The big numbers are starting to roll for On-line Services

May 28, 2010 by John

The reported ‘battle’ between Microsoft and Google for the delivery of on-line services saw Microsoft chalk up another win this week, as the university of Arizona chose the Microsoft On-Line services solution for it’s 18,000 seats.

This is a significant ‘win’ and shows that when the decisions are made it’s not only about pricing – Microsoft’s BPOS stack is typically around the $120 per user per year mark, compared to Google’s $50 – but also about integration, migration, security and risk mitigation. I’m sure that there was also a decent dollop of “I’d just feel better with Microsoft” in there too.

I’m involved with a couple of incipient projects which are also of the magnitude of the University and the decision processes are protracted as the risks of moving core services on-line are identified, discussed, addressed and re-addressed. The costs are very much secondary in these discussions as long as the mitigation is not overly significant.

The Microsoft announcement of the deal said “In addition to updating the university’s numerous and antiquated e-mail and calendaring programs to one centralized system, employees will get 10 GB mailboxes and new features such as instant messaging, presence and online meetings with the ability to share their desktop, audio or video with other users on or off campus,”. And this shows where the adoption of on-line services is really going to take root.

Many, many organisations – not just educational ones – have either old, legacy systems or a whole clutch of systems inherited though mergers and acquisition activity. The capital costs of replacing these systems in-house is usually significant and the benefits are often difficult to put a value on when building a business case. Moving the services on-line becomes THE viable solution in these circumstances as there’s little capital costs (the engagement of an SI for migration activity being the only significant, but potentially vital, one) and the ongoing costs are directly related to usage. The on-line services will usually provide a greater SLA than an in-house solution and will probably also deliver more storage and other functionality that would be implemented in-house too.

Microsoft, Google, or someone else. The decision soon will be not IF they move is to on-line, but WHO will be chosen to deliver the service.