Monthly Archives: October 2012

Decision time – SharePoint – On-Premises, Hosted or Office 365?

In the middle of 2011, Microsoft introduced Office 365 – the new way how organizations will use MS Office suite  in the future, at least how Microsoft hopes. The competition is getting quite stiff in the office productivity tools based on the cloud solutions, and the new Microsoft’s flag product is key to its survival. Office 365, depending on the type of selected license, includes MS Office Plus suite, SharePoint, Outlook and Lync (instant communication solution). With significantly reduced need for maintenance, infrastructure and security, one would expect that this is an ideal solution in particular for small and medium organizations.

Not so, according to Richard Harbridge. Richard did an excellent job in painstakingly collecting data and developing model comparing the costs specific for implementation of SharePoint portion of the suite, evaluating on-premises, hosted and Office 365 installations. The results of the model suggest that the user volume/licensing heavily influences Office 365 competitiveness, and in some cases Office 365 is outright more expensive than on-premises installations, even though implementation and maintenance costs are lower. Office 365 business model clearly targets small business with smaller number of users.

The research looked at several costs, spread over 1 to 5 years:

  • Professional services
  • Infrastructure or Hosting
  • Administration team
  • Licensing

For comparison there were several typical configurations taken into account:

  • Single server (web server and MS SQL server on virtual machine)
  • Small farm standard (two servers: separate web and MS SQL server installations)
  • Small farm with high availability (2 web servers and 2 MS SQL servers)
  • Medium farm (1 web server, 1 application/indexing server, 1 MS SQL server)
  • Medium farm with high availability (2 web servers, 2 application/indexing servers, 2 SQL servers)

As you can see below, number of users (that translates into licensing costs) plays significant role in costs structure, favoring organizations with 100 or less employees. This makes me thinking that Microsoft purposely is trying to keep medium and larger organizations away, due to limitations of their current infrastructure and support. If so Microsoft will soon will have to address it, as Google with their Google Docs is well on the way to take over the market. Overall – the cloud version of the productivity software for organizations seems to be the right direction, and we should see more and more vendors getting into this space.

To see Richard’s research, visit his blog: