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Productivity suite smack down: Office 365 vs. Office 2016

Microsoft's Office 2016 for the desktop might seem like the de facto option for delivering productivity apps to users, but its cloud-based cousin Office 365 offers more flexibility.

Microsoft's Office 2016 applications for the desktop are almost identical to the apps you get through Office 365. But Office 365 ratchets up the opportunity for productivity. Users can run Office applications from nearly any device, and they save files wherever it makes sense.

Microsoft Office 2016 for the desktop is an up-front purchase. It costs $229 to $399 per user, depending on the package. With Office 365, you pay a subscription fee either monthly or annually. Office 365 Business has several versions; each one adds more applications, storage capacity and features, along with an increase in cost. The basic version is Office 365 Business Essentials, which offers a 50 GB email inbox, 1 TB of online file storage and sharing, HD video conferencing and access to Office Online -- the online-only versions of Office -- for $6/month or $60/year per user. Packages become more inclusive and more expensive as you move up from the Business Essentials version.

One advantage of Office 365 vs. Office 2016 is that the cloud-based version offers predictable, easy-to-budget costs, and you can switch between Office 365 Business plans whenever you like. Once you sign up for any of the business plans, you have access to an administrative console where you manage the Office 365 account. Another benefit is that Microsoft maintains backups of files stored online, and connections to Office 365 use encryption for security. Controls are also in place to help organizations comply with the Health Insurance Portability and Accountability Act and the Family Educational Rights and Privacy Act.

Home users can sign up for Office 365 Personal. The cost is $6.99 per month or $69.99 per year. Users may install Office applications on one PC or Mac, one tablet and a Windows Phone, Apple or Android phone. They also get 1 TB of OneDrive cloud storage and 60 Skype minutes. As you might expect, signing up for and getting Office 365 Personal is much easier and straightforward than Office 365 for business; users just sign up and install the software.

System requirements and performance

When users run applications directly from the Office 365 cloud, all they need is a modern Web browser and a fast, reliable Internet connection. A slow Internet connection dramatically affects responsiveness, especially for features such as HD video conferencing. Office 2016 on the desktop requires a minimum of a 1 gigahertz x86-bit or x64-bit processor, 2 gigabytes (GB) of memory, 3 GB of available disk space and 1280 x 800 screen resolution.

If you install Office 365 applications locally, you can run them without an Internet connection for the most part. You'll still have access to the Spelling & Grammar feature and Thesaurus, for example, but you can't use the Help system.

Be aware that there are some incompatibilities when sharing files between Office 2016 and older Office versions on Windows and Mac. Office 2016 is compatible with Office 2013, but it runs Office 2010 and older files in Compatibility Mode. Converting a file or saving it as an Office 2016 file tends to clear up any issues, but not always.

Another noteworthy issue with Office 365 is the occurrence of serious errors when opening files. When a user opens an Office file -- which is typically a Word file -- the system might hang and force him to shut down. The next time the user attempts to open the same file, the "The last time you opened 'filename,' it caused a serious error" message appears. Although this issue has occurred in several generations of Office applications, it occurs with greater frequency in Office 365. Microsoft states that the problem stems from a file appearing on the disabled files list and offers instructions for removing the file from that list. But the frequent crashes and fixes it can cause are annoying and time-consuming. Office 2016 on the desktop is not subject to such problems.

Office 365 is the way to go for users who need maximum flexibility and typically have a good Internet connection, although they may need some assistance from tech support with a few kinks that need working out.

Next Steps

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This was last published in May 2016

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Which is better for your business, the desktop version of Office 2016 or Office 365?
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When collaboration is essential, we'll usually settle for Google Docs. Since we're more often likely to be onboard a flight without WiFi or hiking into places that have never heard of WiFi, some well-funded companies opt for Office 2016. The less well endowed chose one of the many free/near free alternatives. 
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To be honest, most companies I know and nave worked with do not have the luxury to keep updating their software or paying a licensing fee yearly. Most stay put unless they are forced to upgrade for a specific need or customer. Even then it may only be the users involved.. I'd be curious as to what major companies are using the latest office version. As mentioned in the other post, I think more and more may look to a free open source solution. MAny years ago we did not have a choice, today we do.
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Neither. Since both are cloud based and require an Internet Connection to work properly, and both are bandwidth greedy, we are opting out.  While we have a few people that are using Office 365 we have also discovered a compatibility issue with older versions.  We also do not like the licensing issue.
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