Office 365: Five Managed Services Industry Leaders Weigh In

Yes, Microsoft launched Office 365 today. We've developed an extensive Office 365 FAQ to help MSPs understand Microsoft's cloud strategy and the potential implications for channel partners. Overall, we think Office 365 divides channel partners into four camps. But what exactly are MSPs and MSPmentor readers saying about Office 365? Here's a sampling of opinions from five managed services industry leaders, followed by an MSPmentor reality check.

They include...

AppRiver CEO Michael Murdoch

Background: More than 45,000 customers -- mainly in the SMB market -- leverage App River for email messaging, Web security and hosted solutions, the company claims. AppRiver is among the first resellers to bring the new Microsoft Office 365 Suite to market.

Prepared Statement from Murdoch:  "AppRiver understands that businesses today want flexibility, they need options and they demand value for their money. That's why we are pleased to offer our customers a blended solution of Microsoft's bundled Office 365 offerings, along with our own unique, feature-enriched solutions.  By working with Microsoft, we are offering customers more choices, enhanced functionality and greater overall value."

MSPmentor Reality Check: AppRiver seems to be hedging its bets -- promoting Office 365 starting in July 2011 while continuing to promote Phenomenal Care, a 24 x7 U.S.-based live customer support option that's available to all subscribers. The Phenomenal Care program includes everything from sales to onboarding to troubleshooting. The tricky part: If Office 365 goes dark can AppRiver really help customers -- or will AppRiver be able to provide an alternative platform during the Microsoft outage?

Azaleos VP of Product Management and Marketing Scott Gode

Background: Azaleos Corp. is a hosted Microsoft Exchange messaging service provider and one in the first wave of preferred Office 365 cloud productivity suite deployment partners. The Azaleos Managed Hybrid Service (MHS) integrates private cloud or on-premise unified communications (UC) with Microsoft’s cloud.

Prepared Statement From Gode: “Many organizations still consider private cloud or on-premise Unified Communications as their preferred deployment model, but want to pilot Office 365 for some percentage of their users. With the Azaleos Managed Hybrid Service, moving to Office 365 is no longer an all-or-nothing proposition. MHS allows IT to finally start making informed decisions about moving to the public cloud in careful and controlled ways. We fill the gaps between private cloud systems and Office 365, while centralizing monitoring and management for both."

MSPmentor Reality Check: Hybrid cloud services certainly sound like a real opportunity for MSPs, and Azaleos has been a leader in Microsoft-centric managed services. We'll continue to watch the company's moves closely.

Intermedia President Michael Gold

Background: Intermedia provides hosted Exchange on its own, both partnering with Microsoft and competing with Office 365. Intermedia was recently acquired and is now pushing into virtual desktops while continuing to build its channel partner program for MSPs.

Prepared Statement From Gold: “Office 365 is a big moment for Microsoft and gives them much deeper online services reach into the mainstream business world, including the companies coming to the cloud for the first time. Microsoft’s broad partner ecosystem can refer not only Office 365, but other Microsoft cloud services, giving the company an even bigger advantage versus Google. Companies like Intermedia take Microsoft and other best-of-breed products and tailor them for businesses that need additional support, security, mobility, compliance and other cloud services.”

MSPmentor Reality Check: Like we said, Intermedia must both partner and compete with Microsoft. Interestingly, Intermedia found a way to introduce and hosted Exchange 2010 at scale long before Microsoft was able to do so.

En Pointe Technologies VP of Marketing and Product Development Ali M. Din

Background: En Pointe Technologies, a national solutions provider, is providing design, consulting, and deployment services for Microsoft Office 365. En Pointe is currently ranked atop Microsoft's cloud channel partner list, and En Pointe previously ranked among Microsoft's top BPOS partners.

Prepared Statement from Din: “We want customers to know there is a partner that can help them understand what’s included in Office 365 and help them get the technology deployed. We have seen a lot of pent up demand for Microsoft Office. What is really exciting is that with our dinCloud services, we are extending Office 365 to a Hosted Virtual Desktop too... The Microsoft Office 365 deployment team at En Pointe was one of a handful of partners to be part of the Microsoft Office 365 beta program in November of 2010, and has a lot of customers already participating.”

MSPmentor Reality Check: Rather than simply reselling Office 365, it sounds like En Pointe will profit from migration services. The company specializes in Microsoft Exchange 2003, 2007, Novell GroupWise, and IBM Lotus Notes to Microsoft Exchange 2010 migrations -- whether they are on premise, hosted via Office 365, or hybrid deployments, En Pointe says. But the real twist to the story involves En Pointe's dinCloud strategy.

Evolve Technologies CEO David Sobel

Background: Evolve Technologies offers managed services and IT solutions to SMB customers in Washington, D.C, and the surrounding area. Sobel is well-known within MSP circles, an HTG Peer Group member and a frequent speaker on SMB technology issues and business automation.

Sobel's Statement: Office 365 is "still not MSP friendly, so until they change billing, it's not even on my radar. I wish Microsoft understood that they're missing the boat with a percentage of their partners, and they really could be the leaders here."

MSPmentor Reality Check: Sobel's opinion isn't unique. During the recent Ingram Micro Cloud Summit and Lenovo Partner Summit, about a dozen VARs and MSPs shared opinions with me that largely aligned with Sobel's views. Overall, it sounds like a large number of small MSPs (estimated revenues: $7 million or below) are rejecting Office 365 or indifferent when it comes to Office 365. The partners either see minimal revenue opportunities or they want Microsoft to permit partners to manage end-customer cloud billing, a feature Microsoft has so far failed to introduce.

Bottom Line

Overall, I think slightly larger MSPs ($10 million annual revenues and above) see opportunities to promote major Office 365 migration services as well as hybrid cloud services. But I think smaller MSPs ($7 million and below) serving SMB customers remain largely wary of Office 365 because there's no way to control end-customer cloud billing and recurring revenue margins are thin. Certainly, I'm oversimplifying the discussion... but that's what I do every day.

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