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Office 2010 or Office 365?

Microsoft Office 365 can greatly reduce business IT costs, should a company require the complete package but what if a business only requires Microsoft Office without the Lync, Exchange or Sharepoint components, would Office 365 still be worth having?

A recent discussion was overheard between two IT engineers who felt that for people requiring office applications only, there were no real savings that could be made using Office 365 assuming only Microsoft Office Professional was required. Both engineers felt that all companies should have Office 365 Plan E3 as an absolute minimum even if the benefits of Email, Lync or Sharepoint were not required. The engineers felt that the E3 offering was the only viable plan as it included Microsoft Office Professional Plus for the desktop and should there be a connectivity issue, it would allow users to work on their documents offline. In addition they felt that Microsoft Office web apps were not powerful enough to handle anything more than basic documents. As of writing, the cost of Office 365 E3 is £13.25 per month per user.

The argument went like this.

E3 costs £13.25 per month which equates to £159 per year. Most companies will stay on the same version of Microsoft Office for at least five years. So the cost of E3 over a five year period would be £795 while a new copy of Microsoft Office is likely to be £235 depending on the license agreement with Microsoft. In other words, using current prices, it seemed like having Office 365 E3 would cost a company in the region of £560 more per person over a five year period as opposed to purchasing a local copy.

This discussion is probably quite common so just for the sake of argument and this article, let’s assume that the engineers’ assertion that every company needs E3 or above is correct. What other costs could be involved?

Data Storage

A large component of the cost in managing the corporate IT infrastructure is the ability to save and share office documents in a centralised area which for the last three decades has traditionally been one or more file servers. When a company has a server, the associated costs include:-

  • Operating system maintenance
  • Hardware maintenance
  • Regular patching and installation of service packs
  • Server Firewall software and hardware
  • Antivirus software
  • Backup hardware
  • Business continuity components such as a RAID arrays to ensure that should a fault occur on a hard disk, employees still have access to their documents
  • Tapes and/or other consumables associated with server backups and on-going maintenance

A conservative outlay of a server together with associated hardware peripherals such as a tape backup unit together with operating system, antivirus software and firewall is anywhere from £3,500 upwards.

Server Storage and Protection

Anyone old enough to remember the days when companies had their own mini/ mainframes, will remember how much office space was reclaimed when companies migrated their IT business infrastructure towards PC networks. In the same way, the cost of housing servers in special air-conditioned rooms with associated server racks and cabling cabinets together with the associated physical security also racks (excuse the pun) up server costs.

On-going Storage Server Maintenance

On-going hardware and software maintenance can be from £300+ per server per year. In addition, jobs such as server monitoring and security update application may require additional software and certainly will require on-going maintenance.

Server Upgrades

In general businesses budget for server upgrades every five years - five years being the time taken for a server to become too run-down or no longer able to give the business the competitive advantage compared with companies using latest technology. There are many other unforeseen costs with server management. For example, users tend to consume ever greater amounts of storage, legislation requires data to be saved for longer periods, new users and mergers and acquisitions may mean additional hardware (hard disks and memory) being required to cope with the demand.

Addtional Staff Duties

Dedicated staff are often required to better manage and take care of the servers. In a small company, there may not be sufficient budget or requirement to have dedicated IT staff, so one staff member may gain extra responsibilities as an IT officer. This in itself will affect business cost due to the staff member being unable to focus purely on their original business activities.

From the article, you can quickly see, there are many costs associated with using essential office software other than the licence costs of the office software that quickly make Office 365 a valid alternative. This article has focussed on the costs of Microsoft Office only. To properly evaluate Office 365, businesses should take into consideration the worth of the additional business benefits, such as remote working availability, as well as the procurement and maintenance costs involved.

In June 2011, Forrester was commissioned (opens in new tab) by Microsoft to study the ROI (Return on Investment) for Microsoft Office 365. The study showed that businesses would recover their costs within four months of their system being up and running. Although this article's scenario focussed solely on Microsoft Office requirements and showed that there are still financial gains to be made using Office 365, it is important for businesses to do their own calculations and work out their respective ROI.

Below are links to other articles that you might like to read with regard to cost savings from Microsoft Office 365.

Microsoft Office 365 for Small Businesses

Microsoft Office 365 for Medium Sized Businesses

Microsoft Office 365 for the Large Enterprise

Microsoft Office 365 for Non-Profit Organisations