NEWS FOCUS: Microsoft Office 365 - hot or not?

Microsoft’s cloud version of Office has sparked a mixed reaction from the channel, with passionate views emerging around Telstra T-Suite’s exclusive role in the distribution chain along with concerns over higher prices set for Australian customers.

Hosted in Microsoft’s Singapore datacentre, the utility service includes Office (productivity), Exchange (messaging), Sharepoint (document collaboration) and Lync (instant messaging and presence) on a monthly bill.

There are a number of plans, ranging from the small business plan (for up to 50 employees for $7.90 a user per month) to the enterprise plans (which range from $15.70 to $45.10 a seat per month depending on which of four plans is chosen).

Calling Office 365 a “disruptive technology”, Ovum analyst, Kevin Noonan, said the latest technology signals both good and bad news for the channel.

“There is a downside for the channel – it’s harder for resellers to insert points of differentiation because it is a standardised system,” Noonan said.

For some, however, the fact you can’t “tinker with the software” is a good thing, he said. Given it is a “one-dot-zero” release and “far from perfect”, there was still a lack of flexibility in Office 365’s functionality compared to other made-to-measure information and collaboration infrastructures, Noonan said.

Eyeing selling opportunities, he said the channel should become “enablers of service” or “SMB architects”, assessing a customer’s overall IT infrastructure and sorting through the licensing and integration issues of other in-house software.

“Do these stay downloadable or can they also go to the cloud?” Noonan asked.

HubOne’s CEO, Nick Beaugeard, said the cloud integrator and developer is already seeing huge selling opportunities, and the ability to offer additional managed services on top. The company recently clinched a “whopper of a deal” with Global Yellow Pages in Singapore for the migration of Office 365 out to its SME customers.

Getting 400 orders per day thanks to the latest deal, he said the marketplace has matured since the original Business Productivity Online Suite (BPOS) release, and is now ready for cloud computing solutions.

“The technology is no more disruptive than BPOS was – apart from the fact that we’re seeing huge uptick in demand,” Beaugeard said. “BPOS demand died off as customers were all sitting waiting for Office 365. BPOS 2007 edition had limited functionality; Office 365 has far more parity with an on-premise implementation.”

Recognising the channel angst surrounding the way to market, he said the Telstra connection is not an issue. To be able to sell the technology, he said Microsoft partners had to sign two documents: The Microsoft Online Services Partner Agreement; and the Telstra Online Services Agreement.

“It makes resellers a Telstra dealer for T-Suite,” he said, adding traditional resellers could “nail it".

Like Beaugeard, ICT Distribution managing director, Ben O’Leary, sees enormous opportunity for the channel.

“Resellers can configure up and quote an entire solution, not only Office 365 but also the broadband pipe, the phone system, the laptops and PCs,” O’Leary said. “It is not just the software itself, but the entire proactive management of the network.”

The distributor, which deals with 1700 resellers , suggests partners look to peddle migration services.

“There’s still a lot of work with migrating a customer to Office 365,” he said. "It’s not a question of rolling out Office 365, you flick a switch and then you’re done. There are big decisions when deciding on which piece of the network goes to the cloud. You have different phone systems, different providers of broadband, a number of PCs that need refreshed, along with a server upgrade and new backup solutions.” Pain points emerge

Despte the success stories channel angst remains. The biggest pain point for UberGlobal appears to be Telstra’s involvement, according to UberGlobal CEO, Michael McGoogan. “No reseller will make a brass razoo from Office 365 until Telstra loses syndication exclusivity,” he said.

Thomas Duryea national practice manager, enterprise information systems, Rhys Evans, said there are still big customer concerns regarding compliance and data security. The transition phase is another worry.

“There’s lots of interest from the mid-market and enterprise level, but they’re not quite ready to implement,” Evans said.

“Customers have concerns about the time and cost associated with migrating from BPOS. It can take a lot of time and effort to get there.”

Microsoft said BPOS customers will be offered a transition to Office 365 within the next 12 months.

Meanwhile, Calvert Technologies managing director, Dean Calvert, said pricing is a big stumbling block.

“The pricing seems to be out of whack compared to the US. The US mindset for price is a lot more price sensitive than the Australian consumer. Australians tend to realise value more, but in saying that, people are still asking why is it costing more? I’ve heard rumblings where people are looking at buying it overseas in order to cut Telstra out of it

UPDATED July 19, 4.50pm

Microsoft responds

1. Why was Telstra chosen to be the sole reseller? There appears to be mixed reaction to Telstra's involvement in the distribution process.

In 2009 Microsoft and Telstra entered the cloud together with a range of cloud services including messaging, collaborations and communications. These cloud services are proving popular with our channel partners and a broad range of SMB customers. Telstra now offers Office 365 to its SMB customers via the T-Suite portfolio of SaaS products. This means that our existing Microsoft partners are able to take advantage of Telstra’s T-Suite platform and their broad customer base to reach new potential customers.

2. Why are Australian prices higher than the US prices. Some resellers have mentioned Aussies are paying higher fees for Office 365.

Many factors determine Microsoft’s recommended retail prices locally, including, but not limited to, the size of the market, taxes, government regulations and costs. It is difficult to make a straight pricing comparison between countries given that the conditions vary between markets. In Australia, we also go to market with partners who add significant value to our local customers, such as localised customer service and support.

We do not believe it serves our customers or partners well for there to be frequent changes in recommended retail pricing based on fluctuating currency exchange rates between the US and Australian dollar – whether they be favourable or unfavourable fluctuations. For recommended retail prices to constantly move up or down in line with the international currency markets, would make that pricing unpredictable.

3. What is the BPOS migration timeframe?

BPOS customers can find more information about how to prepare for Office 365 from their partner, or by visiting www.telstra.com/business/office365faqs

We understand that businesses do not like surprises and have taken a very deliberate approach to rolling out Office 365. Our approach is designed around the customer and helps ensure they are ready for the transition and will get the most out of the new capabilities we have introduced. We expect the transition to Office 365 (which includes new features, enhancements and services to Microsoft Online Services) will be available to existing BPOS customers in the coming months.

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