There’s plenty of commentary online about the business case for putting office productivity applications in the Cloud. But do the numbers really stack up for a service like Office 365? We did some rough calculations – and found a pretty compelling case.
Let’s imagine you run a 100 person company – large enough, at any rate, for a 2 person IT team (which would not be unusual in a business of that size). Let’s then suppose that in this company you are running 2 servers and 150 PCs. On each of the servers, some software is installed, perhaps Windows Server, Small Business Server and/or Exchange. Each PC runs a copy of Microsoft’s Office productivity software.
Now first of all, let honestly acknowledge that no two organisations will be the same and that some of the hardware and license costs will have been sunk in past capex. But it might also be fair to suppose that such organisations will often wish to upgrade to the latest versions of both.
It’s probably fair to generalise that the largest fixed cost will be in house staff, followed by those depreciating assets in software and hardware. Annual staff cost could be £35-50,000 per head. While our calculations show that at today’s UK prices, the annual bill for server hardware, plus software for server and client PCs could be in the £20-25,000 range.
The Office 365 alternative, picking the E3 plan, will cost £15.75 per user per month, or £18,900 per year. This gives access to email with archive, messaging, voice/video and document sharing, all from any device, anywhere. It also includes client licenses for Office 2010 Professional +.
So far, so fairy tale. But it’s unlikely that Office 365 will meet all of your computing needs. You may be running some useful in-house databases, for example, that you’d be reluctant to discard. So in the early days, you may opt for a hybrid environment, and this may erode cost advantages.
It’s not just about recurring costs, though. Let’s think about other issues of back up, downtime and errors. Putting your applications in the Cloud will give you a more secure and predictable environment, and will help you to avoid the occasional cost spike that can result from an outage or data disaster (you know, the kind where the whole business has to go into crisis mode to recover – or is cut off from the outside world for a day or two. It does happen.)
Let’s take another scenario: a business downturn and a decision to lay off 30 of your 100 staff. In the old scenario, your IT costs are all fixed (and perhaps paid for up front). With Office 365, you can reduce the number of subscriptions, and make significant cost savings.
The transition to the Cloud also offers an opportunity to cleanse and organize data, and improve business processes and ways of working. This entails some investment, of course, which will alter the cost-benefit analysis. You may well decide to use some external consultancy services to help you transition to the Cloud, by planning your project, configuring an Office 365 implementation, designing SharePoint. But each of these activities will deliver operational improvements.
In conclusion, it seems that the cost-benefit analysis is clear. Depending on where you are in the purchasing cycle, services like Office 365 will save you up-front capex – and the annual cost will be lower. There are many other upside benefits, from stability, through access to the latest software versions, to accessing data anywhere, any time. So what’s stopping you?
See more information on SharePoint at Motif-Consulting.
See more information on SharePoint at Motif-Consulting.
