Office 365 plans for small companies: E or P?

The range of available Office 365 plans can be confusing for small to medium companies that are considering a move to the cloud. I believe that a lot of these companies who run Exchange 2003 or Exchange 2007 servers today are natural candidates to transition to Exchange Online. Depending on their size, these companies will probably consider the “P” (professionals and small business) and “E” (enterprise) plans. Let's discuss some of the core differences that exist between these plans that companies need to take into account when they make their decision.

The first difference is the price. Plan P1 is available for US$6 per user per month in the U.S. Plan E varies from $10 to $27/month depending on what variant you buy. The higher priced plans include Office 2010 Professional Plus. You can exclude this cost if you’re happy to use the browser-based interfaces to Office 365 including Outlook Web App (OWA) or you already own Office 2007 or Office 2010 licenses. Exchange Online does not support connections from Outlook 2003 clients.

Next, we have to think about the size and needs of the user community. Microsoft’s web site characterizes the P plans as being suitable for small companies that have up to 25 users. In fact, you can support a company with up to 50 users with Plan P as long as you never intend employing a 51st person as then you’ll discover that Plan P tops out at 50 and there’s no path forward except to restart your Office 365 deployment and migrate your data over to Plan E mailboxes. 

Another interesting restriction that might be problematic in some circumstances is the number of recipients that a cloud mailbox can address in a 24-hour period. The limit is set at 500 for Plan P while it's 1,500 for Plan E. Each external recipient on an outgoing message counts against the limit so a marketing-kind of announcement sent to 350 recipients can chew up a fair chunk in just one message. This may or may not cause your company a problem. An external recipient is one that is outside your tenant organization.

Update: Microsoft increased  the recipient limit for Plan P to 1,500 in late December 2011 so this might no longer be an issue, unless of course you want to send to more than this number of recipients in a single day. The same limit remains for Plan E.

Rumors in the Twittersphere last week mentioned a 90 day period required by Microsoft to move a company from one plan to another (I liked one comment that said "Seriously? Nothing takes 90 days these days"). I think this situation is curious and misses the obvious fact that companies do grow. It's important that Microsoft allows for greater flexibility in the future. After all, even Microsoft started out with just a few employees before it grew into something larger.

In return for the extra cost, Plan E is designed to be more flexible. Small companies don’t tend to have a lot of IT staff and the ability to offload IT tasks to a cloud provider in return for a fixed monthly fee is a major point of attraction. If you use Plan P, you hand over all control to Microsoft. All that you can do is to manage users (create new mailboxes, manage their properties, assign licenses, and so on). The E plans are more flexible because they have to cater for the needs of companies from 50 to tens of thousands of users. Therefore, Plan E allows for on-premises IT staff to take a much more hands-on approach to management. For example:

  • Single sign-on across on-premises and cloud services can be achieved by deploying Active Directory Federation Services. This also allows data contained in an on-premises instance of Active Directory to be synchronized with the cloud. In addition, if you use an on-premises instance of Active Directory Rights Management Services, you can extend its ability to protect information to cloud users.
  • Control can be exerted over password expiry. The passwords of Plan P users never expire. All other Office 365 plans have a password expiry period of 90 days, but you can change this through PowerShell.

Update: Microsoft has now changed its policy so Plan P passwords do expire after 90 days. This came as an unpleasant surprise to me, but it's easy to execute some PowerShell commands to reset accounts so that they don't expire.

  • You can move users between on-premises and cloud servers using the Exchange 2010 Mailbox Replication Service (MRS). You’ll have to deploy an Exchange 2010 Client Access Server (CAS) in your on-premises organization to allow MRS work its magic.
  • Hybrid co-existence is supported. In other words, you can share data between an on-premises Exchange organization and Exchange Online. You’ll have to deploy at least one Exchange 2010 Hub Transport and CAS server to support co-existence (both can be on the same physical server) and afterwards you can run the hybrid co-existence wizard (part of Exchange 2010 SP2) to configure the vast majority of settings to allow users to share data such as free/busy information and MailTips.
  • You can configure transport rules with Plan E. Transport rules support many interesting scenarios such as adding disclaimers to outgoing messages, implementing ethical firewalls, and preventing communication with certain domains.
  • You can configure some anti-virus and anti-spam settings for your company such as adding domains to the white or black lists.
  • If you want to use Unified Messaging to have voicemail messages arrive into user mailboxes and features such as voicemail preview (when Exchange transcribes the content of a voicemail into text and includes it in a message), then you absolutely have to use Plan E3 or E4. These plans also support “unlimited” email storage, but this is something that I don’t think small to medium businesses will be too concerned about.
  • You can combine Plan K (kiosk) users alongside Plan E users. Kiosk plans are designed for users who only use a browser and need limited access to the full range of functionality supported by Office 365. Think of people who work in a factory or other environment that only need to check email or their calendar once or twice a day. Plan K1, for instance, costs $4/month and provides a 500MB mailbox accessed through OWA as well as access to SharePoint Online to get to corporate document repositories, so it’s more than enough to serve this purpose.

Delivering excellent support for IT applications is often a big problem for all sizes of companies. Plan P1 is cheap but comes with Do-It-Yourself (DIY) support. In other words, if something goes wrong, expect to spend time pouring over web sites or tracking Twitter trends to figure out what happened. Plan E comes with phone support. This is still not great for companies coming from the point where support comes from on-premises IT staff because you will be very much “one among many” in the phone queues, but it is much better than the DIY approach.

Office 365 doesn’t yet support the dedicated instances that the largest enterprises use in Microsoft Business Productivity Online Services (BPOS). However, dedicated instances will arrive in 2012 and will deliver even more control and flexibility for those who need this capability. However, Microsoft has released the service descriptions for dedicated subscriptions already to allow large enterprises to begin the process of preparing for the migration to Office 365 next year.

Finally, let me point out that Office365 might not be the right choice for a company looking to migrate from Exchange 2003 or Exchange 2007 today. We’ve already discussed that Outlook 2003 is not a supported client, so if you have thousands of Outlook 2003 clients deployed around your company, you might not want to go through the bother of upgrading all the client desktops to use Outlook 2010 (in practical terms, this exercise probably means that you’d have to upgrade the client O/S and the complete Office suite).

Public folders provide another huge stumbling block because they are not supported at all by Office 365. If you have a deployment of public folders you can’t move to Office 365 until you figure out how to replace public folders. Sometimes this is relatively simple, as in the case of replacing the use of system public folders as distribution points for free/busy information and the Offline Address Book (OAB). But if you use public folders as repositories for data or as part of an application, you might just be out of luck until you do the work to move them to a cloud-friendly platform such as SharePoint. For more information, download Microsoft's document describing how they recommend to approach the migration from public folders to Office 365.

Of course, Office 365 is not the only game in town even if you decide that Exchange is your must-have platform and that you're interested in SharePoint and Lync too. There are plenty of capable, experienced, and willing third-party hosting providers who are willing to deliver a tailored service to your specification, probably close to the price point available from Microsoft. Check out my article on what these providers deliver to differentiate themselves from Office 365!

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