Q&A: Microsoft's Tom Rizzo Gives Partners the Skinny on Office 365

Microsoft's Online Services Director explains how Office 365 fits into the partner ecosystem, and how the transition from BPOS to Office 365 will work.

For partners, the transition from selling the Microsoft Business Productivity Online Suite to Office 365 will involve a lot of moving pieces. As senior director of online services for Microsoft, Tom Rizzo is in a good position to help partners make sense of those details. Rizzo is pounding the pavement talking up his company's next big cloud offering: Office 365. With the product released to beta this month, Rizzo has been meeting with analysts and the press to explain the next generation of Microsoft's online productivity offering. In part one of his interview with Redmond Channel Partner magazine, Rizzo talks about the implications of Office 365 on Microsoft's partner ecosystem and describes how the transition from BPOS to Office 365 is supposed to work.

How's the Office 365 beta going?
Over 2,000 organizations sign up every day for the beta, it is a limited beta. We don't provision them immediately as we sign them up, it is staged over time. We do offer different editions through the beta, so we have Office 365 for Small Business and we also have Office 365 for Enterprise. When you sign up for the beta you can decide which editions you want; you can try multiple editions. Those organizations can provision multiple users typically 10 or 15 or 20 users to try all the different services inside of the actual beta. We continue to have good momentum on the BPOS side of the house.

Does BPOS go away?
Over time. We are giving customers and partners a year transition time. We won't immediately flip the bit on them where they have to start using the new stuff. They can plan out their transitions to the new service.


Tom Rizzo, Microsoft Senior Director of Online Services (Photo courtesy of Microsoft Corp.)

What happens after the transition?
They have to move to the new service, we can't run both forever but unlike the competitors in this space, we don’t require you immediately to upgrade to the new stuff. You have a year to figure out your plan, train your users and then upgrade over time. Once we get the last person off and transitioned, we will eventually shut down the BPOS service.

What types of migrations will customers and partners have to go through?
It will depend on which pieces of the product set that you're using, whether you're using email, like in Exchange, or whether you're using SharePoint or whether you're using OCS [Office Communications Server] or Live Meeting or that sort of stuff. It also depends on whether you're all online or you've got a hybrid sort of solution that you're running where you've got some online and some on-premises. It is an upgrade. It will be pretty seamless for customers and partners.

Obviously if you did a lot of customization on SharePoint and those sorts of things, you'll want to test that. With email it's pretty straightforward. If you did a lot of customization on SharePoint where you built custom sites and maybe uploaded some code and that sort of thing, you definitely will want to test that before you move it over but we provide guidance and tools on helping you make that transition.

What kind of feedback have you gotten so far from customers?
There's lots of excitement. Obviously the 2010 product set is interesting for folks just from the value of the 2010 new feature set. Some of the things that we hear that excites both customers and partners is obviously a bunch of new Exchange features around productivity and email. Also federation of calendaring has been one popular feature where you can take your calendaring system and federate it out to other organizations, so you can share things like free-busy, share calendar details and that sort of stuff. Usually scheduling between companies is very hard. Now with the federation it's easy. In terms of SharePoint there's a whole new set of functionality around collaboration and content management. I would say one of the primary things that people are excited about in SharePoint is the social networking features now coming to Office 365. So you get things like My Sites you get things like Activity Feeds inside of your organization, those sorts of things, so that you can have a very rich sort of Facebook for the enterprise inside of your organization.

The other piece people are excited about is Office Web Apps, so being able to run Office in the cloud through the Word Web app, Excel, PowerPoint, OneNote – that has generated a lot of interest. People have been kicking the tires on the consumer side through things like SkyDrive. With Office 365 we bring the Web apps into the cloud for the commercial side of the house.

What has partner reaction looked like?
When it comes to partners, obviously we have a bunch of partner programs that we're onboarding. There are a couple of things that partners have been very interested in. We're enhancing the partner administration console to make it easier for partners to administer on behalf of their users. So today, in BPOS we allow partners to administer on behalf of their customers. We will give even more granular permissions for partners in this space as part of Office 365. We also have our BPOS Advisor and BPOS Syndication partner programs.

Can you explain those?
With BPOS Advisor, partners don't have to commit a ton to get into the Advisor program. Think of a partner who works with medium-sized businesses who want to not have to worry about installing servers or remote administration. With the Advisor program, you have to commit to a certain number of seats and sales, it's not a hard commitment. What they do is they become the partner of record for the customer and we actually give back some of the subscription that they paid to us to the partner. So it's 18 percent the first year and it's 6 percent every year after that. The Syndication program is higher end. In the Advisor program Microsoft continues to own the billing relationship. In the Syndication program, the partner owns the customer relationship. So they get more interaction with their customers and can sell more value added services on top.

Are you considering making changes to the Advisor program so partners can bill their own customers?
Well they could move up to the Syndication program if they want to own the billing relationship. We also do allow folks to resell our technologies. It depends on what type of partner that they are. Obviously all partners want to control the relationship as much as they can but if customers come and sign up through our standard sort of portal and do direct buying through Microsoft and then add a partner on record, Microsoft will continue to own that billing relationship but partners have lots of opportunities. One of the big opportunities we see is obviously with SharePoint, being able to do value added services on top of SharePoint. The research we did, partners can make $10 to $12 of additional services on every dollar of SharePoint that we sell.

That said, do you see any changes to the Advisor program that will let partners bill customers directly? We are obviously open to feedback. We just announced the Advisor and Syndication programs, just a couple of months ago, so no changes are planned. The other thing too about our all up cloud programs is it's not just Office 365 or BPOS, a bunch of the programs also include Azure and also Dynamics CRM Online. We have over 16,000 BPOS partners today and we're signing up new ones all the time. [Editor's Note: Microsoft Worldwide Partner Group Corporate Vice President Jon Roskill recently told partners that senior executives at Microsoft are holding meetings about possible changes. See the story here.]

What percentage of those would fall under the Advisor program?
I would say probably the majority would fall under Advisor since it’s a lower bar to enter. The Syndication partners are probably your bigger partners in this space. We don’t publish that out.

Will Office 365 users have to upgrade their desktop Office software?
It depends on what you buy, because we do include Office as a subscription in some of the licenses for Office 365 so you will get the rights to Office 2010 on the desktop. We do support back to Office 2007 so you don’t have to upgrade.

Is there any plug-in or connector?
We do have one, making it easier for administration and connecting to the service, we do have a plug-in on the desktop that does a couple of things: number one is it allows single sign-on into our cloud service so that the end user doesn't have to enter in a user name and password, we automatically sign them into the service so when they open up Word, Excel, PowerPoint or Outlook, there's no sort of login. The other thing it does is it autoconfigures all of the Office Apps to connect to the service. So for example Outlook will be automatically configured for the end user to connect to Microsoft Online so they don't have to go in and type a server name or try and discover servers, it will just automatically do that.

As for the Office applications themselves, they are file-open-save. They will be [able to] write to SharePoint Online, so again they don't have to remember it's mycompany.sharepointonline.onmicrosoft.com. It's just automatically an open and save dialog. It makes it easy for administration and also configuration of desktop clients to connect to servers. Then we do some stuff in the browser to make it easier to connect up through the browser.

What's your message to partners that are concerned about disintermediation that Office 365 could bring?
I don't think there's that sort of disintermediation because it allows the partner to go in and sell additional services on top without having to worry about infrastructure deployment, and upgrade and maintenance and that sort of thing. It moves them away from some of the things they may have had to do in the past in terms of patching and that sort of stuff. Still they have to do some management on the desktop and those sorts of things, but on the server infrastructure they can move now to being a higher value add partner where there may be more margin for them on the services that they can provide. I think that will engrain them more in the customer than maybe some of the other services that they may have provided in the past. We think a lot of partners will move toward more advisory services and application customization services than maybe that sort of infrastructure services that they've provided before. That will make them hopefully more profitable partners.

How is Lync being offered in Office 365?
It will have IM, presence, Web conferencing all those sorts of things we'll provide through the Office 365 capabilities. And it's all integrated together. So if you're in Word, we will provide things like co-authoring, so you can be in Word, and be able to see other people come into that same Word document and be able to co-author with them. But the other thing too is with the Lync technologies, you'll be able to see the IM and presence of that person and be able to send IMs with them while you are co-authoring inside of Word. And if you want to start a Web conference, right from within the Office experience, it will be a seamlessly integrated IM, presence and word processing.

Check back next week for the rest of Schwartz' interview with Rizzo, which includes Rizzo's opinions on Google's enterprise cloud offering (hint: not a high opinion), and about Microsoft's plans for integrating Office 365 with Windows Azure, among other things.


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