On November 17, 2008, Microsoft launched cloud-based (Software as a Service) versions of Exchange and SharePoint — Microsoft Exchange Online and Microsoft SharePoint Online. In summary:

• Microsoft is hosting these Online services directly in its own data centers.
• These Online services are part of a growing family of Online services from Microsoft. Others available now are: Dynamics CRM Online, Office Live Meeting (Web conferencing), and Exchange Hosted Services (spam/malware filtering and email archiving).
• Instant messaging and presence, through Office Communications Online, will follow in the first half of 2009.
• Microsoft Exchange Online and SharePoint Online are available now in the United States (see www.microsoft.com/online to purchase).
• Microsoft’s Online offerings are aimed at organizations of all sizes.
• User access to Exchange Online and SharePoint Online is identical to on-premise access via Microsoft Office (e.g., Word, Outlook, etc.) and/or a browser.
• A crucial feature of Microsoft’s new Online offerings is that an on-premise Active Directory (AD) can be employed to authenticate user access to these services, thus eliminating the need for an additional sign-on. This requires the installation of an on-premise Microsoft Services Connector to effect the necessary AD federation.

Pricing:

• List standalone prices (usually minimum of five users required) are:
  • Exchange Online: $10/user/month.
  • SharePoint Online: $7.25/user/month.
  • Office Communications Online: $2.50/user/month.
  • Office Live Meeting: $4.50/user/month.
  • Malware filtering with Exchanged Hosted Services: $1.75/user/month.
  • Archiving with Exchange Hosted Services: $8.60/user/month.
• A services bundle, Business Productivity Online Suite, lists at $15/user/month and encompasses Exchange Online, SharePoint Online, Office Communications Online, Office Live Meeting, and Exchange Hosted Services filtering.
• Versions of Exchange Online and SharePoint Online for deskless workers will be available in the first half of 2009, and will cost $2/user/month, or $3/user/month for both.
• Volume purchases appear to get discounts of around 20%.

Comments:

• Microsoft has put a lot of effort into designing a system that is easy to subscribe to and easy to support. At first sight, the design seems first class.
• Microsoft is encouraging third-party system integrators to participate in support, either by providing mainstream IT applications support, or by building services on top of Microsoft’s cloud-based offerings.
• A lot of work has gone into allowing the coexistence of hosted Exchange and on-premises Exchange, primarily through AD federation.
• Microsoft envisages the common development of applications that span on-premises and cloud-based systems. This is an interesting idea that merits further contemplation.

Additional observations will follow over the short term.

… David Ferris and Nick Shelness

Struggling economies bring challenges, but also opportunities. The IT world is ripe for a major shift, for three reasons:

• Economic concerns are driving IT departments to aggressively increase efficiency and reduce cost.
• Vendors have built vast SaaS infrastructures to enable outsourced messaging, collaboration, applications, and compliance solutions at a fixed cost (examples: Microsoft, Google, IBM, Amazon, Iron Mountain, LiveOffice).
• Server virtualization technologies — from Microsoft, Sun, VMWare, and in Linux distributions — have matured to the point where highly available, high-volume, and complex applications can be efficiently virtualized, at a savings of cost, space, administrative overhead, and energy consumption.

The state of the economy will have a catalytic effect on customer adoption of and migration to SaaS and virtual environments over the coming two years. Within the next three to five years, hosters will start using a combination of multitenancy and virtualization, to offer an always-on, always-available set of solutions to customers over the Internet.

Thus the state of the economy will greatly encourage customers to migrate to SaaS/cloud and virtual environments.

… David Sengupta, with Richi Jennings