So what is the value to a company to move to the cloud and Office 365? This seems to be the Million dollar question for most companies, and it is not just an IT question. A move to Office 365 needs to be understood by the entire company, not just IT, not just the CFO, not just the CEO who heard the buzz word “Cloud”. I have talked to numerous companies looking into a move to the cloud and most of them have had the same questions:

  1. What is involved with a migration to the cloud?
  2. What are the benefits if I move to the cloud?
  3. What are the TCO and ROI for a move to the cloud?


So let’s break down these three questions one at a time. The first is asking what it takes to migrate to the cloud? This question has many little questions associated with it, but it also is one of the biggest benefits to a company, but also the biggest challenge as well. Once a company moves to the cloud for one or all three of the services provided in Office 365, Exchange, Lync and SharePoint, they have made a fundamental step to reduce the amount of server and application administration and move to a pure user administrative model. A move to the cloud and Office 365 will greatly differ for a small company as opposed to a large enterprise.

Some small companies without an extensive on-premises infrastructure; Active Directory, Email, File storage; will be able to move to the cloud without connecting to the on-premises infrastructure. This type of migration is very straight forward. A small company can simply create online IDs for each of their users, register their email domain for an Exchange implementation and then migrate the mailbox data. Microsoft has tools on the portal to assist users with configuring the desktop applications to work with the cloud. Then a small company can simply enable Lync Online and SharePoint online for the users. This method has numerous advantages, one being truly removing all or most servers from a company’s datacenter, or more precisely for a small company, the closet. It does add some additional administrative overhead as now user administration could be needed in two locations, on-premises Active Directory and the Office 365 online portal.

For medium to large companies most are going to want to implement Identity Federation with Active Directory Federation Services (AD FS) to enable Single Sign-On for the users. With Identity Federation the users can use their on-premises Active Directory accounts, the same accounts they use to login to their workstations, to authentication to the Office 365 services. This helps out the IT staff by having a single, authoritative directory service, on-premises Active Directory, to make all changes and modifications to and then using a tool called DirSync, Directory Synchronization, user, group and contact objects are sync’d to Office 365. This helps users as they only need to remember one set of credentials to access on-premises and Cloud based resources. Another option that larger companies will take advantage of is call Organization Federation. By setting up an Organization Federation between the current on-premises Exchange organization and Exchange Online a company will enable a Hybrid deployment. A Hybrid deployment enables companies to be able to share Free/Busy or scheduling information between users whose mailboxes are homed on-premises and mailboxes homed in the cloud. This solution fixes a current issue with Exchange Online and BlackBerry devices, currently there is no solution for BlackBerry users to be able to connect to a mailbox in the cloud. (RIM is working on a solution, which will be an online BlackBerry Enterprise Service that connects to Exchange Online, but it is not expected until early 2012). So a company that has a large or even small BlackBerry user base can implement a Hybrid solution and keep the BlackBerry user mailboxes on-premises with the on-premises BlackBerry Enterprise Server and the other mailbox can be moved to the cloud without impacting the ability for users to communicate and collaborate. Another reason I have seen companies choose to deploy a Hybrid solution is around security or perceived security. Some companies don’t want to jump into the cloud with both feet. Deploying a Hybrid solution allows a company to take baby steps into the cloud, again without impacting the way users interact normally in an all on-premises environment. Even if a company feels very comfortable with the Cloud, the may choose to leave some users on premises for a variety of reasons, and a Hybrid solutions fits the bill. Another big benefit of a Hybrid Solution is the easy of migrating a mailbox between on-premises and the cloud, and vice versa. Native Exchange 2010 migration tools are used to move the mailboxes and can be done during the day without impacting the user. This type of move also allows the Outlook client to utilize a single OST file, reducing the need for a complete local sync of the mailbox data after a move.

One note about an Identity and Organization Federation is that it does require services, or more specifically servers, still on-premises. For Identity Federation it is recommended at a minimum that two AD FS servers be deployed and two AD FS proxy servers are deployed. Depending on the size of the company and other factors, a company could utilize existing Server 2008 R2 (recommended) servers for the AD FS servers and existing DMZ or perimeter network servers for the AD FS Proxy servers (or Forefront Threat Management Gateway to publish AD FS). Also required for both Identity and Organization federation is a 32bit server (2003 or 2008) to run the DirSync service, this does not need to be a dedicated server as it is a lightweight service. For Organization Federation an Exchange Server 2010 SP1 is required on-premises. If the company is already on Exchange 2010 exchange then this is not a problem, but most companies I have talked to about moving to Exchange Online are either on Exchange 2003 or 2007. These servers can be virtual servers as well, again reducing the physical footprint in a company’s datacenter, or closet J.

So the second question I listed is around the benefits of a move to the cloud? Once a company decides to move to the cloud for one or all three of the services offered; that is the last “major” migration they will need to do. The big benefit of a move to Office 365 is that Microsoft will update the Office 365 tenants to the latest version of the services as they come out. Let’s take Exchange for example, I am sure there are a still many companies out there that are still on Exchange 2003. And I am not talking down to any company that is still on this version; there are numerous reason for remaining on Exchange 2003. One is that a migration to Exchange 2007/2010 on-premises is a big project; not only does it require a side by side migration strategy as there is no direct upgrade path for a server running Exchange 2003 to Exchange 2007/2010, it also involves a new administrative model.

Side Note: I often explain the evolution of Exchange Administrative as this: Exchange 5.5 (my first dealings) went from a standalone admin model, then Exchange 2000/2003 integrated much of the day to day administration within Active Directory Users and Computers and then Microsoft went back to the 5.5 model with Exchange 2007/2010 a la the Exchange Management Console and the more important Exchange Management Shell.

Another reason for remaining on an older version of Exchange is cost, new server hardware (Exchange 2007/2010 is a 64bit only application) and licensing. And probably one of the biggest reasons to a company staying on Exchange 2003 is that email is a commodity. Let me explain the last sentence, I would bet that most companies rely on Email heavily to communicate, whether it is internal or with external customers, partners, vendors, etc. But I would go further in saying that almost all companies do nothing “special” with email communication, you compose, send and receive email on a daily basis and your users just count on it working just like they count on lights being on when they come to work or a Starbucks on every corner in the US. My point is that email messaging has become second nature to users, they rely on it and when it is down it is equivalent to a power outage, they feel helpless and cannot function. So some companies are reluctant to make a change to a working email platform.

So when a company decides to move to Exchange Online that migration, the mailbox moves, the setup and configuration of certain administrative settings and options, really is the last time they need to do that. When Microsoft releases the next version of Exchange, currently code named Exchange 15; Microsoft will do the heavy lifting for the company in the datacenter. The company IT will have minimal to no involvement during the migration to the upgraded platform. A company that has moved to the cloud does not have to worry about an on-premises upgrade of the Exchange servers every 3-5 years, the move to the cloud ensures that they will be migrated to the newest version in a timely manner. So the main concern of the IT department will be coordinating the migration with Microsoft and doing some testing and verification of functionality and understanding what the new features and benefits of the upgrade platform are. The same can be said for SharePoint and Lync Online. A move to SharePoint online is probably the most involved of all the migrations as it will require careful and detailed planning around the taxonomy and governance of SharePoint as a whole as well as moving data from an on-premises SharePoint deployment or from existing file servers.

So in Part two, I will tackle the TCO and ROI of a move to the cloud, look for it soon!

I really would also like to get your feedback and thoughts, please add a comment to this post or feel free to email me directly, sean dot mcneill at catapultsystems dot com.