Office 365 Fragmentation?

[Cian Allner]

Another open question is anyone else worried that Office 365 is increasingly being split up, with add-ons and additional costs?  This can polarise customers and they either pay up or miss out on useful features. I have three examples for you.

Of course, I understand commercial aspects and revenue generating can't be ignored but I am wondering about this trend. 

Let's see if I can explain.  Microsoft Workplace Analytics pricing was a surprise to me, it's marketed as an add-on to Office 365, an organisational version of MyAnalytics, with MyAnalytics bundled with the Office 365 E5 licence. With Workplace Analytics, you pay for 5,000 licenses at a minimum and it's not included in any enterprise plan including E5.  Pricing is $6/license/mo, except for the E5 SKU, which is $2/license/month.

If my sums are right that is $360K a year if using E1 or E3 licences and $120K a year for an E5 based tenant, based on the list price.  Of course, if you don't have 5,000 users, you can't qualify for Workplace Analytics, whatever the cost.  No doubt the 5,000 number will be reviewed on an ongoing basis but right now it's quite a division as well as the standalone costs.  

Feel free to fill out my related survey, if I can get enough responses it might be an interesting data point.

Moving on, how about Office 365 Advanced Threat Protection, that substantially improves Exchange Online Protection with additional protection from potential unsafe attachments and malicious links.  I, like I think many people at the time thought this should be a standard feature, it's security after all and that should outweigh separating this from the core product.  I understand ATP incurs resource costs for how it works and expecting Microsoft to absorb that might be a bit much but still, that's an additional $2.00 per user however it is included in the E5 licence.

What about dynamic groups, self-populating based on given criteria, making Office 365 Groups membership management a snap? That killer feature is not included, it comes with Azure AD Premium with a $6 user/month cost or via Enterprise Mobility + Security (EMS).

We even speculated this week that the Visio Online public preview, might not necessarily be included with Office 365 enterprise plans when it goes GA, for creating diagrams it will be a paid service, with no indication on how it might be bundled. To balance out this feedback, just to say I'm appreciative the Office 365 Adoption content pack is available to all customers for free of charge, that's great value added and correspondingly, that means more customers will gain from this.

So let me ask you this, does this bother you at all or is it to be expected and customers can pick and choose the features they want accordingly? Do you have any other examples of this sort of fragmentation, if you can call it that? Thanks for reading if you got this far and for any input! 

[#2]

Yeah, we've expressed similar concerns previously. It's of course understandable that Microsoft wants to monetize their investments in the cloud, and all the different acquisitions they've made. But in some cases it simply doesnt make sense. A recent example I can think of, apart from the ones you shared, is the ASM suite. The price tag for the features it offered at launch was just ridiculous. It has gotten better, but considering the price difference with the full CAS suite, which brings a looooot more to the table in terms of functionality, I dont see any point investing in ASM. Well the standalone plan at least.

[#3]

Hi Cian, Thanks for bringing this together in a thought piece. I believe this is as important feedback to Microsoft as the purely technical pieces. Licensing is an underserved focus in this Community but the recent changes you highlight bring back the spectre of my days doing fiendishly complex Enterprise Agreement negotiations. I would urge Microsoft to keep licensing as simple as possible the current Enterprise SKUs have achieved this well. I always think of E5 as my 'top' SKU will all products and services available. Workplace Analytics is complementary to My Analytics in many ways and have shared my views directly and through this community that I think the seat limit is a real barrier to adoption. That said, I would expect qualifying organisations to negotiate far below the headline costs through their respective Account Teams. Microsoft's new mantra of Digital Transformation led by Satya Nadella clearly addresses all market segments which clearly jars against this recent trend. My underling feeling, my own opinion only, is that a lot of the additional licensing add-ons are through companies acquired by Microsoft and one wonders if the units are simply in cost recovery mode. If so, I would have thought scale adoption mattered. Like you I'd love to hear others, constructive, insights on this topic.

[#4]

totally agree about Workplace Analytics.
The EMS Suite is another thing though, in that regards I understand that AAD Premium is bundled in there somewhere.
About Visio, I would have thought that the creation of diagrams would be bundled into Visio Pro for Office 365? Will that not be the case?

[#5]

I can understand why they charge for ATP, but 6$/user/month for basic functionality like dynamic groups is ridiculous. Of course you get much more with AAD premium, but if you only need dynamic groups that is just brutal.

[#6]

It is a bit steep, to have to pay that if all you're interested in is dynamic groups.  There have been cases where Microsoft have added premium functionality to Office 365, so who knows if that could happen again!

[#7]

These are all good points.  

Not every customer need these additional features and therefore separate pricing charges the customers who do need it and doesn't split the cost over all the other customers who don't need these features.

Also, I think many of the features (like dynamics groups) could be added as a change through an addin.  We do that all the time for customers.  Its more specific to the customer's needs and a lot less expensive than $6 a user.  The $6 a user price is reflective of a much bigger organization that benefits from all the features of a premium azure not just dynamics groups.

The best thing about "Software as a service" is you pay for only what you need making the cost in the long run better than a "one size fit all" solution.  We are very early in all these issues (cloud and pricing) and eventually the market will fill in to make prices more competitive.

[#8]

@Vasil Michev Agreed, we can see from yesterday's earning report Microsoft is doing very well from the cloud, Office 365 included and this has really paid off.  Saying that having licencing that's understandable and where customers don't feel like they will have to buy add-on after add-on to get everything they need.  With E5 out of reach for some and also the feature intersection with EMS a factor, though the upcoming Microsoft 365 Business and Enterprise offerings may help.

@John Wynne Also agree, I think we are looking for simplicity with licencing as much as possible, that's what we were promised with the cloud in a way.  The value proposition with Office 365 is huge anyway but I just wonder how much more add-ons will we see and when will they be bundled.

@Ivan Unger I don't think we will know about that until Visio Online goes GA but it would be surprising if it's not included with Visio Pro for Office 365!

@Don DeCarlo Good points, paying for only what you need I could see working well for some organizations, rather than upselling to something like the E5, where half the extra features aren't really needed.   Agree that this will evolve and will be driven by demand and other factors.

[#9]

Yes, the subscription model will be very lucrative for Microsoft.  In the past customers bought office for a one-time fee and didn't upgrade for years.  That saved customers money versus the subscription model where they pay each month.  But did they really save money?

I find the subscription pricing a better value.  You get continuous updates with many great features (and new apps too).  Your monthly cost becomes a variable expense and you only pay for the users you need.  You get multiple installs per user which covers all your devices.

More importantly your infrastructure is more standardized and there are many efficiencies gained for the business through the integration of all the online services working together.  In my view, the public cloud is enabling productivity that a few years ago was unimaginable and the Microsoft services offer a great value even with subscription pricing.

[#10]

Couldn't agree more, from the origins of Office 365 with BPOS to where we are now, it's amazing really.