The Calculus of Adding New Office 365 Functionality


If you are like most large Microsoft customers, you have either started or completed your journey to the Office 365 platform. And now you find yourself in a unique scenario commercially designed to increase your spend with every Microsoft Enterprise Agreement renewal.

As is the case with many software publishers, Microsoft’s online user brands – including Office 365, Microsoft 365, Enterprise Mobility & Security Suite and Dynamics 365 – are evolving services that routinely change and update. As this occurs, questions naturally arise: Are the routine updates to satisfy customer demand and improve user experience? Or are they simply to fuel Microsoft’s insatiable appetite for revenue?

As Microsoft introduces new online services, it typically deprecates and/or removes existing online services. While technical issues are the most common reason for the changes to its mix of online service offerings, it’s important for buyers to remember that Microsoft also may be reacting to revenue forecasts that suggest certain online services are unlikely to reach performance targets.

The collaboration area of Office 365 is where users can expect to see the most frequent changes. The re-packaging of these collaboration offerings and the subsequent integration with other related collaboration bundles have become almost-annual events. Over the past few years, enterprise buyers have dealt with the ensuing disruptions after changes to several collaboration services, such as SharePoint, Skype for Business, Yammer and MS Analytics.

Other areas ripe for potential disruption include information security and privacy. Microsoft has generated numerous offerings in these areas, many through acquisition, and routinely changes service descriptions, packaging or both. Since new services are typically not “like for like” in terms of packaging and pricing, comparing them to discontinued services is difficult and can result in confusion when Enterprise Agreements are due for renewal.

Elsewhere, other Office 365 information and user security services overlap with similarly named services that are available as discrete cloud-based Azure subscriptions. Microsoft pays close attention to these ephemeral overlaps as it weighs the consequences of maintaining multiple implementations of the same or similar service. Depending on what implementation a customer chooses, and then what Microsoft chooses later, that customer could face a potential remediation effort and additional expense to “snap to” Microsoft’s new line of services.

This problem can be further exacerbated when users design their security implementation with interdependencies across multiple, related Microsoft services, each of which vary in terms of maturity and stand the chance of being radically updated, replaced or removed if Microsoft determines it is a potential liability or a low-growth service.

These are important considerations for users adding new services, but what about the Microsoft services you already use? These also could be problematic. Microsoft is steadily progressing to a model of server-version stratification for its server applications. This means newer server applications will need to run in combination with equivalent versions for all other server dependencies. For example, Exchange 2019 must run on Windows Server 2019. If other server applications follow suit, users will face other unplanned upgrades they have not had to face in the past.

The takeaway? Customers considering new online services from Microsoft should ask probing “what if” questions. Do not assume services are guaranteed to be available indefinitely – and fully understand the maturity and the deployment of any new online service before making a commitment or buying decision.

Planning for and “hedging” against the unexpected is an important component of the contracting process with Microsoft. To limit and manage the risk profile, complex enterprises should engage with an objective advisor, such as ISG, before completing any new or renewal Microsoft Enterprise Agreement. 


About the author

Louis Pellegrino

Louis Pellegrino

Louis joined the ISG team in early 2014 after nearly 20 years with Microsoft Corporation. Louis has compiled a track record of Enterprise client success underpinned by customer focus, strategic thinking, organizational agility, problem-solving acumen and impactful knowledge transfer which has established his reputation as a Microsoft licensing expert.

During his time with Microsoft, Louis worked in both the Consulting Service Group as a Practice Manager and in the Worldwide Licensing and Pricing Group as a Director responsible for designing and negotiating Global Volume Licensing relationships. As a highly effective and influential communicator/negotiator, Louis has delivered consistent business results across both revenue and quality of service performance targets.