SharePoint 2013, Cloud vs. On-Premises: What You Need To Know

Microsoft's plan to upgrade SharePoint in the cloud first is complete, but the puzzle for IT is still coming together. Here's a variety of factors you'll want to consider before making an on-site vs. cloud decision.

Now that Microsoft has released SharePoint 2013 and its online counterpart via the latest rev of Office 365, IT decision makers must choose whether to deploy it in-house or use the latest cloud-based iterations of the collaboration platform.

In many cases decision makers may have less influence -- and in some instances absolutely no say -- in that decision. That's because those who manage line-of-business apps can now sidestep IT and procure SharePoint in the cloud on their own, thanks to a variety of self-service options from cloud providers and the new Microsoft SharePoint Online service. That service is available in the revamped release of Office 365, which Microsoft released on Feb. 27.

Moreover, customers can opt to have Microsoft or a third party build apps and manage their SharePoint instances in the cloud. But even in midsize and larger shops, where IT's role may be changing, it's far from diminished. Most enterprises are still aligning their technology organizations with the business, whether they continue to run SharePoint in-house or in the cloud.

"The business side is interested in transferring capital expenditures to operational expenses, but there's resistance from those who manage the infrastructure side of the business because there's the perception they're going to lose control," says Sriram Jayaraman, director of technology for enterprise solutions at Aditi Technologies, one of Microsoft's top cloud partners.

Jayaraman says Aditi, with headquarters in both Seattle and Bangalore, India, explains to customers how IT can shift control to minimize the number of SharePoint workloads, so that they can focus on maintaining quality of service and business continuity. How do these discussions play out? "It's not a one-time conversation, I'll put it to you that way," he admits. "We have to demonstrate how they can do that."

Analysts and partners say demand for the new SharePoint 2013 release is outpacing that of previous new versions at this stage. Some of the key selling points of the new SharePoint release are a modernized UI, improved support for mobile devices and social networking features including some new ties to Yammer, the cloud-based enterprise social networking service Microsoft acquired last year for $1.2 billion.

New SharePoint Code
Microsoft has updated the code base in SharePoint 2013, which is the same cut of the software that powers SharePoint Online in Office 365. The latter, of course, includes Exchange and Lync, all delivered in a Software as a Service (SaaS) model. The changes appearing in the new Office 365 SharePoint Online will work their way into an update or service pack to the premises-based version of SharePoint 2013, which Microsoft released to manufacturing in November 2012 (see "Under the Hood of SharePoint 2013," December 2012).

The release of SharePoint Online in the new Office 365 release marks Microsoft's completed transition toward adding new features to SharePoint by rolling them out first in the cloud version and subsequently in the premises-based edition, explains Mark Kashman, Microsoft senior SharePoint product manager. "The innovation we're bringing to the cloud will come to the on-prem version afterward," Kashman says.

Most experts are in agreement that a growing number of SharePoint implementations will run in the cloud, either via the SharePoint Online service in Office 365 or through a cloud infrastructure provider such as Amazon Web Services Inc. (AWS), Rackspace U.S. Inc., Microsoft Windows Azure or thousands of alternative hosters and managed services providers (MSPs). Where the experts' projections differ is the extent of SharePoint cloud implementations.

A Forrester Research Inc. survey of IT decision makers shows 62 percent plan to deploy SharePoint 2013 on-premises, while only 8 percent will do so in a Microsoft datacenter, presumably via Office 365. Only 4 percent will run SharePoint in the datacenter of a Microsoft partner, while 26 percent will deploy SharePoint in a hybrid mode, both on-premises and online.

While that shows a clear majority still planning to run SharePoint in-house, it's a marked decline over the current state of SharePoint deployments, in which 82 percent of surveyed companies are running it in their datacenters, 5 percent have hybrid implementations, 4 percent are using a Microsoft-hosted service and 5 percent are hosting it with a third-party provider.

Another survey recently released by Metalogix Software Corp. had similar findings, showing 55 percent intend to continue running SharePoint entirely in-house and only 10 percent plan to run it purely in the cloud. The remaining 35 percent are planning hybrid SharePoint implementations.

"While Microsoft has steadily improved the online version of SharePoint by eliminating functional gaps, customers are still moving slowly to adopt Microsoft's Office and SharePoint cloud services," according to a February Forrester report authored by analysts Rob Koplowitz and John Rymer. Nevertheless, the analysts expect that to shift. "Despite the current slow adoption of Microsoft's SharePoint Online, we expect that customers will begin to adopt it in greater numbers as they eventually start seeing the service's advantages," they wrote.

Others believe a much larger percentage of organizations will run SharePoint in-house, particularly those addressing larger enterprises. Errin O'Connor, CEO of Houston-based EPC Group, a consultancy that specializes primarily in Microsoft SharePoint and SQL Server solutions, says 80 percent of his customers intend to keep SharePoint on-site.

"I don't think the cloud has matured enough for large organizations with 1,000-plus users," O'Connor says. "They're not comfortable with deploying data in the cloud because of security. The cloud is good for quick SharePoint environments that people want to stand up that will play nice with IT, or for smaller organizations."

Shyam Oza, senior product manager for administration, migration and cloud strategy at AvePoint Inc., believes it's hard to predict how rapidly SharePoint will move online.

"I think those numbers are up in the air," Oza says, when asked about the Metalogix survey. "While that number may be accurate as a snapshot of right now, I think that figure is in a state of constant flux. We've had phone calls with customers in the middle of last year who said, 'We won't go to the cloud, it's not on our roadmap, our content is too sensitive.' As recently as a week ago, [those same] customers have reached out to us and said, 'We're thinking of moving to SharePoint Online.'"

Case for the Cloud
Predictions and studies notwithstanding, it's no secret that Microsoft is looking to ultimately wean as many SharePoint customers as possible off of the datacenter and into the cloud. Most agree this won't happen overnight, and there are some SharePoint implementations -- existing and future -- that will never go off-site because of compliance, data governance or other regulatory requirements.

"There will always be large organizations and governments that will never move their servers off-site. They'll want control, but this technology is moving at such a fast pace that in seven to 10 years the majority will be in the cloud," says SharePoint MVP Christian Buckley, director of product evangelism at SharePoint tools vendor Axceler. "Certainly SMBs will be 100 percent in the cloud and the large majority of enterprises will be in the cloud, as well, but hybrid will have a long life."

Steven Murphy, CEO of Metalogix, attended a SharePoint conference last month and suggests his company's findings that 35 percent are planning hybrid implementations may be on the low side.

"The numbers definitely are dependent on the type of content," Murphy says. "From a hybrid cloud perspective, we're starting to hear regularly, 'I'm going to move my social to the cloud, I'm using My Sites.' Now we're starting to see and hear file shares. There's a massive amount of content, and customers are looking for alternate cost and availability models. When you're talking about someone who's looking at less-mission-critical content, I think their intention is to move to a cloud -- Office 365 being one of [the options there] -- and those numbers will increase."

Whether you use SharePoint 2013 on-premises or elsewhere, the new SkyDrive Pro component will give all users a taste of the cloud (see "Working Together,"). It will allow users to more securely share files in the cloud than public cloud services like Box, Dropbox and a slew of other services. "This is a much-needed enhancement to allow users to move between devices and have access to their content," wrote Gartner Inc. analysts Mark Gilbert and Jeffrey Mann, in a report on SharePoint 2013 released in February.

"The innovation we're bringing to the cloud will come to the on-prem version afterward."

Mark Kashman, Senior SharePoint Product Manager, Microsoft

Migration Issues
Microsoft is talking up the parity of SharePoint 2013 and the online edition in Office 365. But critics point out that, while that's fine for new applications, for shops with existing SharePoint farms on older versions, Office 365 is not designed to let IT simply move that content or apps with custom-developed or third-party applications to the cloud.

Microsoft's Kashman says while Office 365 indeed can't run so-called "trusted code" or apps designed to run on existing SharePoint farms on-premises, his team has worked closely with third-party tools providers and ISVs to mitigate that shortcoming. "We don't see that as a blocker," Kashman insists.

Among those that offer SharePoint migration and management tools are AvePoint, Axceler, the Dell Quest Software unit and Idera Inc. For its part, Metalogix last month added Office 365 support to its Content Matrix migration software. The release in February of AvePoint DocAve 6 SP2 adds support for those migrating from older versions of SharePoint -- as well as other content management offerings including EMC Documentum, IBM Lotus Notes and OpenText Livelink -- to SharePoint 2013 and Office 365. And the newest update to Axceler ControlPoint for SharePoint Administration allows IT to enforce SharePoint governance in the 2013 release and Office 365.

"Having good migration pathways and working with our partners to make sure their tooling is compliant with the changes we've made in 2013, it doesn't mean you can't go from 2007 to SharePoint Online, which is based on SharePoint 2013," Kashman says. "There are things to be considered in the what -- and how -- but we think we've addressed that pretty well."

In addition to those running hybrid implementations, the improved SharePoint 2013 Business Connectivity Services (BCS) provides connectors to Office apps, SQL databases, the Open Data Protocol (OData), and other Web services protocols and .NET sources, as well as connectors to popular applications such as those provided by Oracle Corp. and SAP AG.

Alternative Cloud Options
Many talk about SharePoint Online via Office 365 as the obvious option for running SharePoint in the cloud. But major Infrastructure as a Service (IaaS) providers -- including AWS, Rackspace, Dimension Data and even VMware vCloud Director-based IaaS provider Bluelock -- say they have thriving businesses letting customers run SharePoint either via dedicated hosting services or on multi-tenant (shared) virtual servers.

SharePoint MVP Shane Young, founder of SharePoint911, which Rackspace acquired last year, says there's less reluctance from customers to run the collaboration service online, but he believes they want more control than Office 365 allows even with its migration options.

"If you look at Office 365, it's a very cheap option, but it's also not the most flexible option," Young says. "Either your data is so massive, or it's corrupt and you're afraid to touch and move it, or you've added so much custom code and add-ons that you know moving it to SharePoint 2010 or 2013 will be a monumental task because you'll have to redeploy those customizations. For those people, Office 365 is not going to meet their needs because they're not going to be able to move those customizations to a multi-tenant shared environment."

Young, now director of the Rackspace SharePoint Service, is aiming to capture those customers via a fully managed service Rackspace rolled out in February, where the company will actually build a SharePoint farm and provide support services running in its public IaaS offering. And within the next quarter or two, Young says Rackspace will offer SharePoint 2013 in its multi-tenant IaaS environment.

With this multi-tenant SharePoint farm, a customer will essentially be buying SharePoint site collections from Rackspace. IT won't have central admin access, nor will it be able to deploy code on the server, much like the Microsoft SharePoint Online offering.

What's the point of a SharePoint Online-like offering provided by a third party? According to Young: "There's no moving your data out of Office 365 once you're in there, and that's going to be our value proposition."

AWS also has a significant customer base that uses its EC2 services to run their SharePoint farms. One of AWS's largest integration partners, 2nd Watch Inc., offers what it describes as a superior alternative to Office 365 called 2W SharePoint. "What we've done is simplified that to one click, so a company with 1,000 users can have a SharePoint site running [on Amazon] within hours," says Jeff Aden, co-founder and president of Seattle-based 2nd Watch.

Customers can also use 2nd Watch to bring their own SharePoint licenses to Amazon. "In either case they end up with the same product -- it's just a question of how quickly they want to get there," Aden says. The company last month announced a partnership with Slalom Consulting, which will work with clients to provide custom SharePoint development of applications hosted in Amazon via 2nd Watch.

Cloud App Store
Whether you're going to run SharePoint in the cloud, in your datacenter or in some combination thereof, Microsoft is championing a new cloud app model for SharePoint 2013 and Office 365. The apps for SharePoint can be found in the new Microsoft Office Store, where third-party ISVs can sell SharePoint tools, plug-ins, and apps either free or for a fee.

Enterprises with their own in-house development organizations can also use the new SharePoint tooling in Visual Studio to build apps that can be offered in the public store or side-loaded into their SharePoint corporate catalogs, according to Kashman.

Kashman says it's early days for the new cloud app model, but he is optimistic that partners will quickly deploy new applications.

"We think we're going to see a lot of the ISV-level solutions coming into the store in the next four to six months, but we think at the same time, enterprise customers will have started to take advantage of the corporate catalog," Kashman says. "We've gotten feedback that they will be taking more advantage of the cloud app model methods as opposed to writing code that sits in SharePoint


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