Published: 1 December 2014
Needing to upgrade Microsoft Office? As Microsoft’s pricing has evolved, we have been fielding questions about how to move forward with email and MS Office.
Here is an analysis for a scenario where a business needs to accommodate up to 30-100 users.
We have looked at five different options:
- Office 365 Business Essentials (web only)
- Office 365 Business Premium
- Open Business – License Only
- Open Business – License and Software Assurance (2 Years)
- Open Value – License and Software Assurance
Here are our assumptions:
- Office 365 Business plans can be purchased monthly or on an annual basis. We have used the annual payment option.
- We’ve estimated the costs of hardware to host an on-premises system based on our own experience and judgement.
- All the recommended retail pricing excludes GST and has been supplied by Microsoft for customers with up to 300 users; and is correct as of 26 November 2015. Prices may change depending on what promotional discounts may be offering at the time or if Microsoft announces a new pricing policy.
We have analyzed two Microsoft Office 365 options, a low cost option accessed through your web browser and a full featured option which includes a license to install Microsoft Office on your PC or Mac. Both options are a subscription model. Note that Microsoft also offer Enterprise options with additional features including SharePoint Online and Power BI.
Option 1: Office 365 Business Essentials
This is the simplest of the lot. Office 365 Business Essentials provides access to MS Office Online versions with no ability to download the desktop applications for offline usage. Users will only be able to use MS Office when they are online. No updates to download. Users are always using the latest online version on offer. Mailing washing services come as a standard feature of Office 365.
Office 365 Essentials is a great choice for users with limited editing requirements who want the ability to work from anywhere.
Approximate cost per user over 5 years: $366.
Option 2: Office 365 Business Premium
Office 365 Premium adds the ability download desktop applications, allowing offline use.
This is an excellent choice for users who work extensively in MS Office.
Approximate cost per user over 5 years: $918.
The alternative to the first two options is the Open Licensing model. This is a more traditional licensing model with the software installed locally on your computer. Unlike the cloud options, these solutions typically require additional infrastructure and may have additional costs. We have used the following cost estimates in Options 3-5:
- Estimated hardware cost to host the system, together with 3 years of support: $50 per user per year
- Our estimate of power requirements is based on a 150W draw at 20 cents per kWh: $8.76 per user per year
- A mail washing service which will cost approximately $60 per user per year.
Option 3: Open Business – License Only
This is the first of our “on-premises” options, where everything is hosted on your own business premises. To get this going, you’ll need to purchase a number of licenses, some hardware and pay for the power requirements to operate your equipment:
Upfront one-off cost of $261 per user for Open Business (License Only). This gives you your Windows Server License, Windows Server CALs (Client Access Licenses), Exchange 2013 and Exchange Standard CALs.
Adding Office Pro Plus on an Open Value License covering 3 years. This gives you access to offline versions of Office Professional 2013 for 3 years. After that, you can only use the offline versions at no further cost. Be aware that unlike the previous options Office users do not automatically get the One Drive storage service: $261.92 per user per year.
Approximate cost per user over 5 years: $1,740.
Option 4: Open Business – License Only plus Software Assurance (2 years)
Software Assurance gives you access to the latest product versions as well as a suite of services and support including planning services to enable efficient deployments, in-person and online training for IT pros and end users, rights to new software releases during the term of your agreement, access to unique technologies available only to Software Assurance customers and spread payment options. After 2 years, users would no longer have access to any version updates.
Adding two years of Software Assurance lifts the Open Business one-off License fee to $377.52 per user.
Approximate cost per user over 5 years: $1,857.
Option 5: Open Value – License and Software Assurance
The Open Value License provides the same benefits as the Open Business except that it spreads the license fee and Software Assurance payments evenly over three years: $146.73 per user per year for three years. After three years, users will still be able to use the installed version but would no longer have access to any version updates.
Approximate cost per user over 5 years: $1,920.
The Bottom Line
Our analysis shows that operating your own hardware and paying for the operating system and MS Exchange licenses adds a significant cost to your annual per user system cost over 5 years.
This comparison is likely to be a little conservative as we haven’t added in the labour cost of an administrator for the on-premises options 3-5.
Data security issues aside, the economic case for selecting Office 365 over an on-premises solution looks compelling.
The rise of “the cloud” and move from perpetual licensing to subscription models means you have more options. Each option has pro’s and con’s and not all options are suitable for all types of users. We recommend reviewing your licensing annually as part of your IT planning to ensure you are getting the best bang for your buck.