0. Structure and Strategy of Microsoft’s Online Services
WEBINAR
Office
Structure and Strategy of Microsoft’s Online Services
March 15, 2017
SPONSORED BY:

1. Basic Office 365 Concepts License Hosted Services User Licensing
Subscriptions
Customers access Microsoft Productivity Servers (Exchange, SharePoint, Skype, et al) that are “hosted” in Microsoft data centers
Customers assign “User Subscription Licenses” to their users rather than to devices. A user can access the servers from any location and any device.
Subscriptions require annual payment. Unlike Software Assurance on perpetual licenses, customers have no perpetual rights

2. What’s Online
The Office 365 family and related products cover many Microsoft-hosted services
Exchange Online
Hosted
SharePoint Online
Document collaboration & interactive applications
Skype Online
Messaging, voice, Web conferencing
Project Online
Project Management
Visio Online
Diagrams
Office Online
Browser-based Office
OneDrive
Cloud-based document storage (a la DropBox)
Dynamics CRM Online
Customer relationship management
Azure Active Directory
Cloud-based directory services
Intune
Device management and patching
Team Foundation Services Online
Developer team collaboration
Operations Management & Security
Server management
Intune
Device management and patching
Microsoft Teams
Online community a la Slack
On-premises subscriptions often combined with Office 365
Office ProPlus, Visio, Project

3. Office 365 Suites
Microsoft is extraordinarily good at packaging products and services
Even weak products, when bundled, gain competitive advantage. They’re “free” and the competition is not.
Office 365 E1 Exchange Online Plan 1 SharePoint Online Plan 1 Skype Online Plan 2 $6.80/month/user
Office 365 E3
Exchange Online Plan 2
SharePoint Online Plan 2
Skype Online Plan 2
Office ProPlus
On-premises install and full capabilities for lightweight apps on Windows, IOS, Android
$17/month/user
Office 365 E5
Exchange Online Plan 2
SharePoint Online Plan 2
Skype Online Plan with Enterprise voice
and optional PSTN integration
Office ProPlus
On-premises install and full capabilities for lightweight apps on Windows, IOS, Android
$29.76/month/user
Kiosk Plans 1 and 2
Exchange Online (OWA)
SharePoint Online (limited)
$6.80/month/user

4. Enterprise Mobility + Security
Secure Productive Enterprise E3
Secure Productive Enterprise E5
E3:
Active Directory in the cloud Intune Mobile App
Advanced Threat Analytics
Cloud data encryption
$9 month/user
E5 adds:
Identity management and authentication
Cloud App (DropBox, et al) Security
$15 month/user
Office 365 E3
Enterprise Mobility + Security E3
Windows 10 Enterprise E3
$28/month/user
Office 365 E5
Enterprise Mobility + Security E5
Windows 10 Enterprise E5
$50/month/user

5. Managing Office 365 AD Integration Reservations Transitions & Options
Office 365 cloud services can be integrated with cloud and on-premises Active Directory to ease on-boarding and off-boarding
Products can be ordered and used at any time, but between agreement anniversaries, reservations are used to pro-rate partial-year use
Discounts may include partial credit for previous or current Software Assurance on on-premises products: “From SA” recognizes previous SA, Add-ons recognize current SA on a related on-premises product

6. Applying Office 365 to Your Environment
The fit will vary depending on an organization's size and structure
Small
Large
Savings on IT management overhead
Few or no economies of scale
Simplifies remote access to documents
Mergers/acquisitions with disparate technology can be integrated rapidly
Ongoing economies from staff and hardware savings
More costly in the long run than smart on-premises licensing

7. Microsoft’s Great Leap
Microsoft’s main annuity revenue source, Software Assurance, has a fatal flaw:
Customers who stop paying for SA can still use, even upgrade the software.
Customers may be at n-1, n-2, even n-3.
Modest upgrade discounts are the major benefit, but customers who skip versions double costs.
Upgrade feature deltas are declining. What’s the difference between Office 2013 and 2016 again?
If Microsoft moves a customer to subscriptions, they will never stop paying

8. Have a Real Business Case Pay Attention to Quantities
Buy only when ready
Have a Real Business Case
Pay Attention to Quantities
Microsoft wants you buy 2,000 seats of Office 365 E3. You get a 25% discount in an agreement renewing July 1.
You are unlikely to deploy Office 365 until Jan
You will spend $34,000 a month on a service you won’t begin to use for 6 months.
Your effective price (actual cost per deployed user per deployed month) will be 3x to 10x the list price.,
Use the MPSA to match deployment and payment.
Roughly 5% of our customers have identified a real business case for Office 365.
Microsoft arguments like “everybody is going to the cloud,” “we’re cloud first, so on-premises products won’t be upgraded” are great arguments for stopping SA, but not good arguments to abandon on-premises software (often the latest version) for the cloud.
Office 365 ProPlus is the product of choice for mobile users who need to access virtual desktop infrastructures and other services from a variety of devices (business PC, home PC, business portable, iPad, phone).
Buy it for them. As for the remaining 98% of your employees, conventional device licensing should work just fine.

9. Negotiations Cautions
Customers who go for Office 365 in a big way give up most of their negotiating
Promotional discounts usually disappear after (and sometimes even within) the first agreement term. Be prepared for large (>25%) price increases in renewal
Negotiating a price cap may help, but be careful that the concession does not contain a licensing “time bomb” such as “the price of Product X will not increase by more than 15% at full renewal of this agreement.”
All bonuses and incentives for Microsoft account teams are now based on cloud and subscription purchases and deployment. Your renewal proposal will consist entirely of products that give them credit toward sales goals. It is designed around the account team’s requirements, not yours
Microsoft teams may tell you that they will offer no discounts on anything except cloud services, and they no longer propose renewal of on-premises software.
Microsoft is stepping up customer audits. The goal of many audits is to find (or make up) substantial non-compliance and then propose an Office SPE E5 contract as a way to avoid paying the fine

10. Have questions? ) V