Who's Kool Aid are you drinking - and do you know why?

Office 365

For some time now I have been trying to get my head around Microsoft’s application licensing model, primarily because CommArc is independent, we don’t “drink the kool aid” and we really want you to get the most out of your investment.

‘Drinking the Kool Aid’ is relatively common in our industry, and it’s generally not the done thing to disagree with the majority, certainly when it counters “argumentum ad populum”!

In argumentation theory, an argumentum ad populum (Latin for "argument to the people") is a fallacious argument that concludes that a proposition must be true because many or most people believe it, often concisely encapsulated as: "If many believe so, it is so."

There is some confusion around Office 365, including what you get, what it costs and perhaps more importantly, if it is good for Microsoft, is it good for me? Hopefully, I can (through this QuickByte) contribute some constructive clarity around the three most important questions:

  1. What do we get?
  2. What does it cost?
  3. Are there alternatives?

What do we get?

Office Online is the version of Office (Word, Excel, Outlook, PowerPoint etc) that runs within your web browser. Office Desktop is the version that you install on your PC or Mac. Office 365 is one of the mechanisms by which you licence these products. There is unique functionality to each platform, and you really need to understand this before you jump. For example, Word and Excel Online cannot run macros. Office Online has better collaboration, but may not integrate with third party systems (e.g. Finance, reporting, CRM) that you are currently using.

What does it cost?

Remember there are quite a few “tiers” to the licensing model, and this can make it quite complex to calculate what is best for your business. We have based our cost model on a 50 user company that is already licensed for Office and Exchange (mail), and is currently running all of this in house.

Volume Licensing

This is the easiest option: you licence the right to use the products on your existing system.  There is a one off cost, and there is no real pressure to upgrade plus it includes the right to prior versions. You host all of this on your own systems or in a dedicated cloud instance (such as CommArc’s DCaaS). Although you can add licenses - you can’t remove them. With volume licensing, typically you will need to buy your licenses again if you wish to upgrade to a new version, however security updates and bug fixes are provided for free over the published “lifecycle” of the product (typically 5-10 years).

SPLA Licensing

Microsoft Services Provider Licence Agreement is where a vendor (like CommArc) is permitted to licence Microsoft products to you on a monthly rental basis. We are permitted to host these on our cloud platform and then licence them to you or alternatively provide these licenses to your own on-premises system. As SPLA licensing is provided on a monthly basis, you can vary the number of licenses you consume each month. This means if staff numbers grow then your licenses will scale to match and, conversely, if your staff numbers are reduced then the number of licenses you pay for can be updated for the next month. SPLA licensing also gives you the right to run the latest version of the product when it is released without any additional licensing cost and the rights to run a previous version.

Office 365 Licensing

Like SPLA, Office 365 is consumed on a monthly basis, however unlike Volume and SPLA, Office 365 has a different set of rules on where you can deploy your licenses. The cheaper “Business Premium” product (aimed at businesses with 300 users or less) is not permitted to be installed on servers. This rules out its use on a Citrix or Microsoft Remote Desktop platform. To run Office 365 on this type of infrastructure you will need to opt for the more expensive Office 365 E3 or E5 plans. For the purposes of this comparison we will assume you are running a Citrix or Microsoft Remote Desktop platform. The costs for this type of licensing are very fluid and may (and do) increase and you must run the latest version - there are no rights to prior versions.

Exchange Online

Exchange Online comes bundled with most Office 365 plans. Whereas under a pure Volume or SPLA licensing model you would install Exchange on your own server, Exchange Online runs as a cloud service on Microsoft’s servers hosted in their overseas data centres. On the face of it, Exchange Online seems like good value: you no longer need to keep your own Exchange server running and maintained, you don’t need to worry about adding disk space to your Exchange server as use grows, and you can offload all of your security concerns to Microsoft. However if you scratch beneath the surface, there are a number of hidden costs you’ll need to be aware of:

  • Backup and archive
  • Data sovereignty
  • Anti-spam / Antivirus
  • Privacy - E3 vs E5 (private keys)
  • Access Control (EMS Suite)

Licence Model (Assume Exchange, and Office for 50 users)

365 pricing

*Office Professional = $64,000 for year one, year three and year five.

Note: Costs are based on 50 users, Exchange mail and Office. We have rounded the costs and the totals are cumulative for year one, year three and year five.

Are there alternatives?

Absolutely. Microsoft is certainly not the only game in town.  

There are a number of very credible options. For example, this document was entirely created, multi-collaborated and edited using Google Docs via Google's “G Suite” platform. Apple also offers an excellent suite of products that integrate into its iCloud infrastructure, and there are a number of options in the open source environment, such as LibreOffice.

Perhaps the biggest player here is Google. The G Suite platform costs US$10 (Business Plan) to US$ 25 (Enterprise Plan) per month per user and is highly competitive feature-wise compared with Office 365.

In Summary

Large multinationals often assume that we like change. I think it would be fair to assume they are slowly corralling all of us into a licensing and deployment model that suits their ends more than it suits ours. At this point in time - particularly if you know your business is reasonably static - it still makes good financial sense to buy and hold over 3-5 years rather than lease.

To be fair, both Microsoft and Google do throw a whole lot of additional value at their enterprise licensing but the question you will need to ask is, do we need it?

There are quite a few hooks (what you get and what you don’t get) embedded into Office 365 and you need to carefully assess these before you pull the trigger and engage.

Google is a bit more straight forward and you tend to get lots of value thrown in with minimal hooks. But remember, the Google platform is cloud only.

Libre-Office is a great option for a small business that can run on premise and does not require a specifically branded platform, but be aware that it does not include an email system.

Like I said at the start, at CommArc we don’t drink the kool aid, and we are here to help you assess, select and deploy what is absolutely the best option for your business.

If you have any questions about what platform is best for you and your business, feel free to get in touch with us at any time. We’re here to help.