On-prem vs. Office365 - Exchange, SharePoint, Lync
I was posting a reply on this thread ( http://thoughtsofanidlemind.com/2013/04/29/upgrading-office-365-wave-15/ ) and decided it merited a blog post. If you think I'm out to lunch, please comment with intelligent arguments.
The comments bring up interesting points (nearly all surrounding large-enterprise (1000k+ seats) or sub-25 user - i.e. Small Business), but the most vocal were ardently in the on-prem camp because of this math:
SuperExchangeMan = $150k/yr Cloud = $200k/yr
Therefore, you get SuperExchangeMan and a $50k savings (read: cloud is more expensive, bottom line). I'd like to think they are simply leaving out the fact that they must have Ironport/compliance functionality, on-prem anti-spam, etc, therefore THAT's why cloud is more expensive, but they were really harping on the above math.
So what are they missing? On-prem licensing & soft costs. Sure, it only costs $x salary (haha for $150k? I guess normal for Enterprise?) for SuperExchangeMan, but your per-user cost for on-prem licensing is quite expensive - hence why Office 365 popularity with SMB has taken off. Also, the cost of hardware to run your MS infrastructure is something that should be considered as a long-term expense to deal with.
Cost comparison
Let's do some assuming for the purposes of the discussion. Environment is ~80 users, 3-year lifecycle for MS products. Costs are laid out as On-prem/O365 midsize. Products covered are Exchange/SharePoint/Lync/file server (i.e. move to SkyDrive Pro).
Year1 cost is $75k/16k.
Year2 cost is $5k/16k.
Year3 cost is $5k/16k.
Year4 cost is $75k/16k.
etc
Over 3 years you'd pay $85k for on-prem, and $48k for O365 (midsize).
But think of it this way - you halve your CapEx (we're not even discussing OS licensing/hardware/environment concerns here) and potentially slash the skill-level and time requirements for IT Ops support staff. Yes, I would be working myself out of a job, as they say, but that benefits the company, which is kind of the point.
Assuming your internet connection can deal with it and you're not trying to be super-fancy (SharePoint, specifically) with custom everything - i.e. you just need out of the box functionality - how can this NOT be a serious discussion of moving toward the cloud? Maybe the discussion changes for enterprise...but for the SMB 25-250 user category, staying on-prem with these savings in front of you is awful hard.
Potential issues
Conclusion
Let's be clear - migrating core infrastructure will always be a huge task. It'll always require either brute force or expensive tools to get the job done (oversimplification...). The move from On-prem to Office365 is not to be considered lightly, but if you're looking to save money and lower your workload going forward, it definitely warrants a good hard look.
The comments bring up interesting points (nearly all surrounding large-enterprise (1000k+ seats) or sub-25 user - i.e. Small Business), but the most vocal were ardently in the on-prem camp because of this math:
SuperExchangeMan = $150k/yr Cloud = $200k/yr
Therefore, you get SuperExchangeMan and a $50k savings (read: cloud is more expensive, bottom line). I'd like to think they are simply leaving out the fact that they must have Ironport/compliance functionality, on-prem anti-spam, etc, therefore THAT's why cloud is more expensive, but they were really harping on the above math.
So what are they missing? On-prem licensing & soft costs. Sure, it only costs $x salary (haha for $150k? I guess normal for Enterprise?) for SuperExchangeMan, but your per-user cost for on-prem licensing is quite expensive - hence why Office 365 popularity with SMB has taken off. Also, the cost of hardware to run your MS infrastructure is something that should be considered as a long-term expense to deal with.
Cost comparison
Let's do some assuming for the purposes of the discussion. Environment is ~80 users, 3-year lifecycle for MS products. Costs are laid out as On-prem/O365 midsize. Products covered are Exchange/SharePoint/Lync/file server (i.e. move to SkyDrive Pro).
Year1 cost is $75k/16k.
Year2 cost is $5k/16k.
Year3 cost is $5k/16k.
Year4 cost is $75k/16k.
etc
Over 3 years you'd pay $85k for on-prem, and $48k for O365 (midsize).
But think of it this way - you halve your CapEx (we're not even discussing OS licensing/hardware/environment concerns here) and potentially slash the skill-level and time requirements for IT Ops support staff. Yes, I would be working myself out of a job, as they say, but that benefits the company, which is kind of the point.
Assuming your internet connection can deal with it and you're not trying to be super-fancy (SharePoint, specifically) with custom everything - i.e. you just need out of the box functionality - how can this NOT be a serious discussion of moving toward the cloud? Maybe the discussion changes for enterprise...but for the SMB 25-250 user category, staying on-prem with these savings in front of you is awful hard.
Potential issues
- Migration headaches & additional costs - Yes, midsize means a cutover migration for Exchange. It also might mean a migration tool to purchase. For SharePoint it'll definitely need a migration tool. You're eating into some of the initial 'CapEx' savings, sure, but we are looking long-term here.
- Support - Google tells us (haha irony) that support gets a lot better once you move into midsize/enterprise plans. Will there be issues? Undoubtedly. Will they be world ending? Unlikely. Nearly all complaints have been around back-end issues - user experience has had little impact.
- Growth - If you hit midsize's 250 user cap, you have to move into an enterprise subscription - a rather large problem from what I've read. So ideally if you're at 150-200 users already, you'd just start with an E3 subscription.
'Soft' considerations
- Hardware purchases and hardware lifecycling (and hardware maintenance)
- Hardware environmental consumption (heat, power, rackspace)
- IT Admins must be able to support an on-prem Exchange/SharePoint/Lync, including migrating to new versions, daily maintenance, daily support, etc.
- Helpdesk team must deal with Office roll-outs, ensuring users are trained/able to use new versions (you can argue this won't change),
Conclusion
Let's be clear - migrating core infrastructure will always be a huge task. It'll always require either brute force or expensive tools to get the job done (oversimplification...). The move from On-prem to Office365 is not to be considered lightly, but if you're looking to save money and lower your workload going forward, it definitely warrants a good hard look.
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