Update – May 7, 2015
In the original post below, we talked about the 20,000 “item” limit in OneDrive for Business. It turns out that there’s another quirk with OneDrive for Business that we didn’t touch on in our original post below – OneDrive for Business is really just a front end for a Microsoft hosted SharePoint server. “So what?” you say. Well, it turns out that there are several characters that are perfectly acceptable for you to use in a Windows file or folder name that are not acceptable in a file or folder name on a SharePoint server. (For the definitive list of what’s not acceptable, see https://support.microsoft.com/en-us/kb/905231.) And if you’re trying to sync thousands of files with your OneDrive for Business account and a few of them have illegal characters in their names, the sync operation will fail without giving you any helpful error information, and you will get to play the “find-the-file-with-the-illegal-file-name” game, which can provide you with hours of fun…

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A year ago, in a blog post targeted at prospective hosting providers, we said, “…in our opinion, selling Office 365 to your customers is not a cloud strategy. Office 365 may be a great fit for customers, but it still assumes that most computing will be done on a PC (or laptop) at the client endpoint, and your customer will still, in most cases, have at least one server to manage, backup, and repair when it breaks.”

About the same time, we wrote about the concept of “Data Gravity” – that, just as objects with physical mass exhibit inertia and attract one another in accordance with the law of gravity, large chunks of data also exhibit a kind of inertia and tend to attract other related data and the applications required to manipulate that data. This is due in part to the fact that (according to former Microsoft researcher Jim Gray) the most expensive part of computing is the cost of moving data around. It therefore makes sense that you should be running your applications wherever your data resides: if your data is in the Cloud, it can be argued that you should be running your applications there as well – especially apps that frequently have to access a shared set of back-end data.

Although these are still valid points, they do not imply that Office 365 can’t bring significant value to organizations of all sizes. There is a case to be made for Office 365, so let’s take a closer look at it:

First, Office 365 is, in most cases, the most cost-effective way to license the Office applications, especially if you have fewer than 300 users (which is the cut-off point between the “Business” and “Enterprise” O365 license plans). Consider that a volume license for Office 2013 Pro Plus without Software Assurance under the “Open Business” license plan costs roughly $500. The Office 365 Business plan – which gets you just the Office apps without the on-line services – costs $8.25/month. If you do the math, you’ll see that $500 would cover the subscription cost for five years.

But wait – that’s really not an apples-to-apples comparison, because with O365 you always have access to the latest version of Office. So we should really be comparing the O365 subscription cost to the volume license price of Office with Software Assurance, which, under the Open Business plan, is roughly $800 for the initial purchase, which includes two years of S.A., and $295 every two years after that to keep the S.A. in place. Total four-year cost under Open Business: $1,095. Total four-cost under the Office 365 Business plan: $396. Heck, even the Enterprise E3 plan (at $20/month) is only $960 over four years.

But (at the risk of sounding like a late-night cable TV commercial) that’s still not all! Office 365 allows each user to install the Office applications on up to five different PCs or Macs and up to five tablets and five smart phones. This is the closest Microsoft has ever come to per-user licensing for desktop applications, and in our increasingly mobile world where nearly everyone has multiple client devices, it’s an extremely attractive license model.

Second, at a price point that is still less than comparable volume licensing over a four-year period, you can also get Microsoft Hosted Exchange, Hosted SharePoint, OneDrive for Business, Hosted Lync for secure instant messaging and Web conferencing, and (depending on the plan) unlimited email archiving and eDiscovery tools such as the ability to put users and/or SharePoint document libraries on discovery hold and conduct global searches across your entire organization for relevant Exchange, Lync, and SharePoint data. This can make the value proposition even more compelling. Heck, just the hosted Exchange part is pretty compelling. Why in the world would you want to maintain your own Exchange server infrastructure these days if you could possibly avoid it?

So what’s not to like?

Well, for one thing, email retention in Office 365 is not easy and intuitive. As we discussed in our recent blog series on eDiscovery, when an Outlook user empties the Deleted Items folder, or deletes a single item from it, or uses Shift+Delete on an item in another folder (which bypasses the Deleted Items folder), that item gets moved to the “Deletions” subfolder in a hidden “Recoverable Items” folder on the Exchange server. As the blog series explains, these items can still be retrieved by the user as long as they haven’t been purged. By default, they will be purged after two weeks. Microsoft’s Hosted Exchange service allows you to extend that period (the “Deleted Items Retention Period”), but only to a maximum of 30 days – whereas if you are running your own Exchange server, you can extend the period to several years.

But the same tools that allow a user to retrieve items from the Deletions subfolder will also allow a user to permanently purge items from that subfolder. And once an item is purged from the Deletions subfolder – whether explicitly by the user or by the expiration of the Deleted Items Retention Period – that item is gone forever. The only way to prevent this from happening is to put the user on Discovery Hold (assuming you’ve subscribed to a plan which allows you to put users on Discovery Hold), and, unfortunately, there is currently no way to do a bulk operation in O365 to put multiple users on Discovery Hold – you must laboriously do it one user at a time. And if you forget to do it when you create a new user, you run the risk of having that user’s email messages permanently deleted (whether accidentally or deliberately) with no ability to recover them if, Heaven forbid, you ever find yourself embroiled in an eDiscovery action.

One way around this is to couple your Office 365 plan with a third-party archiving tool, such as Mimecast. Although this obviously adds expense, it also adds another layer of malware filtering, an unlimited archive that the user cannot alter, a search function that integrates gracefully into Outlook, and an email continuity function that allows you to send/receive email directly via a Mimecast Web interface if the Office 365 Hosted Exchange service is ever unavailable. You can also use a tool like eFolder’s CloudFinder to back up your entire suite of Office 365 data – documents as well as email messages.

And then there’s OneDrive. You might be able, with a whole lot of business process re-engineering, to figure out how to move all of your file storage into Office 365’s Hosted SharePoint offering. Of course, there would then be no way to access those files unless you’re on-line. Hence the explosive growth in the business-class cloud file synchronization market – where you have a local folder (or multiple local folders) that automatically synchronizes with a cloud file repository, giving you the ability to work off-line and, provided you’ve saved your files in the right folder, synchronize those files to the cloud repository the next time you connect to the Internet. Microsoft’s entry in this field is OneDrive for Business…but there is a rather serious limitation in OneDrive for Business as it exists today.

O365’s 1 Tb of Cloud Storage per user sounds like more than you would ever need. But what you may not know is that there is a limit of 20,000 “items” per user (both a folder and a file within that folder are “items”). You’d be surprised at how fast you can reach that limit. For example, there are three folders on my laptop where all of my important work-related files are stored. One of those folders contains files that also need to be accessible by several other people in the organization. The aggregate storage consumed by those three folders is only about 5 Gb – but there are 18,333 files and subfolders in those three folders. If I was trying to use OneDrive for Business to synchronize all those files to the Cloud, I would probably be less than six months away from exceeding the 20,000 item limit.

Could I go through those folders and delete a lot of stuff I no longer need, or archive them off to, say, a USB drive? Sure I could – and I try to do that periodically. I dare say that you probably also have a lot of files hanging around on your systems that you no longer need. But it takes time to do that grooming – and what’s the most precious resource that most of us never have enough of? Yep, time. My solution is to use Anchor Works (now owned by eFolder) to synchronize that data to a Cloud repository.

The bottom line is that, while Office 365 still may not be a complete solution that will let you move your business entirely to the cloud and get out of the business of supporting on-prem servers, it can be a valuable component of a complete solution. As with so many things in IT, there is not necessarily a single “right” way to do anything. There are multiple approaches, each with pros and cons, and the challenge is to select the right combination of services for a particular business need. And if you use the Office Suite at all, or if you like Exchange as an email server platform, Office 365 probably makes sense for you – it’s just a matter of which plan to choose.

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