First look at Microsoft Office 365

Microsoft might not be the first name you think of when considering enterprise cloud offerings. But then again, the company does handle 10 billion Hotmail and Windows Live messages a day and has a 15-year history of deploying and managing massive data centres.

Now, Microsoft is applying that expertise to several of its popular enterprise products, including Exchange, SharePoint, Lync and Office – all brought together online as Microsoft Office 365.

Variations of the service – Enterprise, Small Business, and Education – will have different prices and features tailored to each audience. We tested Office 365 for Enterprise beta, which comes out today. The final product will officially ship later this year.

Our focus in this review was whether Office 365 provides a solid case for moving critical business functions to the cloud – along with its integrated communication and collaboration capabilities, mobile options, and IT administration functions.

No storm clouds here

First, let’s tackle the strategic argument. Office 365 offers predictable costs ($2 to $24 per user, per month), which can be lower than maintaining an in-house data center. The economics makes sense, especially for mid-size organizations, which often forgo security and reliability because of hardware and support costs. This also holds true for large enterprises that are spending lots of capital on redundant data centres or scaling up for specific projects – funds that could be invested in their core business.

Perhaps the biggest advantage is the potential to transform IT groups – from being hidden away managing server rooms to becoming a true business partner with internal clients. Energizer Holdings, Microsoft’s first customer to go completely to the cloud, says that its technologists were freed up to work with internal business groups, consulting with them on how technology can best be applied.

Starbucks took a hybrid approach in working with Microsoft. Headquarters employees still rely on internally-hosted e-mail and other applications. Yet 17,000 employees at 8,000 retail locations depend on Exchange Online for e-mail access and a SharePoint Online intranet to access human resources and other information. No matter where or how Starbucks employees access information, the experience is essentially identical.

Experiencing Office 365

In our week-long test, we ran a desktop setup script, and connected without problem to the Office 365 service. Depending on the licenses you choose, you can also download and install Office Professional Plus; it’s not necessary for every user, but does let you perform advanced editing, such as creating intricate animations within PowerPoint presentations or work with millions of data rows in Excel.

For casual users, the Office Web Apps are convenient online companions to Word, Excel, PowerPoint and OneNote. Web Apps let you access, view, and edit documents directly from your Web browser.

The understandable Office 365 Web interface links you to Exchange Online e-mail, SharePoint Online Team Sites, and Admin functions.

I appreciated the flexibility to also get Office 365 e-mail through my Outlook desktop application or through Entourage for Mac. That anywhere access extends to mobile devices – iPhone, Android, Blackberry, and Windows Mobile – with Office 365 keeping e-mail, documents, contacts and calendar in sync across all systems.

Microsoft takes aim at Google Apps with Office 365

I didn’t encounter any shortfalls working with either the desktop or Web Outlook connected to Exchange Online. For example, all the Outlook functionality – such as grouping e-mail by conversations — is available through a browser (I used Internet Explorer 9, Chrome 12 and Firefox 4). Moreover, folders, rich text formatting and flags were maintained when viewing my inbox in the Web app.

Office 2010 introduced improved presence awareness and contact information, which are available in the cloud versions of Exchange, Lync and SharePoint. For example, when receiving an e-mail from a colleague, I saw his online availability light up next to his name. Additionally, hovering over his name displayed a contact card. Here, I could easily start an IM or voice or video call through Lync Online.

As expected, there’s tight integration with meeting services. From my inbox I scheduled a group meeting with all those involved in an e-mail conversation. A handy feature, MailTips, let me know immediately if someone is out of the office, so I could remove the person from the meeting list – before sending the request – and invite an alternate. Since Lync is integrated, a single click inserted the online meeting information into the meeting note. You can also invite users outside your organization, and they can join with a Web App or the full Lync client.

Adding users at meeting time was as simple as dragging and dropping them into the meeting space. As with the on-premise version of Lync, adding video to the call, sharing a screen or presentation, and creating a whiteboard worked without any flaws.

Team Sites form collaboration hubSharePoint is the foundation for Microsoft’s collaboration model, so it’s no surprise that SharePoint Online takes on a central role in Office 365. From any Office desktop application, I easily saved documents to a Team Site where they were accessible by colleagues from Office desktop applications or Web browser.

Office 365 is very smart about automatically saving files, and simultaneously editing a document by multiple people worked very well. A pop-up card shows who is editing, and within the document there’s a clear indication of each person’s changes.

The straightforward way files are centrally stored and accessed reinforced another basic benefit of the cloud. You forgo various versions on hard disks, and eliminate e-mailing files back and forth. Moreover, when you receive an e-mail with a document link, the material can be quickly viewed in a browser without launching the desktop application.

In other ways, SharePoint Online is much like SharePoint 2010, but with some improved access options. As with on-premise SharePoint, the navigation and ribbon editing toolbars let me customize the look of sites and do everyday tasks, such as creating document libraries. I conducted other tests – working with Microsoft InfoPath forms and creating new sites – which worked as expected.

In general, editing documents was consistent between the desktop and Web apps. Making changes in a browser sometimes temporarily changed the document layout; however the saved version maintained the formatting no matter which device was used for viewing.

One thoughtful addition let me allow external users to access my SharePoint Online sites without consuming a license.

In-house SharePoint setups have some extra-cost options, including Access Services for viewing databases in a browser. SharePoint Online includes this feature standard, which let me publish a Microsoft Access desktop file as an online database – with a few clicks.

Taking Team Sites mobile

Office 365 works with most smartphones that support Exchange ActiveSync – and you can access a mobile page of the Office 365 site through an ordinary Web browser. Plus, SharePoint Online supports mobile access to Team Site pages and list data.

Although I tested Office 365 with several phones that included a BlackBerry Bold, I wasn’t surprised that the best experience was when using a Windows Phone 7 device. Since it has Office Mobile, I could view and make light edits to documents (such as correcting text) and synchronize them back to the Team Site. Further, I successfully recorded notes and snapped photos with the Windows Phone and saved the resulting OneNote file to the Team Site.

The Office 365 Admin page is the gateway to administration functions of interest to IT support staff. I appreciated shortcuts to common tasks, including resetting passwords, adding new users, and assigning licenses. For large organizations, there’s a must-have option for syncing with your on-premise Active Directory server.

In addition, your staff can view the health of the Office 365 service. As such, if users experience any problems, you’ll know right away if the issue is with your network or Office 365. In the beta, the response time was consistently under two seconds and Microsoft’s committed to 99.9 per cent uptime for the final version of the service.

I also quickly performed other typical admin jobs, such as creating security groups. Office 365 doesn’t match the mobile device management of dedicated products such as Sybase Afaria. However, I created a policy to enforce strong passwords and disable smartphone features, including use of the camera.

Overall, Office 365 for enterprises’ Web-enabled tools let me access e-mail, important documents, and efficiently collaborate with those inside – and outside – my test organization’s boundaries. This cloud service works handily with Microsoft’s desktop office application that workers may already use. Additionally, Office 365 gives enterprise IT departments control over policies and configuration – while delegating server maintenance and software upkeep to Microsoft.

Understandably, not every enterprise will feel comfortable entrusting productivity applications to the cloud for their entire organization. Still, Office 365’s low-cost kiosk licensing may prove suitable for a subset of workers. Other options can prove equally economical – and free up internal resources – when you need to create secure extranets or deal with specific projects.

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Jim Love, Chief Content Officer, IT World Canada

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