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Office 365 costs vs in-house

Art A. makes some good points about the cost of Office 365 for business.  Microsoft’s CFO admits that Office 365 costs up to 80% more than other buying choices but that doesn’t mean that it’s necessarily a worse choice for business.

When Office 365 includes backoffice services (like storage, Exchange Server etc.) that saves a business the cost of running their own physical servers in-house.

You may be spot from a consumer perspective, but as an Exchange engineer responsible for business continuity, I think you miss many considerations for business — mainly, the cost of the back end.

The cost of Office software can be peanuts compared to Exchange licensing, on premises hardware, the cost of a remote, secondary data center to host an additional Exchange environment for high availability. Then factor in bandwidth for replication, and we are no longer talking $250-400/ seat. And the terabyte of cloud storage is nothing to sneeze at either. It means that, in the event of a primary data center outage, our employees will still have access to their work. Skype could replace what we pay for Lync and Vidyo conferencing. I haven’t been able to evaluate the compliance and legal features, but I can tell you that Enterprise Vault ain’t cheap.

Art is right, there’s cost savings to take into account for businesses.  We weren’t attempting to judge the overall cost of switching to Office 365.  We were noting that a senior Microsoft executive admitting that the ‘subscription’ pricing system meant more revenue for Microsoft.

There are also non-monetary considerations, here’s the main two.

Privacy and security are very important.  Microsoft has been talking about customer privacy but it’s mostly been just talk in response to buying resistance from customers.  Putting your personal or business data in the cloud is convenient but it adds a greater risk to that information.  Naturally enough, cloud service providers focus on the convenience and do their best to brush aside the privacy concerns.

Bandwidth and internet speed are other factors.  Most businesses have Internet connections a lot slower than their local network.  That means transferring large amounts of data is considerably slower to/from the cloud.  Switching to cloud services might mean paying for a faster internet connection or one with more GB allowance.

Evaluating the cost benefits of in-house vs cloud hosting is complicated and beyond Office Watch’s modest resources.  It would be an interesting and complex calculation to do for a variety of scenarios (size of business, number of staff etc).

Any such evaluation should be truly independent.  Something from or paid for by Microsoft should be read with a very critical eye.  The same goes for the many ‘partners’ with a vested interest in selling Office 365 packages.

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