Thursday, August 14, 2014

Is Office 365 really going to save me money?

Saving money is something every organization wants, right? Well it is if it was my organization. But is moving to Office 365 really cheaper on the long run like Microsoft says it is? And is saving money the only thing you'll need to consider when moving to a public cloud platform like Office 365?

This is the question most of my customers have and is, unfortunately, not so easy to say or predict. Although in theory most of my customers can save an average of 66% compared to their current solution, saving these amounts are usually not very feasible.

In this post I am trying to explain the different variables and catches there are concerning this questions.

What is Office 365?

For those who lived under a rock the last few years and don't know what Office 365 is, i am giving a short description of Office 365 in this paragraph.
Office 365 is not the new version of Office on you PC or MAC. Office 365 is also not used to chew on or eat. Office 365 is a public cloud platform delivered by Microsoft and can leverage several productivity servers and applications to your organization.

Productivity Services

Productivity Services are services that you can rent within the Office 365 platform. The main services you can use from within Office 365 are:
  • Mail (Exchange Online)
  • Communication (Lync Online)
  • Collaboration (SharePoint Online)
  • Social (Yammer)
  • Document editing (Office Online)
Note: These services are the main services the platform provide at the moment. New services can be added in the future.

Productivity Applications

Productivity Applications are all applications you can use to access the information that are located in the Productivity Services. The main applications you can use within the platform are:
  • Office 365 Pro Plus. This is a desktop version of Office like Office 2013 only with a subscription service to activate or de-activate based on the users permission or license. With a typical Office 365 Pro Plus license you can install Office 365 Pro Plus on five different devices and on both PC and MAC.
  • Project Online with Project Pro for Office 365. Project Online is a flexible online solution for project portfolio management (PPM) and everyday work. Delivered through Office 365 and designed for people who need to manage with full project management capabilities on the desktop as well as work online from virtually anywhere on almost any device
  • Visio for Office 365. Visio for Office 365 requires a separate subscription. With a Visio for Office 365 subscription you can provide users who need Visio a possibility to install Visio on their client. This is the same way as users install Office 365 Pro Plus.
  • Mobile Apps. Microsoft is providing several mobile apps (like OneNote for Business, Yammer, OWA and Office 365) to all main mobile platforms Android, iOS, Blackberry and Windows Phone*
* On Windows Phone 7, 8 and 8.1 all mobile Apps are integrated seamlessly into the platform. There is no need to install separate apps.

For a complete overview of all plans, subscription options, available services and applications you can use this page or consider hiring an expert via one of the many certified partners or just ask me ;-).


First of all, to keep the records straight, we need to have some sort of a baseline. In most calculations I perform for a customer, I use the following six categories to split the costs:
  • Hardware
  • Microsoft Software and Services
  • Third-Party Software and Services
  • Operations
  • Deployment and Migration
  • Disaster Recovery 


This category is about the costs of hardware you need to maintain or purchase during the lifetime of the solution (in The Netherlands this is normally the financial depreciation which is usually 5 years).
What I usually see is that hardware costs will drop compared to Office 365 but are (in most cases) not the big cost saver.

Microsoft Software and Services

This category is about the costs of Microsoft licenses you need to pay to have a licensed solution over the lifetime of the solution. Included in this category are:
  • Licensing costs for the messaging solution (Exchange)
  • Licensing costs for the communication solution (Lync)
  • Licensing costs for the collaboration solution (SharePoint)
  • Licensing costs for the clients (Office)
In Office 365 you use a pay-per-use model. Because of the large scale of the Office 365 platform and the flexibility of a pay-per-use model, costs of buying, renting and maintaining expensive licenses are not needed anymore. Therefore Office 365 is most of the time cheaper in licensing costs.

Third-Party Software and services

This category is about the costs needed to maintain or purchase third party solutions like backup, antivirus and anti-spam or different vendors for your communications solution (if you are already using them).
Because the data of the services you subscribe is not in your own datacenter anymore, you don't need to worry about the purchase and support for AV, anti-spam and backup solutions anymore. Therefore it can save you a lot of money if you decide to move to Office 365. It also simplifies your contract management, but it's hard to tell the real financial impact of this.
Also, if you implement it right and include the optimization of having meetings and leveraging your mobile workforce with the proper processes for working at home and not having to travel a lot, this can save your organization a lot of money. If you successfully implement Lync, users who need to travel a lot can save time being in traffic jams, having flights, etc. This is one of the biggest cost savers. But you have to be able to implement it right.


This category is about the personnel and consultancy costs you are going to have maintaining the solution.
Operations can be a real cost saver, but most of the time the actual saving is not achieved. This is mainly because the admins are not provided with new tasks and responsibilities or are rusted away in there very comfortable chair. It is therefore hard to put an actual number on this topic.
My advice to all customers is to really think about the opportunities moving to the public cloud can create for IT employees and also address the proper actions to it. This doesn't per se mean that you need to get rid of your IT employees, but activate yourself and your personnel to create new roles and possibilities and also pull conclusions out of it if these new responsibilities and opportunities are not achieved.

Deployment and Migration

This category is about the costs you are going to have deploying and migrating the current solution to Office 365 or a new on-premises solution.
So typically migration to Office 365 will cost your organization somewhat more then upgrading the current solution. Migration to Office 365, and especially the initiation and preparing phase, will consume a lot of time. Also most organizations are not capable to see the big picture of Office 365 and/or do not have the expertise and experience in-house. The use of an external expert is, in almost all cases, advisable. Hiring such an expert cost you money.
However the costs of hiring an expert to implement and migrate to Office 365 are a fraction compared to the savings your organization can make.

Disaster Recovery

This category is about the costs involved maintaining a disaster recovery solution.
When using Office 365 you don't need to worry about disaster recovery anymore. It's clear that the costs for a disaster recovery solution for the services in Office 365 will almost completely disappear.

Advantages of Office 365

Moving to the Office 365 really has several advantages for your organization compared to an on-premises solution or solutions, like:


Office 365 is a very scalable platform. If you only want to use Messaging (Exchange Online) or leverage the complete platform, you can choose whatever you like for every user or persona in your organization.

 For instance, if you are a company who is subject to heavy increments or decrements of personnel (like project based organizations) you can easily add or remove licenses based on your current needs. In an on-premises environment you are less flexible because you need to scale the solution based on the needs at that point in time.

Another advantage concerning scalability is that you can divide users or user groups into persona's. So if you are an organization who has users who only need to have an Exchange Online mailbox and users who also need to use other services like SharePoint sites, OneDrive and/or conferencing, you can easily purchase and enable multiple plans or SKU's for each type of persona.

High Availability

Using Office 365 automatically adds high availability (HA) to your solution(s). You don't need to worry about the design and maintenance of multiple datacenters and the fact if your HA solution is working. Office 365 has several datacenters across the world and, by default, every service has a primary and failover location in your continental region.
The only exception is when you are going to use Single Sign On (SSO) based on Active Directory Federation Services, which is covered later on in this post.


By using Office 365 you or your employees can literally access their data from anywhere in the world, as long as they have a usable internet connection. It doesn't matter if the user is in one of your offices or in an internet cafe somewhere in the middle of Peru or somewhere else, the user can always access his or her data.
Where in an on-premises solution you'll have several dependencies, like:
  • Is or are your datacenter(s) available in the region where the user is?
  • What is the user experience if the user is on a location which has limited internet connectivity?
  • Are the Service Level Agreements met? For most subscriptions Microsoft guarantees 99,9% (in 2013 it was 99,6%) availability.


By moving to Office 365 reduces complexity of your own environment. Although it not always saves you servers (like if you were only using one or two Exchange servers and you want SSO, DirSync in a high available construction you need to have at least 2 proxy servers, 2 AD FS servers, some load balancers and one DirSync server), it can save you complexity regarding to the availability requirements of Exchange, Lync and SharePoint. It also reduces the complexity for storage of these products. You simply don't have to worry about this anymore.

Disadvantages of Office 365

Like every choice in this modern world there are disadvantages or considerations to make when your organization is considering a move to Office 365.

Considerations for not moving to Office 365 can be, but are not limited to:

Highly Configurable - Not Customizable

All services provided in the Office 365 platform are highly configurable but are not customizable. This means that if you want to, for example, change the login screen or create a custom theme in Exchange OWA you are not able to. You can however change most theming in SharePoint, as long there is no server based coding in the theme or app.

Data Location and Transfers

In Office 365 Microsoft desides where your data is stored. You are not able to infuence this. Most of the time Microsoft stores your data in the continental region where your organization has there home ground. For example, if you organization has it's headquarter or only office in The Netherlands, Microsoft stores your data in the European Datacenters.

This is done due to several reasons. One of the reasons is to minimize the latency used to access your data. The other reason is to comply to the country's or regional governance policies (covered later on).

No Customer Right to Audit

Customers or tenants of the Office 365 platform are not able to physically audit the data and or services located in one of Microsoft's datacenters. However, Microsoft provides all audit data twice a year on the Microsoft Office 365 Trust Center site. But, if you need to comply to certain audit requirements which requires you to have access to the datacenter, you are out of luck.

In my experience however most organizations or vertical markets don't have or are not aware of any specific regulations regarding this topic.

Comfortable with the Office 365 Roadmap

When your organization moved to Office 365, you need to feel comfortable with the Office 365 roadmap. This means that if Microsoft decides to upgrade there platform to a newer version, deprecates features / services or implements new features / services your organization needs to comply and go with the flow.

Most of the time this actually creates possibilies for you organization like leveraging new abilities to your workforce. But sometimes this roadmap is a bit fuzzy and unclear. For that Microsoft is providing a public roadmap which helps in most cases but not always. Also, if you have or work in a very conservative organization which, for example, doesn't have a flexible upgrade process or uses applications and/or addins in Office that cannot comply, moving to Office 365 can be quitte a challenge or in worst case a real deal breaker.

Less complexity or more

Although removing specific product complexity for Exchange, Lync and Sharepoint in an on-premises environmont, moving to Office 365 can also introduce new ones. For example if you organization wants to use Single Sign On (SSO) you will need to have Active Directory Federation Services (AD FS).

If your organization also wants AD FS to be available anytime and anywhere (which in my opinion is a must in any case because not having this can create severe complications regarding to the availability of the platform), you will need to have multiple AD FS servers in a farm or multiple AD FS farms.

By introducing AD FS you leverage a lot of opportunities relating to SSO on many web services from within your organization or at partner organizations. However, introducing AD FS also introduces the need for specific and specialist knowlegde and local* dependancies. Therefore AD FS can add unneeded and unallocated complexity.

So if you or your organization decides to add AD FS as a needed part of the solution, you need to really consider the above.

* Local related to servers or virtual servers in you own datacenter. You can also use virtual servers in Microsoft Azure. This post does not cover Azure.


As mentioned earlier, governance can be a challenge. Although Microsoft claims that their platform complies to most of the world accepted regulations, we know all the recent fuzz created concerning the Patriot Act and PRISM.

Personally I am having trouble to form an opinion about this topic. I always think how data is no secret for anyone in anycase. If you have users who are not provided the right tools, they will send data to there own mail account (like google) or put it on dropbox. This can be much harder to control and even be a bigger threat then putting it on Office 365.

One thing I know for sure, Microsoft is doing everything she can to provide her customers with a high integrity enterprise grade solution, but i guess you never know for sure.

For (potential) movees who are concerned about the number of data requests in there region, Microsoft provided a periodical Law Enforcement Requests Report which you can find here.

At least all Governance related (potential) issues need to be addressed as soon as possible in the project. What i normally do is to provide my customers with a "Cloud Briefing". For this session I ask the customer to invite all potential stakeholders for this project within the organisation. During this session an open discussion is made to discuss all potential concerns and issues related to a move to the public cloud.

Having some sort of session like this not only addresses governance concerns but also provides a better view of Office 365 and gives an opportunity to make decisions like naming conventions and used services etcetera.


So back to the question "Is Office 365 really going to save me money?".

As you have read my post, this is an easy question that is not so easy to answer. It all depends.

Although I am an early adopter, real expert, evangalist, public speaker and big promotor of Office 365 from the early days (when it was still named BPOS), I am also critical. I did a lot of advisory in and moved a lot of customers to Office 365. During all projects above topics really came into play and in some projects, unfortunatly, not always at the beginning of the project.
I am also realistic about the fact that Office 365, or any other public cloud platform, has it's limitations. These limitations don't always have to be a desicion breaker, but you always need to have a clear mind and address potential decision breakers.

Moving to Office 365 can save your organization can save you a lot of headpains in the IT department and money in the long run, but proper preparation, adjusting business policy and processes are needed to make it a succes. In my experience a lot a lot of organizations are making their decisions based on the investment costs of a project or new technology. Better said CAPEX.

In my opinion making a big desicion like this that can really leverage and optimize all corners of your organization. Therefore you should look at every aspect of moving to Office 365 over a longer period of time then only during the project. Better said OPEX. Only then you can will save money and time.

I hope i provided you all with easy readable information concerning this topic and provided you with enough food for thought. If you have any questions related to this topic or your organization wants to hire my company to discuss Office 365 or on-prem environments. You can contact my via

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