Dogfooding IT with Office 365

Have you heard the term, "eating your own dog food?"  Microsoft manager Paul Maritz wrote an e-mail in 1988 that created the term and loosely it means... use what you sell.

I took the challenge to heart a while back and decided that if I was going to sell cloud services I needed to use them myself.  This idea really took off for me with Office 365 this year.  As I started talking to more and more clients about the benefits of cloud-based e-mail I first signed up for Business Productivity Online Services (BPOS, the precursor to Office 365) and then the beta of Office 365.  I used BPOS and the beta as test beds to learn the products and to assess their viability for my clients.  I wasn't ready to migrate to them internally yet however.

Eventually, just as Office 365 was releasing my first client wanted to get moving.  I had been talking to them about it for months.  My experience with the beta had been good so we went ahead.  I signed up for the full product and started moving over e-mail at the same time I was installing it for this client and actively selling the product to my other clients.  I figured it was time to eat my own dog food.

So, here's what happened: my client had some growing pains but Office 365 has turned out to be a good solution for them; I've had several other clients express interest and installed it for them successfully; I love using it internally and am recommending it to anyone that listens.  I did learn some lessons though:

1. Doing your research really pays off.  It did for me!  I avoided several land mines by doing a beta assessment first.
2. The entry-level Office 365 SKU (P1) doesn't come with phone support.  It isn't worth the $4/mo savings... get the E1 SKU, you won't regret it.  There's also a 50-user cap for the P1 SKU.
3. You cannot switch from the P1 to E1 SKU.  Tell me it ain't so!  This was a real bummer for me.  I still don't understand why.  I'm sure there's a good technical reason.  You have to do a full migration to move between these SKUs.
4. I know Office 365 is supposed to be easier than self-hosted Exchange, but it's no cakewalk and still requires significant technical knowledge and capability.  Your average tech-savvy client isn't going to do a migration without assistance.  Some of the migration stuff gets pretty complex.  Besides, most businesses just don't *want* to do the administration.  They have other stuff to worry about... like running their business and making money.
5. The amount of money you'll make on Office 365 (aside from ancillary services) is negligible until you get in to hundreds of  deployed licenses.  Don't plan to make your money on monthly recurring revenue.  It's a 6% share per year plus 12% if you're the initial partner of record that signs up the client.  That's a maximum of 18% the first year plus 6% per every year after.  Make your money on services, that's all I can say about it.  It's not nearly as profitable as providing a hosting service if you do that.  If you do provide hosting services plan on this being a big competitor!  Stress the customization options you offer that Office 365 does not.
6. A properly run and well maintained Exchange server doesn't take much more work to service than Office 365.  You'll still get the bulk of your work on user adds/deletes, adding new domain names and aliases and on the user-side support of Outlook.  You just don't need to monitor the hardware any more.  Oh, and you have a new administrative interface to learn.
7. Including Microsoft Office in your Office 365 subscription seems like a good idea and it may be for some clients that have very seasonal workforces.  Do the math before you decide on this course though.  You have other options for subscription based Microsoft Office, like Open Value Subscription and sometimes Services Provider License Agreement (SPLA).
8. There's no private branding or resale of Office 365.  It's 100% direct bill from Microsoft.  You don't get to mark it up.  This makes it hard to include in a fully managed service agreement by the way.  Microsoft really needs to fix this to increase adoption by Managed Service Providers (MSPs).
9. Just like any service IT WILL GO DOWN.  Make sure your clients understand that 99.9% of the possible 8,760 hours in a year equals about 9 hours per year of down time.  That's a full day and then some and it could happen at any time.  Just the same, it's likely to be much more reliable and secure than self-hosted Exchange for most small businesses and may make sense for larger ones as well.
10. It comes with some nifty additional products you may or may not use.  Bear in mind that you don't get as much of each product with each Office 365 SKU so learn your product before you sell it.  Also, don't try to sell Lync to people using Office Communication Server as an onsite VoIP unified communications system.  There's no integration with the public communications infrastructure yet.  That means for right now it's an internal-only system.  Cool, but not blow-me-outta-the-water awesome.

I like Office 365.  I've tried Google Apps and while that worked okay, Office 365 just feels more like a business solution to me.  It's been reliable and pretty easy to set up.  Most days I don't even notice I'm not hosting my own Exchange server any more.  And isn't that the idea?  Apparently, dog food ain't so bad!

Are there any best practices with regard to Office 365 that you've found and I've missed?  How many seats do you have on Office 365 and how has it been as a profit center for your business?  Let us know with your comments!