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How to choose an Office 365 enterprise plan

Ian Hardenburgh looks at Microsoft's Office 365 suite and the various enterprise plans available. Here's some insight into the costs and benefits of moving Office apps to the cloud.

Even with the seemingly hefty price tag that comes with Microsoft's cloud-based document, collaboration, and messaging software, Office 365 can offer a generous amount of value to an enterprise of varying operational magnitude and needs. This is especially the case for companies looking to reduce the licensing cost associated with their on-premise Microsoft Office seats, without abandoning the employee performance gain noticed with what has undeniably become the most pervasive productivity suite for over 20 years now.

With a well-planned deployment strategy, the upfront investment cost to enterprises can prove to be relatively minimal. However, the long-term cost of effectively administrating, or internally supporting Office 365 from within the enterprise, largely depends on an organization's willingness to replace a large part of its in-house staff with Microsoft's own IT administrator support. That is, at least those that aren't indirectly connected with the core business tasks. And make no mistake; this is something Microsoft intends to largely discredit in the coming years (the high-cost of a centralized IT staff, not to mention third-party software/hardware support).

Microsoft's march on the cloud

Historically, Office 365's roots come from Microsoft's first considerable attempt with cloud computing, it's Business Productivity Online Suite, or what is essentially known today as Exchange and SharePoint Online, bundled with a messaging/communication service called Office Communications Online (now can be considered Lync Online). From the beginning, one could get a sense that Microsoft was going straight for the jugular in respect to providing a complete alternative to what can be deemed as at least half of what most company data centers manage -- that being email and documents.

Just about two years later, Microsoft released Office 365 with a very blatant message: Stop licensing communication and desktop software, and move to the cloud. This is probably best exhibited with its competitive licensing for the Microsoft Professional Plus version of Office 2010, when enrolled in one of Office 365's premier plans. Much of this message can also be correlated with Office 365's pricing model, or how it lends itself toward both immediate and gradual migration.

Who is Microsoft's target for Office 365?

Microsoft makes a valiant attempt toward catering Office 365 to those businesses without much technological infrastructure. It also seeks to capture the attention of large-enterprises that not only require a diverse range of end-user services, but also a reasonable IT governance service level, all through a flexible pricing arrangement. It's Plan P entry-level subscription costs a mere $6 per user a month, but comes with a number of caveats that aren't well suited for your medium-to-large enterprise type setting.

For instance, there are a number of limitations put on email messaging in respect to the number of recipients a single mailbox may reach within a given day. The enterprise plans have this kind of limit in place as well, but not nearly to the extent that the entry-level plan has. Furthermore, Plan P only comes with online (community) support, while all the enterprise plans offer 24/7 phone support. Lastly, the plan branded as the best match for professionals and small businesses (for a reason) doesn't offer integration with on-premise software, as with Active Directory.

Office 365 enterprise plans

There are four Office 365 enterprise plans, E1 - E4. The only difference between what are known as the E1 and E2 plans is that the E1 variant doesn't feature Office Web Apps (online versions of Word, Excel, PowerPoint, and OneNote). Although some might think this is counter-intuitive to opting for the E1 plan in place of Plan P (where Office Web Apps is available), it might make sense for certain situations when you consider that Exchange, SharePoint and Lync Online are offered with access to on-premise Exchange and SharePoint instances. Depending on the job role, this could be more than enough for certain employees who don't require full-fledged productivity software, such as is the case with those in a customer support role, who might only require something as simple as an email inbox.

Office 365's E3 and E4 plans are geared toward your bona fide power-user or executive -- more explicitly -- a power-user who routinely needs to use advanced analytical software like Microsoft Office Plus's InfoPath, or who might need to take advantage of the document sharing capabilities that SharePoint offers. In respect to an executive who needs an onslaught of email capabilities, archiving and storage is available in almost an unlimited capacity.

The only difference between the E3 and E4 plans is that the E4 one offers Microsoft's Lync 2010 enterprise VOIP solution. Even though this is only a $3 per user a month jump in price from the E3 plan, one would think that this would be an all or nothing kind of investment in most scenarios, where virtually every user in a company would need this subscription in order to replace an entire phone system/PBX. But yes, Microsoft wants you to run your entire company in their cloud!

For a basic breakdown of Office 365's enterprise plan features and pricing, see this web page.

Considering the flexibility  and terms available for Office 365 subscriptions: different plan types, contract lengths (month v. annual), and volume licensing options, adoption can start to take place for an enterprise tomorrow. This pricing structure is most likely intentional, as Microsoft looks to gain more revenue through market share, mostly by replacing the middleman (i.e. hardware manufacturers, independent software vendors, etc.), not by pricing out their users. However, full scale adoption needs to take place internally, and as certain IT administrators begin to become more threatened by the growing tide of the cloud, employee sabotage can prove to taper off expectations of growth and cost cutting. Although this should be considered in a company's deployment strategy, one might note that this is intrinsic to the enterprise, not Office 365's service level.

Expected costs

Below is an example of the monthly cost associated with what could be called a medium-sized enterprise, with 1,500 employees, spread out disparately across Office 365's enterprise plans. It was assumed that 1,000 employees only needed email, or already had MS Office installed on their desktop; so SharePoint Online can be utilized. 250 employees needed Office Web Apps for basic routine spreadsheet and word processing tasks. 250 users needed the advanced features that come with Office Professional Plus, SharePoint and email capabilities (made up of mostly analysts and executives). Lastly, 5 advanced/IT personnel needed all the features that come with the E3 plan, plus the Lync 2010 telephony initiatives that come with E4.

Click to enlarge.

About

Ian is a manager of business intelligence/analytics for a small cap NYSE traded energy company. He also freelance writes about business and technology, as well as consults SMBs upon Internet marketing strategy.

4 comments
binab
binab

After the headaches of maintaining an onsite email server and file server over several years, the MS cloud was something I was already positive with. This was after calculating the costs then comparing with the costs of buying hardware, software, licenses and SLAs. This did not include the cost of people to maintain and troubleshoot hardware and software problems, like for instance, when a certain AV product was insanely driving memory consumption up through leaks. Due to takeover, I was not able to continue the next stage. But I always had the firm opinion that the MS cloud was better. The only thing left is to secure a very good line from a telecom.

Firenzi
Firenzi

Hi Ian. Thanks for such a brief review, that's what I've been seeking for while around the web.

Ian Hardenburgh
Ian Hardenburgh

Binab&madbadbearbox, you were the audience I was hoping to directly address in this post. I have the same sentiment as yourself; the (MS) cloud is better. Focus on development, and stop consuming yourself with the innocuous details, like the hardware/software maintenance tasks you speak of. This is the highest value cloud computing can provide!

Ian Hardenburgh
Ian Hardenburgh

Glad in was helpful Firenzi, and thanks for the complement. A lot of this elastic cloud compute type pricing can certainly get confusing, and almost certainly impact your cash flow if you're not careful. Hope to write more no nonsense type posts like this in the future.