Part 3 - Why is Microsoft Moving to Office 365?

by Andrew Connell on May 20, 2014

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Date Revised:
May 16, 2014


This is just one entry in a series of articles that cover a keynote presentation I delivered in April 2014 at the SPTechCon conference in San Francisco, CA. The first article in the series below sets the stage and explains what the series is about. All articles in the series are meant to be read in order, but hey… it’s your browser and mouse… click what interests you!

  1. Navigating the New World of SharePoint Online, Office 365 and On-Premises - Introducing the Series
  2. Level Setting and Definitions
  3. Why is Microsoft Moving to Office 365?
  4. Completely Unscientific Survey - Survey on Office 365 and Where Are You?
  5. Customer and ISV Takeaways from the SharePoint Conference 2014
  6. My Thoughts on The Challenges with Customer Acceptance of Office 365
  7. My Thoughts on How to Approach Office 365 & SharePoint On-Premises Today
  8. Office 365 Call to Action - What Should You be Doing?

In this installment of this series I want to discuss why Microsoft is moving SharePoint to Office 365. Many people don't understand the reasons behind this move by Microsoft. Some of the reasons are in response to customer requests and feedback, but many of the reasons for the move are in the best interest of Microsoft as it makes life easier for them, it will be better to their bottom line and it improves the support story.

slide08Some of these reasons I'll outline aren't things you'll likely hear Microsoft say.. they just aren't things that the media should be quoting someone with a Microsoft salary saying. But they are things we can talk about. I've always felt like if you understood the reason why something was changing, many times it helped you have a different state of mind and approach the change in a better way. When you're told to just change or this is way it is now, sometimes... or maybe most of the time... that doesn't go over so well.

Some of these reasons are going to be more important to some customers, while some are more important to others. There are so many factors involved from the size of the organization, the number of people who use SharePoint, how it is being used... one size most certainly doesn't fit all here so these are in no particular order.

SharePoint is Expensive

It's no secret that SharePoint isn't exactly the cheapest software on the planet. You're looking at anywhere from $20,000 - $45,000 for a server license and $100 - $250 for client access licenses (CALs) in the United States for commercial retail licenses. And that's just for one license! For any significant deployment or one to support even the upper end of the small businesses, you're looking at multiple licenses. Consider this is only the SharePoint license cost... there are also costs associated with SQL Server and Windows Server.

One of the more appealing things to customers is the lost cost of Office 365. For a single per-user fee of anywhere from $3 (SharePoint Online Plan 1) - $22 (Office 365 Enterprise E3), someone can get access to your SharePoint environment. No upfront capital purchase... this is a operating cost that is baked into your monthly budget which can be a lot easier to manage for financial planning purchases.

SharePoint is Hard to Manage

I could play my "I'm just a developer card" here, but I'll spare it. :) SharePoint can be quite a burden to manage. It isn't just the installation, the planning ahead of time and initial configuration is critical to a successful deployment. In addition you need to think about managing the upgrades and monitoring the performance of the machine. There are so many different moving parts and services involved, it's not easy to keep track of everything and ensure it's all performing optimally.

Customers Expect More Frequent (Constant?) Upgrades

Years ago Microsoft would release a new version of a product when the time was right. What that meant was different for each product and could vary based on the time it took for the company to build a new version or how often customers were asking for new features. However for a software company, this is tough to forecast revenue and that's something investors like to see.

So Microsoft introduced a new thing called Software Assurance (SA) which said if you buy a subscription on a 3yr plan, you get any new upgrades over the course of those three years. But there's an issue with that. In order for you to get value our of SA, you need to get a new version during those three years. Therefore Microsoft now must ship a new version every three years. Great for customers, but maybe the product ships with features that aren't nearly as complete as you'd want them to be (see SharePoint 2013 social).

But in this world we're in today so much stuff is moving to the cloud. People don't want to wait for releases, they want to see things get updated constantly and not wait for new features. For a packaged product like SharePoint, this is hard to implement. You can't keep doing major releases... you have to be constantly releasing. And even if they get to that point, do you think companies would be constantly applying the updates? What if they skipped an update? Companies aren't even applying security patches every month... you think IT staffs will be updating their on-prem SharePoint boxes? Yeah... me either.

Compare this to how services like Facebook update their platform. A developer builds a feature and pushes it out. Assuming it passes all the tests, it gets pushed into production, but only to (I'm using rough numbers form a friend who is a developer there that shared this info with me a few months back, so it might not be exact) 10 servers. They monitor the server & code performance... if things are good, they push it to 100 server, then 1,000, then 5,000, then 10,000 and eventually these updates make their way to all 60,000 servers.

Now look at SharePoint... think these big releases work in the new world of cloud oriented services? Yeah... not so much. So Microsoft would do better by their customers if they would take on the hosting and management of SharePoint (ala Office 365) and then they could add features at a faster cadence without convincing customers they needed to update. They can just do it on behalf of their customers. Of course it does introduce some pain points when you don't communicate the updates in the right way, but they are working to make this a better experience and improve the communication. That's how we're seeing things like new APIs, new administration Message Centers, updates to OneDrive for Business and even multi-factor authentication just to name a few. No way these updates would come out between major releases if we were only on-prem... in fact all these are Office 365 only improvements!

SharePoint Upgrades are Hard

Piggy-backing off my last point, let's face it: SharePoint upgrades aren't exactly the easiest thing in the world. And I'm not talking about applying cumulative updates, I'm talking about upgrading from one version of SharePoint to the next version. That isn't the easiest thing in the book! What about upgrading custom code solutions from one version to the next? If you've tried, you know it isn't easy. Well, it might be easy... but an easy/hard comparison isn't the right thing to do... we should look at it more as "is this a simple & quick thing to accomplish?" Usually not.

However with Office 365, Microsoft has taken this responsibility on themselves and making it something we don't have to stress out about anymore.

SharePoint Upgrades are Disruptive

My last point is about upgrades being disruptive and I mean they keep you from doing some of your work... and that's just not good. In the old world, updating from one version of SharePoint to the next was a big deal. There were always major user interface changes that happened, sometimes quite drastic (see: the Ribbon). It was always with the goal of improving on what we had, but let's face it... it just takes time and isn't always a easy upgrade.

These major user experience changes required some user training sometimes and this slowed down productivity. IT staffs would go through all the trouble to upgrade the system only to find that they couldn't roll it out so quickly because users needed training. And once they were trained, it still might take time to get to be as productive as they were before the change.

Also consider that upgrades always take a system down. No matter how much planning, you're going to have some offline time while the system gets updated unless you've poured a ton of money and planning time into the process. Why? Each SharePoint installation talks to the centralized databases. An upgrade changes the database schema. Once the schema was updated by one server, all the other servers were effectively unusable until they had the new version applied to them.

How does Office 365 help with this? You don't deal with it! Rarely do we have service outages for upgrades. We did when we went from the big core update in Office 365 that was based on SharePoint 2010 to SharePoint 2013, but we haven't seen another one of those because we don't have massive updates... we have smaller incremental updates... and this is good for users!

Conclusion

In this installment of my series I have explained some of the reasons why Microsoft is moving SharePoint to Office 365 and to the cloud. They are enticing you to move to Office 365 as well because it makes both your life and their lives collectively better and allows them to provide a better service with newer and updated features more frequently.


Topic: Cloud