Office 365 partners are a rare breed of reseller, fighting against the current of traditional server-based selling.
It’s a different style of sale as there are no servers to spec, install and maintain. Everything has to go through Telstra, which holds an exclusive licence for any business not on a Microsoft enterprise agreement.
And the technology is sometimes hard to explain to business owners who like to know the location of their server – and the secrets it holds – at all times. Although Office 365 is a great cloud solution for many businesses, hints at a slow takeup among SMEs suggest that selling the cloud is tougher than selling a server.
In the meantime the majority of Microsoft’s 5000-strong reseller channel are still pushing Microsoft Exchange and keeping it business as usual. While margins may have crashed on hardware, hourly rates still provide the best way of generating profit. And there are many fewer hours to be billed if there are no servers involved.
Managed Exchange is also doing well. MSPs that sell it say the argument for keeping information in Australia strikes a chord with business owners. And next to the cost of owning your own server it’s relatively cheap.
Loryan Strant is a Microsoft most valuable professional in Office 365 and owner of Paradyne, one of Australia’s leading Office 365 resellers. Strant took up the challenge to respond to last month’s column on how to pitch Managed Exchange versus Office 365.
The upsides to Office 365
Strant starts with the obvious lines. When you’re buying Microsoft Managed Exchange, the email system is maintained by the reseller’s own technicians who may have general rather than specific knowledge about running Exchange.
Compare this to Office 365 which is run by Microsoft itself. Office 365’s support team should have far better access to deep technical knowledge and experience.
“Anyone can run Managed Exchange. Can they run it well?” asks Strant.
This advantage also translates to staying on top of bugs, updates and upgrades. Any improvement or security patch to Microsoft Exchange would hit Exchange Online in Office 365 first before being passed out to Managed Exchange installations.
How and where MSPs host their Managed Exchange is another key point.
“Make sure it’s not run from a garage,” Strant says. “I sat with a company the other week who said they run their own cloud. I said, ‘Where is it?’ and they said, ‘It’s in our server room.’ That’s not the real cloud.”
Google, Amazon as well as Microsoft operate their cloud services from enormous data centres the size of several football fields, loaded with security and redundancy measures. Microsoft offers a money-backed service-level agreement that Office 365 will be online 364 days a year. MSPs can gild the lily a little when it comes to talking about their own operations, Strant said.
One well-known Sydney MSP told Strant about their data centre but it was “just a few racks in the basement of their building. That’s not a data centre to me,” Strant says.
“It’s not uncommon for someone to say we have a data centre and it’s just a rack.”
The biggest problem for Managed Exchange customers is the details in the SLA. If an MSP is reselling the services of a dedicated Managed Exchange provider, the customer needs to know what the SLA promises and whether it can be enforced. If the Managed Exchange goes down there’s unlikely to be much the MSP can do about it.
Pricing is a key point. Although Managed Exchange is cheaper than running your own server, Office 365 is far lower again. And it also comes with other applications for the price. Fewer MSPs offer Managed SharePoint and almost none sell Lync (successor to Communicator). So the option to pick up more hosted applications is limited for Managed Exchange customers.
Office 365 will always be cheaper due to economies of scale. The cloud service supplies more customers, buys more disk space and doesn’t have to pay licensing fees. Technology is always in flux but the impact of cloud computing is causing even more disruptions.
Can businesses be confident their technology partners are going to be around? Microsoft is not going to disappear anytime soon but what about the myriad MSPs that provide Managed Exchange? What does their balance sheet look like? How profitable are they? Will they be around next year?
Microsoft has kept its support costs down on the cheaper licences by building a community of Office 365 users who post answers for various issues. MSPs must handle all technical queries through their help desk.
Strant says MSPs selling Managed Exchange need to do more than just sell mailboxes as it puts them in the firing line for Office 365.
“Come up with something unique, don’t just host a mailbox. If you’re offering a commodity service then Office 365 is going to win,” he says.
A local help desk – local support is definitely one selling point used by MSPs – is not a strong enough platform either, Strant says. He points out that Telstra’s level-one help desk is in Melbourne (242 Exhibition Street) and level-two support is based in Sydney.
As an example of a different approach, Strant puts forward systems integrator CSC which runs its versions of Business Productivity Online Suite (BPOS) and Office 365 on its own infrastructure for customers such as BHP which wanted a locally hosted version of Office 365.
Strant’s money is on SharePoint. SharePoint installations are far more complex than switching on mailboxes and they promise ongoing work. Strant has noticed a trend away from customers replacing their dying Exchange server with Exchange Online and says they are instead going for the full Office 365 suite.
“More and more customers are buying Office 365 as a bundle with other products because they see more value in SharePoint or in Lync,” Strant says. “That’s the thing. A mailbox is a mailbox."
Tall tales about Office 365
There are a number of misconceptions floating around the web about Office 365. Loryan Strant, a Microsoft Most Valuable Professional in Office 365, has heard them all. He lists here the most common fictions.
1. Microsoft takes control of your DNS settings
Microsoft requires Office 365 customers to prove ownership of their website’s address by making changes to their DNS settings. Other changes to the DNS are required to set up email through Exchange Online.
Some people think this simple process of registration is the equivalent of Microsoft seizing control of the DNS settings, Strant says, but this is completely untrue.
“There’s no control lost. None at all. It’s like calling Medicare and changing your address. They’re going to ask to prove who you are. It’s exactly the same with the domain name,” Strant says.
2. Businesses have to use a Microsoft domain rather than their own
When a business signs up to Office 365 they receive a Microsoft service domain that follows the formula customername.onmicrosoft.com.
“Some people have thought that’s their email address and say ‘I can’t add my domain’,” Strant says. The service domain works as a placeholder of sorts in the Microsoft system. The business can use its own domain for its website and email.
3. It’s not possible to migrate many files to SharePoint Online
SharePoint Online doesn’t come with great tools for importing files. It is possible to copy files using Windows Explorer but it has a tendency to time-out or break, especially with large file transfers or unusual characters in file names. As a result people think there’s no easy way to migrate files.
However, there are a number of third-party tools designed specifically for that purpose, Strant says.
4. Office 365 doesn’t work on Apple iPhones, iPads or Macs
Just because Office 365 is a Microsoft product it’s sometimes thought it won’t work on other platforms, particularly the highly popular Apple iPhone and iPad. Office 365 does run on the iOS and OS X operating systems, although some features aren’t available.
5. It’s always Office 365’s fault
Office 365 can be used on all sorts of devices, not just Windows Phones. Sometimes problems crop up on other software platforms due to their own bugs. For example, users can’t access email in Office 365 from their Android smartphones because the near universal ActiveSync protocol for handling email was not properly installed in some versions of Android, Strant says.
Likewise in iOS devices, a bug in Apple’s code causes Office 365 contacts to appear multiple times.
“Just because it connects to Office 365 doesn’t make it Microsoft’s problem,” Strant says.
6. Microsoft looks at my data
Does Microsoft look at my data? Can other customers see my information? These are common questions for Office 365 partners.
Strant uses the apartment block analogy. Businesses are sharing apartments but can’t walk into their neighbour’s place unless they have a key to front door. The building manager could open the door with a master key but has signed a legal contract that he won’t do so.
But if the police turn up with a search warrant then it’s no different to them showing up at a business’ own office.