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Office 365: Analyst Explains Limitations and Nuances

Organizations looking to move to Office 365 got some of the finer points discussed during a Thursday Directions on Microsoft talk.

Office 365's general availability may begin on Tuesday, which is when Microsoft CEO Steve Ballmer plans to make an announcement. In general, Office 365 will be an update to Microsoft's current Business Productivity Online Suite (BPOS), a collection of software-as-a-service offerings based on 2007-branded Microsoft applications. Office 365 will update those offerings based on Microsoft's current 2010 brands. The services are offered on a monthly subscription basis, priced per user.

One dilemma for organizations thinking of moving to Office 365 is determining what limitations there will be with the on-demand service offerings vs. using premises-installed Microsoft applications. Organizations also face uncertainties over migration, compliance, infrastructure and security, as well as licensing (described here, based on an earlier Directions on Microsoft talk).

Wes Miller, research vice president for server applications at Directions on Microsoft, an independent consultancy, fielded some questions along those lines in a Thursday Webinar presentation. He mostly deferred covering the licensing angle in this talk, however.

Office 365 consists of Exchange Online, SharePoint Online and Lync Online. The inclusion of Active Directory Federation Services 2.0 with single sign-on is a new addition with Office 365. Some of the Office 365 packages will include Office Professional Plus, a productivity suite that gets installed on the customer's premises. However, Office Professional Plus is still offered on a monthly subscription basis, so its use expires when the subscription ends. Office 2010 is available with some offerings or organizations can "bring their own" Office 2010, Miller said. Also supported for use with Office 365 are Office for Mac 2011, Office for Mac 2008 and Office 2007.

Some packages will come with Office Web Apps, which offer similar capabilities to premises-installed Office software, although with limitations. For instance, Miller noted that the Excel Office Web App can't run macros. In addition, Office Web App files can only be opened when stored on a SharePoint site. They don't open from a local drive.

Office 365 Packages
Microsoft has four licensing categories for enterprises (E1 through E4), with E4 being the most inclusive offering. They include Exchange Online e-mail support for mailboxes of 25 GB in size, personal archiving, calendar and contacts.

The E1 offering essentially replaces Microsoft's BPOS offerings, Miller explained. The E2 offering includes BPOS offerings plus Office Web Apps. E3 is the offering most organizations may select, according to Miller. With E3, users get Office Professional Plus and the most SharePoint functionality. E4 adds features such as enterprise telephony, but it may not be available until late 2011. Miller noted that Microsoft's timeline for improving that aspect of the E4 offering could be affected by its acquisition of Skype.

In addition to these four enterprise packages, Microsoft offers two plans for so-called "kiosk workers." The K1 offering costs $4 per month per user and includes SharePoint/Exchange Web access. The K2 offering costs $10 per month per user and adds Office Web Apps to what's offered in the K1 package.

Small business users can purchase Office 365 services via Microsoft's P1-level licensing, which includes a single SharePoint site. Miller noted that the Web site support at the P1 level is for very simple ASP-capable sites, and is not intended to meet the needs of midsize companies or enterprises. There is no good migration capability from P1 to E1. Organizations should select the right level "out of the gate," Miller said.

Microsoft's standard Office 365 offerings are based on a multitenant architecture, which means that subscribers share hardware with other users. If organizations have security or compliance issues and want dedicated service, Microsoft offers that too through its dedicated and federal services. However, Miller noted that organizations will need to have 30,000 seats at least to be considered for dedicated Office 365 service from Microsoft.

Current standard subscribers will get two years to migrate to Office 365. Migrations can start three months after Office 365 launches, which may be on June 28. Organizations should investigate using Active Directory Federation Services 2.0 because it can help with migrations, Miller said.

Limitations
The talk by Miller covered Office 365's capabilities, as well as its limitations. However, it's the limitations that IT shops may need to focus on, especially if they've relied on premises-installed versions before.

One overall caveat to using Office 365 services is that it requires having a reliable Internet connection in place. The only application in the bundle that works offline is Office Professional Plus. Office 365 applications lack the full feature set found in the on-premises versions.

Moving to Office 365 entails "significant migration costs," Miller noted, although he didn't go into the details. The time and complexity of the move will be based on the number of users and the size of user mailboxes. There are no migration tools for SharePoint Online and Lync Online thus far. Organizations will have to understand the implications of service level agreements, compliance and legal issues, and security when opting for Office 365. The standard model may not work for some organizations, he said.

Office 365 users essentially give up backup and recovery control to Microsoft, Miller noted. There also are uncertainties for those wanting an "escape hatch" -- that is, an ability to back out of Office 365 and return to the on-premises model. It's not a turnkey kind of thing to move back, Miller explained.

SharePoint Online is significantly better with Office 365 and very strong on collaboration capabilities, Miller noted. However, it can be considered a "weak" solution to meet business intelligence needs, he added. Miller added that one of the features of SharePoint Online is 10 GB of storage per tenant with 500 MB of storage per user, although that sounded rather limited. SharePoint Online does not have the full customization or API set of the on-premises or dedicated instances of SharePoint. The API is designed around a sandbox model, and any custom code needs to be able to work with that model. SharePoint Online lacks search integration for Exchange, FAST and Windows 7 search. It also lacks scripted management support.

Exchange Online does not support unlimited message sizes and mailbox sizes (which Exchange on-premises does support). It also does not come with managed folders. Public folders are not available. It does not support server-side MAPI or CDO connectivity, nor does it support hierarchical address lists and GAL segmentation, Miller said.

Lync Online, Microsoft's unified messaging offering, lacks enterprise voice today, Miller noted. There's no calling with standard phones at launch and there's no PBX integration. Microsoft is working on the voice limitations, but solutions may come a year after launch, he said. A meeting service is offered through Lync Online, but it's limited to 250 participants. Microsoft previously offered a Live Meeting service through BPOS that supported up to 2,500 users, but Live Meeting is being phased out of Office 365. The meeting application has some geographical constraints, such as in France and Germany, Miller noted. Lync Online lacks voicemail recording or playback. It lacks scripted management and has server-side API connectivity constraints. The federation services in Lync Online are limited to Microsoft-to-Microsoft connections at this point (Lync Online or Office Communications Server).

The browsers supported by Office 365 vary based on each service offered, Miller noted. However, the browser is the primary tool for connecting with Office 365.

So, is Office 365 ready for prime time? "I think it's pretty ready," Miller said, in response to an audience question. He added that "it may be a little more expensive than Google Apps."

Directions on Microsoft plans to complete a report on Office 365. Miller said the report may be finished in late July or early August.

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