March 2013 Document N31

RESEARCH NOTE ANNOUNCES NEW OFFICE 365 OFFERINGS

THE BOTTOM Microsoft announced updates to its Office 365 cloud services, including enhanced social capabilities with SharePoint and Yammer. It also announced tiered pricing for Office 365 to appeal to small, medium, and large enterprises. The new capabilities will provide an additional productivity boost, as will support for users with multiple devices. This strategy is also clearly an effort by Microsoft to leverage the success of Office 365 to drive more users to adopt the latest version of Office.

On February 27, Microsoft announced an update to its Office 365 cloud services. In addition to updated Microsoft Lync Online, Exchange Online, and SharePoint Online services, Office 365 features social capabilities leveraging Microsoft’s Yammer acquisition. Lync- connectivity for presence, (IM), and voice is planned for release in June. The new Office 365 service is available today in 69 markets and 17 languages and is planned for release in an additional 20 markets and 16 languages in the second quarter of this year.

The announcement also includes new tiered offerings: . Office 365 ProPlus includes Word, Excel, PowerPoint, OneNote, Outlook, Publisher, InfoPath and Access delivered as a service on up to five devices for $144 per user per year. Office 365 ProPlus is also available as part of premium Office 365 Enterprise and the Office 365 Midsize Business. . Office 365 Midsize Business Office includes Office 365 ProPlus for businesses with 10 to 250 employees as well as Exchange Online, Lync Online, and SharePoint Online for $180 per user per year. . Office 365 Small Business Premium includes the Office applications as well as business-grade e-mail, shared calendars, Web site tools and HD videoconferencing capabilities for businesses with one to 10 employees for $150 per user per year.

Office 365’s momentum is not surprising, given the clear return on investment customers achieve by reducing IT support issues and increasing productivity (Nucleus Research m70 - 365 ROI case study - Ignite , June 2012). Office 365’s adoption in the United States and Europe, and Microsoft’s expansion of its geographic footprint (Nucleus Research l123 - Microsoft Office 365 ROI case study - Naumac, December 2011) is

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March 2013 Document N31

also evidence of broader acceptance of the cloud’s reliability and efficiency in delivering applications. In fact, Nucleus found that cloud-based applications deliver 1.7 times the ROI of on-premise ones, and Office 365 is at the high end of the average (Nucleus Research m108 - Cloud delivers 1.7 times more ROI, September 2012). That said, it is ironic that one of Microsoft’s fastest-growing businesses is based on the fact that IT has challenges supporting Microsoft on-premise products themselves.

It’s natural for Microsoft to take advantage of Office 365’s thunder to drive adoption of the latest version of Office, but companies should consider the negative productivity impact of the learning curve Microsoft has created for Office users by moving around features and functions in applications such as Excel, PowerPoint, and Word in Office 2012. Nucleus has found that even expert users using the new applications every day have found challenges in relearning features such as how to insert cells in Excel or change animations in PowerPoint. Infrequent users will have an even steeper learning curve. However, for most organizations any short-term negative productivity impact of Office changes will be outweighed by far by the ongoing productivity benefits driven by Yammer and Lync integration and multiple mobile device access.

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