"It was all about Office 365"

On March 27, 2012, in news, by

More Details on Microsoft Small Business Competency Trickling Out! – SMB Nation Blogs:
CloudSpeak. “In for a penny, in for a pound of cloud” was the message we heard regarding the technical emphasis of the SB competency. Legacy on-premise solutions such as Windows Small Business Server weren’t really part of the conversation today. Instead, it was all about Office 365. Interesting but albeit somewhat risky strategy for Microsoft to be all in the for cloud when the channel has expressed revenue reservations about that path. True, the reality is that times are changing fast. Microsoft is hedging partners will get on the cloud train with the SB competency.

Translation… because you guys are supporting your clients’ SBS 2003 boxes that are still chugging, Microsoft can’t make money off of you.  They need you to upgrade those guys to Office 365 where they lock them into monthly subscription fees!  You are holding Microsoft back, dude! 

I just hope someone up there in Redmond knows what they are doing.  For every one partner that says they are using Office 365, there’s another five I see that says that they can’t make money off of it or it has no support model for their needs.  You guys in Redmond are betting the farm and I just hope this goes your way.  Out here in the sticks I see Google docs being used by small businesses, I know of no one (other than myself on that free year long offering) using Office 365.


3 Responses to "It was all about Office 365"

  1. Joe Raby says:

    I don’t get it.

    How do you weigh a cloud?

    Ya, I got the Hump Day (i.e. middle of the week – get your mind out of the gutter!) blahs….

    Office 365 is basically this: once it’s set up, you get residuals – very small amounts, mind you – for not having to do much at all, if anything. The idea is to add on other services like initial account setup, DNS setup, adding new users, SPAM filtering, PC software setup, selling Office software licenses (if they don’t want to get them via the subscription), SharePoint customization, etc. Each one of those could be added on as an ala carte service. There isn’t a lot to do if everything is running well. If you’re doing an on-premises setup and the customer doesn’t like the idea of paying a monthly maintenance contract, and will only pay on-demand for actionable response, then does it take much to read a some logs in an email and just tell them that they need support and charge them accordingly? Is that really worth a huge support contract if the response action is going to be an extra fee anyway? This is the way I offer Microsoft’s online services: if they only want to pay for the service from Microsoft, I still make money off it via my Partner-of-Record account, but any time I need to be called into action (and I can predict that just by keeping an eye out on automatic alerts in my email), they pay standard service rates, including phone support. Otherwise, if they want to do a predictable monthly rate, I can be flexible and offer a package of so-many hours of remote assistance support included in a higher monthly fee or whatever is the best option for the customer. Point is, if a customer thinks they can just have something deployed and not have a support/maintenance contract for it, I can still use the email alerts and leverage that so that they will get me into action to service their systems. Those customers pay more for response than those that pay extra to me for “priority” monitoring over and above Microsoft’s Intune fees. My rate packages break down into 3 main price points that most customers can understand:

    1. “Free” monitoring + standard service rates. (More expensive for pay-as-you-go)
    2. Paid monitoring + service rates discounted by X%. (For low-incident accounts that want discounts and faster response)
    3. Paid monitoring + X hours remote service included. (More expensive monthly fee, but heavily discounted bundled services – good for less techy businesses that need a lot of hand-holding)

    There are additional details, but this is the simplest way to describe them. On-site service is always extra for these types of plans since these are just for managed services. Deployment and PC hardware/OS services are always extra too. These tend to work best for my customers. YMMV though. Even with “free” monitoring, I still make partner fees from it though, and I still do read the alert logs.

  2. Joe Raby says:

    Forgot to add:

    Office 365 is alright for large businesses looking to get subscription versions of Office software with upgrade rights, but I wish they had an option with Office Small Business (it’s in volume licensing) with a smaller fee. Getting Office software through Office 365 E3/E4 plans is far easier than getting it through volume licensing.

    I got a couple of clients on Windows Intune recently because they used to be paying about $50/PC a month for “hard drive encryption” (it wasn’t – it was Windows 7 Pro with a 3rd-party file encryption program only), and PC monitoring from another service company, but it didn’t meet their needs. They wanted full hard drive encryption, so I figured Windows 7 Enterprise was a better way to go. They were on the fence over whether or not they needed a managed service offering, so I weighed all the options, and built a chart showing the cost of licensing through all of the major channels, including retail, over a 6 year term, and also included Software Assurance costs. The cheapest option (aside from a 1-time retail upgrade purchase to just Windows 7 Ultimate) with upgrade rights was volume licensing + SA to get Enterprise, but none of the licensing options included managed services. I included Intune on the price sheet and explained the cost differences (it was the most expensive), but they still got Windows 7 Enterprise with Bitlocker included with the service. The retail versions were Ultimate, so they still included Bitlocker too, but they were the second-most expensive if you include Windows 8 and Windows 9 upgrades, but lacked managed services. Over the 6 years, I indicated an approximate 3 year difference in OS upgrades and the respective costs, should they want to keep current. Starting this year, I put in Windows 8 on year 2 and “Windows 9” on year 5, which is approximate, but should also be relatively accurate. I also included a feature list of each licensing scheme. I noted that Intune only included subscription rights, not ownership rights so they understood that if they cancel the service, they have to roll back to the OEM software.

    After all of that, they ended up going with Intune.

    They also wanted cloud backup of data files, and I looked over a lot of vendors, but ended up recommending Carbonite because of the relative ease of use and the fact that it’s unlimited storage. I don’t make any residuals on Carbonite, but they are being charged for us doing the OS upgrade installation.

    Oh, and I had explained the difference with going with a management server, and neither wanted to spend the capital on it just to monitor their PC’s. They don’t share files between PC’s, don’t share PC’s, and most are mobile workers with BYOD laptops. A server just didn’t make sense IMO.

    One last thing: some companies don’t think that investments in IT hardware and purchased software looks that great on the books. Moving software to a subscription basis, leasing computers, and getting cloud services means it can be written off as an operating expense. Sometimes that’s preferable. Sure, you could argue that purchasing means you have an asset at the end of your payments, but the current trend is that IT assets doesn’t hold any value after their lifecycle, so it’s harder to justify compared to keeping everything up to date and on a regular refresh cycle. Budgets, however, will often dictate which way you think about this.

  3. Neil G. says:

    I have been fighting with two parts of the Office 365 eco-system.
    A) I am not a reseller – I am a technology advisor/mentor and will not accept the conflict of interest that comes with being a reseller.

    B) Unless I go to the “Cloud Accelerate” level and do the competency I am unable to offer remote management without consuming a user licenses.