First Look: Microsoft's Office 365 Will Shake up IT

Microsoft’s Office 365 is such a radical shift in both technology and its delivery that there will scarcely be any segment of the IT industry that won’t be impacted in a big way.

Office 365 has now reached public beta, so let the questions and the discussion begin.

A one-week examination of Office 365’s beta by the CRN Test Center finds much more than just a simple, online suite of productivity tools. Microsoft has turned the heart and soul of day-to-day computing over to the cloud in a manner that every enterprise, business or government entity can access in a meaningful way.

And it’s done so in a way that should embarrass Google, one of Microsoft’s primary rivals. Office 365, frankly, is to Google Apps as XBOX 360 Live is to Pong. It’s in a different league entirely and represents a leap into the next generation of computing.

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To be clear: Office 365 doesn’t do it all, all by itself. For extended functionality, including single sign-on, the solution still requires a working knowledge of Active Directory. Several tasks like integration of existing, premise-based mailboxes with Office 365 are not automatic, either. When Microsoft executives briefed reviewers on Office 365 earlier this month, they were clear that the Redmond, Wash.-based software giant still considered the solution provider channel to be its strategic go-to-market plan – and with good reason.

But Office 365 is so radically different from other approaches we’ve seen from Microsoft in the productivity and collaboration spaces, that it will have a major impact all through the pipeline.

Office 365: What It Does:

• For $6 per month per user, Office 365 bundles Exchange, Outlook, SharePoint and Lync (formerly known as OCS) into a turnkey solution for up to 25 people in an enterprise;

• It integrates this technology with mobile platforms including iPhone and Windows Phone 7;

• It integrates both with Office 2010 and some earlier platforms, as well as Office Live, it’s free, web-based extension of its productivity suite;

• It works almost seamlessly with Mac OS X;

• It’s fast. We noticed almost no latency in working in Office 365 even in a 3G Internet connection as slow as 1.11 Mbps;

• It takes about 5 minutes to set up an SMB enterprise productivity and collaboration infrastructure on Office 365, and about a minute to add users and tailor their permissions and access;

• In a week of testing, we ran into no downtime. While this remains a concern for any production-quality business solutions in the cloud, and will remain an area to watch as the Office 365 installed base grows, for now it appears to be on a reliable network.

Office 365: How It Works

Once an account is opened up, a designated administrator finds a straightforward, easy-to-access management console. This console provides for license management, adding users, defining their security levels, creating ’security groups’ and creating levels of functionality throughout.

Administrative privileges also allow for porting an organizations domain name to Office 365. This is not difficult; Microsoft provides a three-step wizard for domain addition to Office 365 through Microsoft Online Services.

Users are provided with 25 GB of storage and security features (such as litigation hold on email deletion) can be controlled by enabling or disabling them via check boxes. In short: it’s largely enterprise capable administration.

Office 365 And Microsoft Exchange

There is no need to deploy a stand-alone, Exchange server or even integrate a separate cloud-based exchange (of which the CRN Test Center has reviewed several in recent years.) Because it is part of the overall Office 365 package, it’s ready to go once the account is set up.

As with Exchange, Office 365 provides an administrator with the ability to set user-by-user functions and features. From choosing whether to issue storage capacity warnings at 24.5 GB or 24.75 GB or 25 GB, to setting an organizations email archiving preferences, to enabling or disabling Active Sync and Unified Messaging (even whether to provide a ’Mail Tip’ to users), Microsoft allows for drop-down-box like control over what a user gets or doesn’t get.

If someone doesn’t have training in Exchange administration, it’s fairly easy through Office 365 to get started.

NEXT: Office 365 And SharePoint, Lync

SharePoint comes ready to use with built-in Team Site functionality. As with Exchange in Office 365, there is no separate server that needs installation. It’s included in the Office 365 package.

Collaboration features are familiar to those versed in the Exchange and SharePoint worlds. Team Site can be populated with individual site pages – for special projects or work groups, for example – and users can set their own controls about who can access their pages. It also integrates with the calendar and task features in Office 365, and provides a wiki-like Team Discussion creation tool that permits for separate discussion threads on separate topics.

Document sharing is provided, and with access control.

Throughout, Microsoft has built a familiar ribbon at the top of the Team Site page that guide customization of each page or discussion thread, and there appears to be no feature loss between the online version and the on-premise version of SharePoint.

Microsoft Lync

Lync is the current product name for Microsoft Office Communication Services (OCS), so get used to the new branding if you have not yet.

Deploying this part of Office 365 allows for user-by-user management of file transfers, audio and video, domain federation and public IM connectivity. (This is done through a page of check boxes.)

Office 365 Customization

To a degree, Office 365 is not just a ’take it or leave it,’ or ’one size fits all’ offering. It does allow for creation of custom plans for an enterprise: either a deployment or pilot rollout; inclusion of Exchange, SharePoint, Lync and Microsoft Office Professional Plus server capabilities; and feature-by-feature rollout on an individual schedule -- with a very granular console.

A New Model $6

For $6 per month, per user, Microsoft is working to simplify not just the deployment of IT but the monthly cost model as well. While some VARs may see this as a move that undercuts their own pricing or their own relationships with customers, others may very well be highly competitive with their own deployments of either on-premise or cloud-based versions of these products.

Still other solution providers may view Microsoft’s cloud-based bundling of SharePoint, Exchange and Lync services, with Microsoft Office tools, as a plus that will allow them to focus on other areas of a customer’s IT and business needs – including broader security, mobility, virtualization and data center architecture and management.

In any event, Microsoft is now putting a price to its productivity, messaging and communications in the cloud: $6 per month, per user. That may diminish a VAR’s pricing flexibility or create the need for additional conversations with a customer. Microsoft will, undoubtedly, have to work with its channel partners to make sure conflict is held to a minimum.

Microsoft In The Cloud

Microsoft has made no bones about the fact that it is aiming to put every, single piece of its product line in the cloud. It’s already done so, successfully, with apps like Word, Excel and PowerPoint (via Office Live), as well as with its gaming platform, XBOX 360 Live.

While this has been trickier for Microsoft than, say, rival Google (because Google never had to change a business model from selling boxed software), Office 365 represents Microsoft’s boldest move to date into the cloud.

It very well could be Microsoft’s most successful product for IT since Windows XP. But it is a near certainty that it will change the rules for deploying enterprise software and, in the process, force its competitors to adapt as well.