Microsoft’s BPOS: Cloud Computing’s Silver Lining?


There are two ways to look at BPOS costs: the upfront purchase price and the total cost versus conventional software. You can go to the Microsoft Online Services page, click the How to Buy tab, then, click the Calculate estimated cost link. You could put together a list of a la carte selections, but let’s just say you want five licenses for the Standard BPOS setup, which is the minimum for getting into these Microsoft apps. That’s $75 per month, or $15 per user per month.

You could tackle the titles independently. They break down like so:

Exchange Online = $10/user/month
SharePoint Online = $7.25/user/month
Office Communications Online = $2.50/user/month
Office Live Meeting = $4.50/user/month
Exchange Online Deskless Worker = $2/user/month
SharePoint Online Deskless Worker = $2/user/month
Deskless Worker Suite = $3/user/month

With BPOS Standard, you’re practically licensing Exchange Online and Office Live Meeting and getting SharePoint Online and Office Communications Online thrown in for free. How does this compare against business as usual with running on-premise applications?

How about the cost of doing everything in-house? Let’s assume you’re a really small business with 10 employees, all of whom need access to the apps you plan to develop. Windows Small Business Server 2008 is your best bet. Windows Small Business Server 2008 comes with the basic applications you’ll need to match BPOS

  • Windows Server 2008 Standard Technologies
  • MS Exchange 2007 Standard Edition
  • Windows SharePoint Services 3.0
  • MS Forefront Email Security for Exchange
  • Windows Server Update Services 3.0

Windows Small Business Server 2008 costs $1,089 with 5 Client Access Licenses (CALs). An additional five CALs will run you $385 for a total of $1,474.

You’ll also need solid server hardware to run Small Business Server 2008 on. You can build your own for less, but expect a business class small business server to run you around $2,500 with all the bells and whistles you’ll need. So, your total cost for basic software and hardware will be $3,974 or roughly $397 per user. Assuming you can get a generous five years of service out of the software and hardware, you’re talking $80 per user per year.

Sounds cheap, huh? Well, it’s certainly less than the $180 (12 * $15) per user per year you’d spend on BPOS; a saving of $100 per user per year. But, we haven’t yet accounted for the real costs of in-house application support: the higher powered PCs you’ll need to run full-blown rather than web-based apps, local backup/restore resources, the energy costs of running the systems, the cost of floor space, all server and application version migration expenses, and the ongoing expense of maintaining server and local application-based workstation hardware and software, as well as system- and network-based applications security. We can assure you that, assuming 10 users, all of this would cost much, much more than $1,000 per year or $100 per user per year. With BPOS, Microsoft absorbs all of these costs.

This is just the beginning of our explorations into the cost of in-house vs. online applications. In the next article on this subject, we'll look in detail at costs for larger organizations, especially those needing more than 75 CALs, the limit for Windows Small Business Server 2008.

  • cadder
    Web-based apps have very poor performance, even for something as simple and basic as email. Software on your own computer will always perform better and be more responsive, as well as have many more capabilities. Not to mention eliminate the continual problems almost all users have with internet access and remote server reliability. I will continue to purchase software to run on my own computer independent of web access.
  • wicko
    You know, when I first read the title, the first thing that came to my mind was "Microsoft's Big Piece of Shit". ME, is that you?
  • bob boblaw
    Can Microsoft’s Business Productivity Online Suite (BPOS) reignite our hope-strewn love affair with cloud computing?
    Who is the "our" in this? I don't recall ever liking cloud computing. Or is that thoughtcrime?
  • descendency
    cadderWeb-based apps have very poor performance, even for something as simple and basic as email.Poor application design. Actually, your own example is the worst you could have picked. ANY application you use for email could be easily written to use the same UI as a Silverlight application. While the software is not local to your machine, the computing will be. So, the only real loss will be at loading time for the application (which if done well will be minimal). The rest would be identical (as a matter of fact, if the code is written in a .NET language already, it could be nearly directly ported to Silverlight... so saying it would be identical would be dead on.). Just because the install isn't local doesn't mean the processing can't be.

    Gaming will require a major boost in internet speed before it can be offloaded successful (because sending huge amounts of textures, models, and other media just isn't possible across the average cable connection yet). The only applications that can't be ported are ones where massive data transmission is required constantly. However, applications like MS Word will be easy to port especially if the files are all stored local.

    Let me give you an example of a RIA (rich internet application) you use without even realizing it... If you do any online shopping, you use a RIA. How many desktop applications do you own for shopping on the internet? Zero? Yea. That's because when a RIA is designed well enough, the "desktop applications are better" mentality is foolish.
  • matt2k
    is it just me or does this just look like a business version of google wave?
  • Heyw00d
    I'm with wicko = BPoS = Big Piece of Shit!
  • NeatOman
    The matter of fact is simple... Right now you don't own you OS or the Software on it, and it can (has been) change at any time without your consent. That is because like stated in the article, you do not own the software and as with any license it can be taken away. This is just the next step where they want to get you to give up you physical computer and only give you a terminal.

    The reality is that there really is very little if no benefit from "cloud" computing, and the only reason no one could figure out what the benefits were is because there are non for the user.
  • lordfisch
    NeatOmanThe reality is that there really is very little if no benefit from "cloud" computing, and the only reason no one could figure out what the benefits were is because there are non for the user.Other than, you know, costing a small fraction of local versions. And never having to update. And never having to deal with a hijacked license. And not having artificial "install limits." And not carrying around countless boxes of install CDs. And not, and not, and not...
  • in order to support cloud for ALL applications and games,the internet needs to change and become at least 10 times, if not 100 times faster than it currently can.
    Also limitations of 15GB/month need to go. bandwidth limitations need to go in order to get cloud working.

    I see only cloud computing working in lower performing apps,not in games or video.
  • erichlund
    Performance and quality may be issues today, but cloud computing will mature over time. However as a user in a classified environment, and even for users in a sensitive business environment, there are times when you just don't want your information attached to the internet. That means dedicated apps. So, where the author cannot think on one reason, I certainly can.