We now know that Microsoft Office 365 will officially launch on June 28. Meanwhile, it seems not a week goes by that I don't see an announcement from Microsoft about some big new customer won over to its cloud platform, whether Office 365 or one of the various Microsoft Online Services such as Exchange Online, and of course Google makes the same sort of announcements about its new customers. For the last couple of years, it seems like most of the announcements about big new customers for the cloud have been for various government agencies or districts.
For instance, last month, Microsoft announced that the city and county of San Francisco was converting its 23,000 workers from an on-premises email system to Exchange Online. Microsoft is also supplying cloud services to the city of New York and the US states of California and Minnesota. Google Docs and Gmail likewise have infiltrated the halls of government, including in the District of Columbia, the city of Los Angeles (which is probably the first major cloud win I recall being announced, back in November 2009), and the city of Seattle—which must vex Microsoft, sitting on its doorstep like that.
It's not only governments that have taken to the cloud for their messaging needs; certainly many businesses have likewise evaluated their options and found hosted services the way to go. What I've wondered is why it seems so many of the high-profile customers are in the government sphere. Well, a couple weeks ago, Toby Tai on the Why Microsoft blog wrote about the reasons Microsoft's government customers have reported for making the cloud switch. Some of Tai's reason's are in line with my own theories, but I've got one or two to add.
Tai's first reason that government organizations are choosing cloud services, and one I wholeheartedly agree with, is the financial aspect: Yes, you can save money by outsourcing to the cloud, and governments in this economy are particularly under stress to reduce expenditures. A big part of those financial savings boil down to the CapEx vs. OpEx equation, and you've probably seen all the case studies about that aspect; I won't delve into that here.
A piece of the savings, however, might come from staff reduction, specifically in the IT department. While that's always a possibility, it's important to remember that getting rid of a task such as messaging that isn't core to your business (or government) goal isn't all bad and can let IT focus on more important tasks. In a recent conversation I had with Nick Mehta, the CEO for hosted services provider LiveOffice, he made this point quite forcefully. "There's still a significant responsibility for an IT administrator in a cloud model, particularly because very few companies are doing everything in the cloud," Mehta said. "You might run Exchange on premises, you might archive to the cloud. You might run an archive on premises and maybe use antispam in the cloud. Stitching all that together—managing SLAs, doing the synchronization of Active Directory, figuring out how to make a single-sign on so that users don't have to sign in multiple times—those are real things that some IT person has to do. So I think the role changes a little bit, but does it go away?" The answer, clearly, is no, and that's going to be the case whether it's a small or large company, government or commercial.
Tai makes the case in his blog that governments have chosen Microsoft hosted services for reasons such as optimizing resources or "doing more with less"—which if you think about it, is basically just another way of spinning the financial savings aspect. This is where you see IT departments highlighted for "effective use of IT resources." I guess you can also include here the added benefits you get from having a collaboration suite such as Office 365, which can improve end-user productivity—although, you'd get those same benefits if you had all those technologies on premises.
Tai's third reason for cloud adoption seems to me to be the most Microsoft-specific: compatibility and user acceptance. Is this solution compatible with the systems the organization already has in place? Will users have an easy time adjusting to the new programs and interfaces they're presented with? Will they trust the technology the company has deployed to them? Because a majority of organizations have Microsoft technologies such as Office and Windows installed already, moving users to Microsoft's hosted solution is likely to have less impact in this regard than competing solutions would. Again, I don't see anything specific to government adoption in this line of reasoning; it would seem to apply equally to any type of organization.
Tai's final listed reason for government adoption of Microsoft services is security, including data archiving. On this point, I would in part agree. Microsoft has made a good case for why its data centers are a secure location for you to store your data, and the multiple data centers the company has located throughout the world certainly offers the promise of high availability—even though we've seen major problems with precisely this aspect of availability in recent weeks when the BPOS system has been down for multiple days.
Security and availability are points where I think governments and businesses might certainly look at the cloud differently. For availability, almost any business would say that email is mission-critical and any downtime could result in lost revenue. Communications, both internal and external, are also of primary importance to government organizations, but downtime is less likely to be associated with financial loss; so while they might still say email is mission-critical—and they do in Tai's post—the reality is that it's less mission-critical than it is for other businesses. (Can you have degrees of mission-critical? I think so.)
On the security issue, some governments might simply not be able to achieve the level of security that a cloud service provides, which again returns us to the money issue. As citizens, we can hope governments take data security extremely seriously; therefore, if they can achieve better security for their data (which has who-knows-what about us in it) in a cloud model, then we should be happy for them to choose it.
For organizations overall, security seems to be the issue that has most kept organizations from wanting to move systems to the cloud: not believing those remote servers are as secure as what they manage in-house. Additionally, questions continue to come up about where cloud data is stored—questions that could have serious legal ramifications in years to come. If government organizations are choosing cloud providers for email and other services now, what happens when and if the laws for how they need to treat archived data change in six months or a year?
As Martin Tuip, Exchange expert with Iron Mountain said when I spoke with him recently about these issues, "We haven't really figured this out in the grand scheme of things. We're just running into this at 300,000 miles an hour." Of course, there are people who are thinking about and working on these problems. I'll have more to say about some of those efforts in a future commentary.