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Changes to Microsoft Office licenses rub IT the wrong way

Business versions of Skype, OneDrive and Outlook won't be part of on-premises Microsoft Office licenses, leaving those shops looking for alternatives.

Changes to the software included in perpetual Microsoft Office licenses could push some organizations to use competing products.

Starting Oct. 13, 2020, organizations with Office 2010, 2013 and 2016 will not be able to access business versions of Microsoft Outlook, Skype or OneDrive. Those services will require an Office 365 subscription, which raises cost and cloud access concerns among IT professionals.

"I fear this move on Microsoft's part may cost them some small-business customers," said Logan Rosenstiel, systems administrator at Rivermark Community Credit Union in Beaverton, Ore., which uses Office 2013.

One such customer is California's Bear Valley Community Healthcare District, which runs Office 2007 and 2010.

"They're going to lose me," said IT director Jon Booth.

'I don't trust them'

Over time, subscriptions to Office 365 are more expensive than one-time Microsoft Office licenses, and that is what many smaller organizations want to avoid, Booth said. Most of all, the lack of options doesn't sit well. Microsoft is taking a "my-way-or-the-highway" approach to this change when, in the past, the company has been more flexible, Booth said.

They're going to lose me.
Jon BoothIT director, Bear Valley Community Healthcare District

"They are trying to force people out of their comfort zone," he said. "Microsoft is making it easier and easier to make the switch [to competing products]."

Bear Valley planned to buy Office 2016 and even included it in this year's IT budget, but Booth said he is now hesitant to move forward with the purchase.

"Microsoft is becoming less of an innovator and more of an accounting firm," Booth said. "They make moves to make them the most money. I don't trust them right now, and I was a big supporter for a long time."

Booth said he is considering switching from Office to Apache OpenOffice or Google G Suite. Other holders of perpetual Microsoft Office licenses will face the same choice.

"Over the next three years, SMBs that use stand-alone apps, if they know they will have to go to cloud, might decide to move on and implement an alternative platform like Google G Suite," said Jack Narcotta, analyst at Technology Business Research in Hampton, N.H. 

Concerns about cloud are an issue, however. Some organizations don't want to be forced to make continuous payments to access their own data, Rosenstiel said.

"Many small businesses I've worked with have resisted the move to cloud services, as they fear having their data held hostage," he said.

What's the point?

By adopting Microsoft Office 365 ProPlus, organizations receive security patches, new features and other Office updates as soon as they're available. Office 365 customers will also receive two large updates a year in March and September, similar to the way Windows 10 updates work.

This approach is better than what typically goes on in organizations that don't have a vigilant IT staff to consistently update apps, Narcotta said.

Additionally, Microsoft will likely offer a migration path for on-premises Office shops to move to the cloud, said Allen Falcon, CEO of Cumulus Global, a Microsoft partner in Westborough, Mass.

"I also expect future versions of Outlook, Skype for Business and OneDrive for Business will be thinner, [meaning] less on the desktop and more running in the cloud," he said.

Next Steps

Compare Office 2016 with Office 365

How to migrate to Office 365

How Apps for Work stacks up against Office 365

Dig Deeper on Enterprise software

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What do you think about Microsoft's changes to its Office licensing?
Can you elaborate on what is meant by not being able to "access" Outlook? If I already own Office 2013 why would I not be able to "access" it after 10-13-2020?
I know this is not normal, be we as an organisation have gone to great lengths to avoid the cloud for primary operations, we only use the cloud for tertiary backup in case of total disaster, as an IT shop we also advise our clients the same way this is for both financial TCO and practical reasons.

We had no issues we not been able to overcome and frankly to have core operations on ones business in someone’s else pocket is madness no matter the reason.
I'm confused. What is meant by "organizations with Office 2010, 2013 and 2016 will not be able to access business versions of Microsoft Outlook, Skype or OneDrive." I'm assuming that means that users will not be able to purchase perpetual licenses of these products and that they will only be available through an Office 365 subscription. I also assume that an existing installation of Outlook will still continue to function after 10/13/2020. Is that also correct? 
As far as I understand: Yes. But beware of the support life cycles, one thing is that your license agreement allows to use it, another if it would be wise to use it once you won't get any more security patches.
I'm not a big fan of this trend. Could be a hard sell for Enterprise customers. Alternative options will certainly become viable options for those organizations that choose not to put their data in the cloud.
If users have an E1, can they still use the perpetual office 2013/2016 to connect to SfB/outlook? Or do they need an E3 with o365 only? thanks,
Again, as far as I understand: As long as your Office 2013/2016 can use the same protocol to access the SfB or Exchange Online Services (i.e. MS does not cancel O365 support for it) everything will be fine. For E-Mail the same is true for your ActiceSync connected devices like tablets and smartphones and that's also the reason why changing this in an incompatible way is not very probable to happen over the next years. But MS could stop support for older versions of client sw and most probably will do at least when extended support phase for a client product has ended.
If this truly is MS policy, they have just divorced themselves from individuals and businesses that distrust the cloud. Linux on the desktop has been getting more and more attractive. I guess there is going to be quite an exodus from the MS camp. The problem is that small business become big business. Those new SMBs will not be tethered to MS anymore. By default they will be looking elsewhere. Sell your MS stock now.
This is more or less the question of moving to the cloud or not. But who if insecure in moving to the cloud or not would look for Google as an alternative? In fact other suppliers like for instance Adobe have been much more rigid in forcing their customers to the cloud than MS. But if you decide not to go into the cloud, which might be a good move depending on what you do and how you do it, you have to be aware you're swimming against the tide and might get forced to go with much less professionally supported alternatives.
Most of us prefer to "buy" software with a one-time payment for a perpetual lease. We only spend money when we can afford to, not when a vendor wants more! The value is simply not there to justify a perennial lease/rental arrangement.