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Microsoft eyes small businesses with Office 365

Angela Ashenden

Wednesday, June 29, 2011 by

Yesterday saw the long-anticipated launch of Microsoft Office 365, the company’s first true software-as-a-service (SaaS) offering, and the replacement for its Business Productivity Online Suite (BPOS). The product, which has been in public beta since April (and in private beta since November), includes SharePoint Online, Exchange Online, Lync Online and Office Web Apps, as well as a licensing option for the Office desktop tools, and is the company’s main challenge to Google Apps.

While the offering comes with licensing plans for businesses of all sizes, it is small businesses that Microsoft is targeting most pointedly with its launch-day marketing push. It’s easy to see why Office 365 might be of interest to a small business, giving them enterprise server tools that would have been unaccessible previously due to the IT skills and investment needed, while enabling them to leverage the desktop tools that they are already familiar with. Of course it also brings all the general benefits of SaaS services such as low-cost, flexible licensing, and anywhere access. However, it will be interesting to see whether Microsoft is able to get the attention of the broader small business community sufficiently to make them consider Office 365 as a potential benefit – IT is tyically a long way down the list of priorities for SMBs, in any form. Partnerships with organisations who are already working with small businesses, such as Vodafone and Telefonica which were also announced yesterday, will help with this, and this is clearly a key aspect of Microsoft’s strategy in its push with Office 365.

An interesting point which surfaced yesterday was the different perspective on data security at this end of the market; UK launch customer Shine Therapy explained how Office 365 introduced security in their business where there was none before – because previously their data storage was largely paper-based. This was an obvious contrast with the way larger organisations view SaaS, and the concerns relating to the risk of online storage in the cloud versus storage in on-premise systems.

When it comes to competing with Google Apps, Office 365‘s main advantages are two-fold, with both involving the Office suite. Firstly, as I already mentioned, the fact that Office 365 builds upon those familiar Office tools, meaning that there is no significant learning curve relating to the user experience. And secondly, its support for offline activity, again though desktop applications such as Outlook, Word, and SharePoint Workspace (formerly Groove). While the cloud offers great benefits, until we have fully reliable broadband services, offline access remains a major requirement, and Microsoft will no doubt win many battles against Google Apps and other cloud services on this argument alone.

Despite this, one of the most significant points about Office 365 is that it has the potential to offer Microsoft a solution to its financial dependence on its Office domination on the desktop. It needed a way to transition smoothly to a less client-heavy solution, and Office 365 could potentially provide this, through Office Web Apps and its access-anywhere approach. But that is very much a long-term view, and Microsoft is only at the beginning of that journey.

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