Office 365 takes Microsoft online with Google – but is it any good for the enterprise?

Microsoft's cloud-based Office 365 is now available. While Microsoft Office 365 is aimed squarely at the small business user, does it leave the enterprise wanting?

Microsoft's cloud-based Office 365 is now available. While Microsoft Office 365 is aimed squarely at the small business user, does it leave the enterprise wanting? Cliff Saran investigates.

Launching Microsoft Office 365, Microsoft's UK managing director Gordon Frazer said the software would help small businesses reduce the cost of running IT services. According to Gordon Frazer, early adopter customers are reporting a 50% saving on IT.

Gurdeep Singh Pall, a corporate vice-president at Microsoft, pointed to the benefits of using software-as-a-service (SaaS): "It's like signing for electricity or water. The software is always fresh."

Office 365 customers in the UK include Alliance Healthcase, Hornblower business brokers, UKBI, St Andrews College, Ealing council, Dorma and Kensington Enterprises.

Cremyll Sailing, a charity that takes young people sailing, is one of the early adopters. It is using Office 365 as a central place to share documents. Users work on their standard Office products and can upload documents via a Windows mobile phone.

Clearly Microsoft is targeting small businesses with little or no IT experience. This makes sense, given that in the UK, most of the growth in the economy is expected to come from small businesses. And unlike in larger organisations, IT is often an expensive barrier to a small company. So through Office 365, Microsoft promises to help small businesses by reducing the cost of IT.

Entrepreneur Doug Richard, founder of training firm School for Startups, said: "In a large business, technology is a competitive edge. For small firms, it is a burden. Small businesses want services, rather than another product."

While Microsoft recently bought Skype and provides products such as Office Live, Microsoft's ultimate goal has always been to merge on-premise software with online services, through the concept of software plus services.

Bola Rotibi, an analyst an Creative Intellect, said: "Microsoft has always had the idea of software plus service. If you have bought Microsoft Office you can still use it with Office 365."

However much of Office 365 already exists. "Users can already do a lot with Microsoft's existing products. The only one new addition is real-time editing, which enables two people to collaborate. But Google has had this capability for a long time," Bola Rotibi added.

Google posted a blog spoiler to coincide with the Office 365 launch, claiming Google Apps is cheaper and does not tie users in to long contracts. The blog stated: "We have a single, transparent, low price that meets everyone's needs, and it hasn't changed in four years. There's no extras for basics like phone support and robust productivity apps. No long term contracts or opaque enterprise agreements."

However, one commentator on the blog said Google offered no offline editing - which is important when users have intermittent wireless connectivity: "You need to have a line for offline editing. You don't yet have true universal access. I had a problem with Comcast and I don't tether my phone. I could no longer get access to any of the material I was working on. The enterprise will be reluctant to adopt a technology that can't sync on and offline."


What's in store for enterprise users?

Significantly, the enterprise was notably lacking from Microsoft's Office 365 launch presentation. Angela Ashenden, principal analyst at MWD advisors, said: "There was very little talk about the enterprise, particularly those businesses that bought Microsoft's Business Process Online Suite (BPOS). BPOS includes many Office 365 products such as SharePoint, Exchange and Link - the Office Communications Server."

Angela Ashenden said BPOS was a hosted service, rather than a cloud service, which meant it could not offer the same levels of cost savings now available on Office 365. Although it was hosted by Microsoft, users needed to implement the BPOS system, while Office 365 runs directly in the cloud, and the software is updated automatically.

To benefit from Office 365, users will need to run Microsoft end-to-end. This spells a departure from Microsoft's other online offerings such as Hotmail, that can be accessed from any device with a web browser. In fact, the mobile component requires Windows Phone devices.

Vodafone is one of Microsoft's business partners developing products for small companies that include Office 365. Through its Vodafone One Net service, businesses can buy Office 365 on a per-user/per-month basis, combined with broadband and fixed and mobile telephone calls. Office 365 will be available to One Net customers for €5 per user per month.

Tom Craig, Vodafone business service director, said: "For a small business, Office 365 gives the best experiences when used with a Windows Mobile phone."

People who use Blackberrys and iPhones will get some access to Office Live, once Microsoft builds in integration with these platforms. The key question for such users is whether Microsoft will provide much more than what is already available through ActiveSync, the Microsoft technology for synchronising Exchanging InBoxes on different devices.

Questions remain how Microsoft will support users who want to move from BPOS onto Office Live. Microsoft, like other cloud providers, will need to clarify data sovereignty issues, if Office Live is to be taken seriously. While it does have a datacentre in Dublin - so it can guarantee data resides in the EU - Microsoft is headquartered in the US and will be subject to US legislation, such as Homeland Security, as well as UK and EU law. It is far from clear how government legislation will affect data in the cloud. But this will be an issue enterprises will need to address if they are to take Office 365 seriously.

Read more on Business applications