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As Microsoft marches on with its cloud-first strategies, the momentum for Office 365 continues to pick up steam. According to estimates from cloud access security broker Skyhigh Networks Inc., the ratio of enterprise users active on Office 365 jumped from less than 7% to more than 22% between 2015 and 2016.
This remarkable growth is expected to continue on an upward trajectory -- but, on the flip side, it's still important to note that the majority of users remain on-premises with their productivity apps. The goal for Microsoft may be to move past that tipping point, where the majority of its users are on subscription licensing, but there's a long way to go on the migration front for most organizations.
As Microsoft shops contemplate a migration to Office 365, they need to keep in mind that the total cost of ownership (TCO) of their productivity software is not just a function of hardware and software licensing. There are a number of cost considerations they should keep in mind to maximize savings and minimize pain.
In a recent blog entry, Michelle Ramirez, product marketing manager for the email and apps portfolio at Rackspace, explained that, "All too often, organizations view TCO through the narrow lens of hardware and software licensing costs. The common calculus usually includes a basic look at the cost of hardware and on-premises licenses, versus the predictable monthly costs of SaaS [software-as-a-service] offerings."
Migration-related productivity disruptions
One of the big impediments to large-scale Office 365 migrations is the perceived difficulty with the process. It's no wonder, considering that 44% of IT professionals experience the difficulty of a failed migration each year, and 43% have experienced some system downtime as a result, according to a survey by Vision Solutions. If organizations don't plan their migrations well, this pain can translate into some very real -- but often hidden -- costs.
AmyKelly Petruzzellaglobal marketing director at Binary Tree
"While migrating data is easy, it typically surprises enterprise organizations that migrating people is difficult," said AmyKelly Petruzzella, global marketing director at Binary Tree Inc. "There is a huge amount of manual effort to perform a migration to Office 365. Many of these projects have delays, downtime, and overrun their schedule and budget."
Petruzzella warns that the financial impacts of migration problems for a 5,000-user migration can stack up quickly. Binary Tree estimates that just an hour of downtime in this scenario can average to more than $116,000 in loses. A single week delay due to unexpected problems could equal anywhere between $20,000 to $40,000 in remediation cost overruns.
Cost of supporting infrastructure improvements
It is important to remember that users have a level of performance expectation based on software served up locally from on-premises systems. If organizations want to avoid costly productivity problems during and after an Office 365 migration, they'll need to plan accordingly, with appropriate infrastructure upgrades to support a high-performing cloud-hosted software service. This may require infrastructure and internet service provider investments that will affect a migration's TCO.
One big pitfall is going into a migration with insufficient bandwidth, or bandwidth that is metered, said William Warren, owner of Emmanuel Technology Consulting.
"Cloud-connected apps require a high speed [and] generous amounts of bandwidth," he said. "Also, if you want to go cloud-based, you need more than one stable connection to guard against internet outages."
According to Skyhigh, more than 90% of enterprise organizations had migrated at least 100 users over to Office 365 by last year. Clearly, most organizations are dipping their toes in the water before moving to any kind of wide-scale adoption. For many, the long-term strategy will be to gradually cut over users to the SaaS model through a staged hybrid approach. But that could add costs to the equation, as well, from both a tech support and licensing perspective.
"Even after you move some systems, you might continue to also rely on a hybrid landscape," Petruzzella said. "This means that your IT team must be experts in both old and new. Rarely does this level of unique expertise exist in-house."
As a result, organizations will either need to hire talent to fill in the gaps or bring in a service provider to help them during the long-term transformation.
Meanwhile, there are also considerations on the licensing front. Years ago, Microsoft introduced the Client Access License (CAL) Bridge option to help organizations with enterprise agreements for perpetual licenses gradually transition users to Office 365. CAL Bridge gives them access to perpetual license workloads. Organizations need to keep in mind that, a little over 18 months ago, Microsoft changed the terms of CAL Bridge to a per-user subscription model. Any new growth in users can't be done through perpetual licensing, but can be through Office 365.
Preparation is your best defense
The experts generally agree that the key to a successful and cost-effective migration to Office 365 is preparation.
"Before any kind of migration, a full hardware, software and workflow assessment must be performed," Warren said. "Otherwise, you are just winging it, and this leads, invariably, to delays, problems and cost overruns."
He also warned that if an organization does partner with a consultant or a service provider, it should make sure it hasn't "been lured by the cloud's swan song," and is really willing to compare all options.
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