premises and hosted applications to software-as-a-service and cloud-flavored versions of products in that suite before it can be seriously evaluated.

It isn't just transitioning to Office 365 that causes concern for IT managers. It is also Microsoft’s plan for moving enterprises off other core server products and onto SaaS and cloud computing platforms. Given growing competition from smaller, faster moving competitors armed only with cloud-based offerings, IT shops think Microsoft doesn't have much room for error.

"I am looking at my options for cloud (offerings) and what I see Microsoft doing so far is taking these half steps with things like its ERP products,” said a technology director with a large New York City-based retailer. “I am not getting the whole picture of how I go from my existing infrastructure to what [Microsoft is] talking about with Office 365 and Azure."

While Microsoft escaped significant damage when it failed to shift smoothly between key application and operating systems platforms in the past, it  may find making such mistakes in the services-age less forgiving.

"[Microsoft] got away with bad transitions like the one from Windows XP to Vista, but you don't get to make those kinds of mistakes in the online world,” said Dana Gardner, principal analyst at Inter-Arbor Solutions in Gilford, N.H. [Microsoft] needs to make this transition flawlessly in terms of simplicity, cost and technical aspects. I am not seeing that yet."

Gardner and others say that if Microsoft bungles this transition to the new age, it will be easy for competitors, such as Google and Salesforce, to add on commodity capabilities such as messaging, calendaring and collaboration to their existing core products already designed from scratch for SaaS.

"Most of Microsoft's products aren't architected for SaaS, multi-tenancy, or have a common code base where you can layer services across them like a services oriented architecture," Gardner said.

With or without a technical roadmap it could be a painful transition, according to Wes Miller, research vice president of server applications at Directions on Microsoft, a Kirkland, Wash.-based consulting firm. Exchange alone  represents the "cardiac system" for most businesses today.

"The transition plan for core pieces like Exchange and SharePoint becomes more important the larger an organization, whether you are going from a cloud to cloud, on premises to a cloud or taking your datacenter up into the cloud," Miller said. "But Microsoft has some best practices stuff, things it’s learned from BPOS, and is making good prescriptive suggestions for people to get started."

Double charging for Office?
IT pros and analysts who advise enterprise shops said they also need more clarity on the various licensing options for Office 365. The company laid out those options earlier this year for its Office 365 flavors (see chart below). But in two of the four options, where it offers Office Pro Plus as a standard component, IT managers with existing enterprise licenses for Office were concerned about the possibility of paying for Office twice.

E1 $10/mo/user IM & presence, conferencing, collaboration with SharePoint sites, email, calendar, AV/AS/ personal archive
E2 $16/mo/user Web Apps
E3 $24/mo/user Office Pro Plus, voicemail and advances archive capabilities, Access/Excel/Visio services
E4 $27/mo/user Voice

"There's little chance I'll buy into the E3 option (for Office 365) if I have to pay for the Pro Plus version. The other two lower end options don't particularly appeal to me," said the IT executive with the New York City-based retailer.

Asked if Microsoft would discount the monthly rate for users selecting the E3 version, a Microsoft spokesman said he wasn't aware of any plans to offer discounts to existing Office desktop users who didn't want Office Pro Plus in the two higher-end offerings.

With E3 however, you do get the full fledged version of Office, which is $499 off-the shelf, and you would get all that for $24 a month.

Earlier this month, Microsoft made the first public beta of Office 365 available, disclosing two different programs: one for small businesses that have up to 25 employees; and another for mid-size companies and enterprises.

The beta program for smaller companies comes with Office Web Apps, Exchange Online, SharePoint Online, Lync Online and an external website. The one for midsize shops and enterprises includes email, voicemail, enterprise social networking, conferencing via voice and video, Web portals, and the subscription-based copy of Office Professional Plus.

Besides the two beta programs, Microsoft announced Office 365 marketplace, which helps customers personalize Office 365 by giving them access to 100 applications and 400 different professional services.

Microsoft did not add any major features to the public beta. It focused mainly on improvements to Office 365’s overall usability, speed and performance.

With the first beta, a little over 70% of customers  who signed up were small businesses, with the remaining 30% coming from larger companies, according to Microsoft officials. Some observers said they believe that mix will change, with the more widely distributed public beta and finished product expected by the year's end.

"It is most appealing to small and mid-size companies now because they can turn on a dime to go to the cloud,” Miller said. “Enterprises have more considerations like pilot projects, testing in complex environments and rollouts. The enterprise is where Microsoft wants to go, but the smaller companies are the ones clambering for it now."

Ed Scannell is Executive Editor of Data Center and Virtualization Group. He can be contacted at

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