So this is a continuation from my Part 1 blog post.

In Part 1 I mention there are three primary questions that most companies are asking about Office 365:

  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?

Part 1 answered the first two questions, and in this Part 2 I will answer question 3.

TCO for a move to the cloud

So the TCO (Total Cost of Ownership) is pretty easy to determine for Office 365. Office 365 has a total of six packages available to purchase bundled services. Two of these are the K or Kiosk plans and four are E or Enterprise plans. There is also a SMB plan, P1 but the focus of this discussion is for an enterprise client with more than 50 users and the P1 plan only covers up to 50 users; see more about the P1 plan here:

Here are the Kiosk, Enterprise and Standalone pricing charts:

For Kiosk Workers – Plan K Family

For Information Workers – Plan E Family

Enterprise IWs – Standalones

So you can see there are many options for a company to move to the Office 365. The K and E plans are bundles and include multiple services. These are the best way to implement Office 365 as they provide bundle pricing discounts. The Standalone pricing allows a company to choose a single service for their users. This is a more expensive route but does provide the company to enable services needed on a per user basis.

TCO also includes the implementation costs. Implementation costs depend on how the company wants to provide user identity and authentication. I would estimate that Enterprise companies will want to and need to implement Identity Federation which allows for Single Sign-On (SSO) for their user with the on-premises Active Directory. Additionally the migration timeline and end results need to be taken into account for implementation costs. If a company plans to move all users’ mailboxes to Exchange Online, and can complete the migrations quickly, then a Hybrid solution deployment might not be necessary. But for companies who do not plan to move all user mailboxes to Exchange Online due to various reasons (BlackBerry users, Size constraints, or security or other concerns) a Hybrid solution will also need to be deployed. A Hybrid solution requires the deployment of an Exchange 2010 SP1 server on premises for the Hub Transport and Client Access roles. These roles provide a company the ability to seamlessly integrate the Exchange Online and Exchange On-Premises users for Free/Busy information. The Hybrid Solution also might be initially implemented for a company that is planning a 100% migration to Exchange Online but the migration will take an extended time to complete. Hybrid also provides the ability to move mailboxes to and from Exchange Online seamlessly for the users with native Exchange 2010 SP1 On-Premises tools. This migration method also limits the impact on a client computer for Outlook as the offline cache file, OST, is able to be utilized during the migration and does not require a complete re-sync of the mailbox to a new OST file.

So assuming a company needs and wants to implement SSO and A Hybrid solution, this will require at a minimum one new server, and worst case six new servers (all of which can be virtualized. Let me explain the high number of servers that might need to be deployed. To ensure that SSO is highly available two internal ADFS (Active Directory Federation Services) servers need to be deployed for high availability. These servers handle the authentication requests that are re-directed to the on-premises Active Directory for SSO. It is also highly recommended that two ADFS Proxy servers be deployed in the company’s DMZ are deployed to handle authentication requests from clients outside of the company network. A Hybrid Exchange 2010 SP1 server is required as mentioned previously. The sixth server would be required for a company that does not have a 32bit server OS (2003 or 2008) available for the DirSync (Directory Synchronization) server.

Now let me talk about the minimum one additional server. ADFS can be co-located on a Server 2008 R2 server, even a Domain Controller. The ADFS Proxy server can be co-located on existing Web servers in the DMZ and the DirSync server can be co-located on an existing 32bit server OS, as long as it is not a domain controller. So the only net new server would be the Exchange 2010 SP1 Hybrid server.

So for TCO on implementation it is hard to generalize for every company. Working with a Microsoft Partner such as Catapult Systems would ensure the company utilizing the strengths and experience of a partner that has implemented Office 365 SSO and Hybrid solutions. This is not to say that a company cannot go it solo, but the SSO and Hybrid solutions require expertise configurations to ensure they are working correctly, and a company that goes with an all internal implementation might find it harder than working with a proven partner. Another reason I would recommend a partner to assist with the implementation is that this is a one-time move! Once you move to the cloud, a company will not need to go through another migration again. So why invest in the training and pain of migrating once when a company can leverage the expertise and experience of a partner like Catapult Systems.

ROI for Office 365

So ROI (Return on Investment) for Office 365 is more of forward thinking and is probably the bigger number a CFO type is looking for when a decision is made to move to the cloud. ROI, to me, is looking at how quickly a company can show a benefit for moving to a new technology when you take into account TCO versus another solution. To the best way to determine ROI is to compare it with the costs of moving to another solution or staying on the current solution. Well staying on the current solution. The TCO is 0, so how can you compare this with anything else? Well what needs to be factored into a stay with the current solution is the cost of upkeep and maintenance of the current solution; hardware fails, software falls out of mainstream support, and new functionality is not gained. So I think staying on the current solution needs to be thrown out of the equation.

So a big ROI of Office 365 is the fact that once a company migrates to it that is pretty much the final migration a company will need to do. When a company moves to Office 365, Microsoft will handle the migrations for that company to the new and latest version of the services. This is an important consideration for ROI; Microsoft is generally on a three year cycle for deploying new versions of the backend services such as Exchange, SharePoint and Lync. With a move to Office 365 a company can ensure they will be migrated to the latest and greatest version of the Microsoft services. This will enable a company’s IT department to be able to give the latest features and functionalities to the user community without the cost of major migrations.

Another big ROI for Office 365 is the fact that a company’s IT department now does not have to do the day to day server and service administration and upkeep. This is now provided by Microsoft. Microsoft created, developed and is in the best position to fully support the service. This allows a company to re-allocate specific IT resources from being reactive and mundane administration for these services to being proactive and strategic to help the company align the business goals with IT opportunities. I want to be clear on this point; by no means do I see an enterprise company cutting IT resources as part of a move to Office 365. It is my expert experience that a company’s IT resources are already spread thin. I have never been in an IT department where there were more resources than projects/initiatives/needs. One more time, a move to Office 365 allows a company to reallocate IT resources to cover other needs within the IT department and help the company automate and accelerate IT’s value to the company.

The Numbers

So where are the numbers? Well I have many tools that help me is pre-sales engagements but they take into account specific company numbers around hardware, resources and implementation costs. Recently Microsoft commissioned a study to analyze the total economic impact of a mid-sized company to Office 365. This study goes much further than I could do and think it is a great example of how a company can benefit with a move to Office 365. I encourage you to read the Microsoft blog post about this study and you can also then ready the entire study.