Administrators warned over Office 365 functions and licensing

IT administrators need to be careful when signing up to Microsoft's Office 365 cloud suite, as the software is less powerful than installed versions and licensing terms are different from Redmond's traditional strategy, analysts have warned.

Office 365 has some key differences from the installed software, say analysts. These range from minor changes to Exchange, with the cloud service not supporting shared folders or some Outlook 2003 files, to more major differences in SharePoint and Lync.

SharePoint users will be missing some search capabilities – notably fast search – and the ability to integrate with business intelligence software is severely hampered. Lync systems will not be able to federate with non-Microsoft systems and won't be able to hook up to a PSTN network when Office 365 is launched.

"Administrators will have to do a thorough series of tests before making the move," said Rob Horwitz, research chair of analyst house Directions on Microsoft.

"The web version is missing a lot of features found in full versions. Companies need to make sure they can get the functionality they need."

Horwitz has also analysed the latest licensing terms posted by Microsoft for the cloud suite, and found significant changes in policy that could lead to confusion.

Microsoft has traditionally priced on a per-device basis for software such as Office, but Office 365 was being sold exclusively on a per-user basis. Administrators need to keep a close eye on user numbers and existing licences to avoid paying Redmond more than they need to.

Volume discounts are also lower than usual with Office 365 he said, since Microsoft would be spending more on servicing costs for users than with installed systems.

Discounts only kicked in for companies signing on more than 250 users, with a three per cent discount for up to 2,399 purchases or six per cent for up to 5,999 subscriptions. Buyers of more than 15,000 Office 365 subscriptions would save 12 per cent of costs.

Microsoft has also "sliced and diced" its purchasing options for Office 365 to provide a dozen different options. These range from a small business plan that costs $6 per user to larger enterprise agreements that allow for scaled increases in services.

The release of the licensing data this month indicated launch for the platform by June, Horwitz said. Microsoft generally released such data every three months and would be unlikely to have published detailed licensing terms with the intention of changing them again in June.