Evaluating Office 365 – Third Release is Closest Yet to the On-Premises Version

By Wes Miller, Directions on Microsoft

This major version of Office 365 delivers cloud-based services and an automatically updated on-premises Office client.

The latest major version of Office 365 based on Exchange Server 2013, Lync Server 2013, and SharePoint Server 2013 became available in Feb. 2013 for new customers, while existing customers will be upgraded throughout 2013. Office 365’s Exchange Online and SharePoint Online services are remarkably close in capabilities to their on-premises counterparts, and the offline desktop Office suite can be updated automatically to the most current version and can be patched by Microsoft. With this release of Office 365, customers likely need to focus most on migration, legal compliance, and licensing, where technical limitations may have been a larger concern with earlier versions.

Office 365 Fundamentals

With the latest release, Office 365 business offerings consist of per-user monthly or annual subscriptions to Microsoft-hosted services, including the following:

  • Exchange Online, powered by Exchange Server 2013
  • Lync Online, powered by Lync Server 2013
  • SharePoint Online, powered by SharePoint Server 2013
  • Project Online, powered by Project Server 2013

Some editions (or plans) of Office 365 also include the latest version of Office desktop applications for Windows and Apple’s OS X, and almost all include the Office Web Apps, which are server-based applications that enable viewing and limited editing of Excel, OneNote, PowerPoint, and Word documents in a browser. (For a breakdown of what features are included in which edition of Office 365, see the chart “Office 365 Editions.”) This report primarily focuses on the E3 edition of Office 365, a premium tier of Office 365 targeting larger organizations.

Hosted Office services were called the Business Productivity Online Suite (BPOS) before being reorganized and rebranded as Office 365 in June 2011. The original release of Office 365 was based on Office 2010 and the latest is based on Office 2013. Customers using the Office 2010–based services will be upgraded on a schedule determined by Microsoft throughout 2013.

Office 365 and the Desktop

In addition to the Office Web Apps available in most editions of Office 365, premium editions of Office 365 now include subscription-based Office 365 Pro Plus desktop software or Office 2011 for Mac as a component of the subscription. Stand-alone subscriptions to the Office desktop applications are also available. Additional desktop licenses are not required to use the suite, and both Windows and Mac software are available for users to download from the Office 365 portal.

Office Web Apps

Office Web Apps lack many features of the Office suite; for example, users cannot work on documents while offline. However, they can be useful to quickly review and make small changes to documents, especially for traveling workers or workers who do not have access to Office desktop applications.

The latest Office Web Apps provide a user interface that has been updated to match Office 2013. They open documents first in a read-only mode, which optimizes layout for readability. However, if a document is editable, the user can open it for editing in the corresponding Web App or in a desktop Office application.

All four Web Apps support coauthoring, which allows two or more users to simultaneously make changes to a shared document. Changes become available to all document users when the changes are saved and users manually refresh the document. PowerPoint Web App was updated in May 2013 to support real-time coauthoring, which enables multiple users to work on the same document and see changes made by others almost as soon as they occur. The other Office Web Apps will be updated to provide real-time coauthoring over the next several months. PowerPoint Web App and Word Web App both support commenting, and the latter now has support for change tracking.

Office Desktop Applications

Office 365 Pro Plus is functionally identical to the Office 2013 Professional Plus desktop suite and can run offline just as Office 2013 can. This enables each Office 365 subscribed user to create and edit Office documents on their Windows PC or Mac, but requires Internet connectivity to deliver the full functionality of the Office 365 hosted services.

All business editions of Office 365 that include the Office 365 Pro Plus suite permit a licensed user to install it on up to five PCs or Macs, but the license is valid only while the Office 365 subscription is active (as opposed to the perpetual licenses offered with Office 2013 Professional Plus).

Office 365 provides two methods for users to install most Office applications on the Windows desktop:

  • Click-To-Run, which installs the applications locally on the computer, and applies toward the device count for the subscriber
  • Office On Demand, which installs temporary copies of many Office 365 desktop applications and does not apply toward the device count for the subscriber

The Click-To-Run version of the Office 365 Pro Plus suite and Office On Demand use streaming technology derived from Microsoft’s App-V application virtualization platform to let users start running Office quickly while the suite finishes installation in the background. Click-To-Run installations set associations with Office document types and require the user deploying the software to have local administrator privileges. A Click-to-Run installation can exist side-by-side with Office 2010. (The Office 2011 for Mac client, while newly available in Office 365 as a subscription component, uses traditional installation technology and is not streamed to Mac desktops.)

Office On Demand is ideal for users who are traveling and need more editing functionality than the Office Web Apps can provide. Provided the computer being used has a good Internet connection, users can stream Word, Excel, PowerPoint, Access, or Publisher individually, enabling them to quickly work with data stored in SharePoint Online or Exchange Online. Office On Demand installations do not set associations with Office document types and are available to the local user only. As a result, Office On Demand does not require local administrator privileges. Office on Demand is available only for subscribers using Windows 7 or Windows 8 PCs. As with the Office Web Apps, Office On Demand requires Internet connectivity, as it is provided solely as a hosted service and cannot run offline as some of Google’s Web applications can.

In addition to user self-provisioning, Office 365 Enterprise subscriptions also support client push deployment of the Office Click-to-Run installer using traditional desktop management technologies from Microsoft and third parties. Office 365 Pro Plus can be used with some types of Virtual Desktop Infrastructure (VDI) deployments but cannot be used with Remote Desktop running on Windows Server. By default, Click-to-Run and Office On Demand installations are updated by Microsoft automatically, although Enterprise tenants using client push deployment can opt to maintain the installation themselves.

Project and Visio Available

Subscriptions to Project Pro and Visio Pro are now available. Neither is included as part of any Office 365 suite, and no other Office 365 plans are required as prerequisite. Both Project Pro and Visio Pro deploy using either Click-to-Run or Office On Demand technologies.

Project Online, powered by Project Server 2013, is now available as a separate subscription-based hosted service.

Office 365 Hosted Services

The most recent version of the Office 365 hosted services has capabilities that are similar to the corresponding services hosted on-premises, and Microsoft has gone further to address security, privacy, and reliability concerns.

Office 365 Focused on Multitenancy

Microsoft’s on-premises server products originally were designed around one server farm per tenant. (A tenant is an organization subscribing to the Office 365 hosted services, which consists of one or more user subscriptions to the services.) Previously, Microsoft required a dedicated server farm for a customer that required certain functionality. Dedicated services continue to be offered at a higher cost, and Microsoft now requires a minimum number of seats (30,000 for enterprises) in order to subscribe to them. Microsoft provides few public details around pricing and licensing of dedicated Office 365 offerings.

The first version of Office 365 replaced BPOS with a new infrastructure based around Exchange 2010, Lync 2010, and SharePoint 2010, all of which had been redesigned to better support multitenancy. The new infrastructure results in lower operating costs for Microsoft, since one server farm can support more than one organization (tenant), which has resulted in lower Office 365 prices for customers as well. With the initial release of Office 365 in 2011, some customers expressed concern about the potential for security or compliance-related issues when sharing a farm with another organization. Microsoft responded by focusing on delivering a secure infrastructure and worked with third-party certifiers to prove compliance with certain certifications. (For a discussion of the compliance standards for which Office 365 has been certified, see the sidebar “Office 365 and Compliance Standards.”)

An update in 2012 delivered a multitenant edition of Office 365 intended for use by the U.S. government initially, with the expectation that it would be deployed to governments abroad.

Approaching Feature Parity with On-Premises

Exchange Online and SharePoint Online achieve close parity with Exchange 2013 and SharePoint 2013, but Lync Online continues to have a larger feature gap. Lync Online offers presence, instant messaging, Web conferencing, and limited connections to the public telephone network (in the United States and the United Kingdom), but it does not deliver enterprise telephony and private branch exchange integration as Lync Server 2013 does. Microsoft has announced an update to Lync Online, expected in mid-2014, intended to address this feature gap. The feature gap between hosted and on-premises is what may have caused some larger organizations to hold off on deploying the first iteration of Office 365. In that version, SharePoint Online was also quite limited when compared to its on-premises counterpart, SharePoint 2010. In particular, most business intelligence features available on-premises were not available online, but these have been added to the latest SharePoint Online service.

Downtime, Security Risks, and Other Limitations

Office 365 customers are frequently concerned with downtime and security, but other concerns include feature availability and migration costs. Migrating to Office 365 or any hosted service requires entrusting an organization’s key communication channels and data to another party. As a result, customers should ensure that they understand how their data will be secured, backed up, and recovered.

Office 365 has experienced several outages and some have been quite significant. Microsoft has improved the availability, reliability, and scalability of Office 365, but customers may want to evaluate Office 365 to ensure the service delivers on their uptime objectives.

Organizations considering Office 365 (or other hosted services) should review the significant migration complexity and costs. Exchange Online will generally be the largest migration effort, depending on the size of an organization and the current e-mail software and management tools in place. Although many partners can offer tools and assistance for migrating e-mail from on-premises to hosted services, few tools are available at this time to assist with migration to SharePoint Online or Lync Online, but partners should be familiar with the process for all three services. Although SharePoint Online now enables much broader customization and developer functionality than previously, it is more limited than a dedicated or on-premises version. Existing SharePoint applications, especially those developed on SharePoint 2007 or earlier, will require work to migrate them to SharePoint Online, as it is limited in the extensibility models it supports.

Manageability of Office 365

With this release of Office 365, Microsoft continues to support single sign-on with Active Directory on-premises through the use of Active Directory Federation Services (AD FS) and adds support for Active Directory federation through Windows Azure Active Directory. Office 365 now supports automatic, portable encryption of exported documents and e-mail through Information Rights Management (IRM) to the top two Enterprise editions of the service. This could help ease some security and compliance concerns of organizations skeptical of moving to cloud services.

Management of Office 365 has also been improved by adding PowerShell support for SharePoint Online. (PowerShell was already supported for users, subscriptions, and Exchange Online.) Hybrid deployments are supported for all three hosted services, enabling organizations to mix on-premises with cloud-based deployments.