If you’re a small business or startup, Microsoft Office 365 should be on your technology shortlist. It’s a cloud-based suite based on the world’s most popular office software that launched in late June. It will likely get small businesses and enterprises to start considering cloud software solutions if they haven’t already. Microsoft also hopes this offering can edge into the space Google Apps has had to itself for several years.

After testing the suite’s small business tools for several weeks, I’m convinced that it’s a strong option for small businesses, startups, and enterprises. It’s possibly even better for small companies than Google Apps. With a promise of 99.9% uptime, generally reasonable pricing, a deep list of features, and rich cross-application compatibility, I can see many businesses wanting to use Office 365.

Opinions are mixed on just how useful the Office 365 will be to small businesses and nimble startups. Our own Matthew Lynley made the case that startups with young personnel that grew up with social networking won’t see Office 365 as the ideal solution for them. But frequent VentureBeat columnist Peter Yared argued that Office 365 will clobber Google Apps and similar cloud software options because it has familiarity and considerably more features.

The pricing for Office 365 packages is wide-ranging, perhaps too much so for its own good. Pricing starts at $6 per user per month for small businesses under 25 people. At a step up, the cost for medium- to enterprise-size businesses ranges from $10 to $27 per user per month. This is considerably more than competitor Google Apps, which charges $5 per user per month no matter how big the company.

Office 365 pricing plans escalate when companies need to add more features. If a user needs more powerful features than the ones provided in the cloud-based Office Web Apps, the company can pay more for a monthly subscription to Office Professional Plus, which is the latest desktop version of Office. A business with under 25 employees pays $18 per user per month, while businesses with more than 25 employees pays $24 per user per month to rent the latest desktop version.

A lot of the cloud-based tools available in Office 365 were previously available under the less-catchily named Business Productivity Online Suite. Office 365 improves on those tools by updating Exchange Online and SharePoint Online to include the features of the 2010 desktop version, whereas BPOS had its software bits based on the 2007 versions.

The online services that 365 specifically offers are Exchange Online, SharePoint Online, Lync Online, and Office Web Apps. In addition, there’s a set of Web Apps, which are slightly slimmed down versions of Word, Excel, PowerPoint, and OneNote that are accessible through a web browser.

Next: The Good and The Bad of Office 365

The Good: Familiarity, features, lower costs

The biggest asset Office 365 has is its inherent familiarity. College students and businesspeople alike have been using Microsoft Office for years. Many of these people know the basic functions of Word, Excel, and PowerPoint, and understand how the programs work together.

Arguably the second most important thing about Office is the feature set. Ever tried to use Google Apps documents to do serious spreadsheet or presentation work? It’s lacking, to say the least. If I’m pounding away with advanced macros and formulas, I want Excel. If I’m doing complicated presentation, I want PowerPoint. I’m sure plenty of managers and office drones feel the same way.

Another feather in Office 365’s cap is the ability to cut costs on servers and maintenance. If your company was planning to run Exchange and SharePoint servers anyway, this solution is much more economical than managing local servers running that software. Letting Microsoft handle the management means fewer IT hassles and a smaller IT staff.

The Bad: Menus, collaboration, pricing

The biggest problem I see after spending time with 365 is how many menus and screens you have to go through to do anything. If there’s one thing Google Apps does well, it’s simplifying and unifying the process of opening programs and documents. Office 365, however, makes you slog though menu after menu to get to things. It’s something you can get used to, but it’s doesn’t feel completely refined for its purpose yet.

Second, collaboration in Office 365 isn’t as seamless as I’d like. You can’t be inside the same document as your peers and see real-time changes as they occur. A faint grey marking on the page lets you know a change has been made, but it’s not as smart as Google’s alternative. Apps lets groups of people seamlessly edit documents together in real-time, and Google was quick to point this out the day before Office 365 launched.

While inter-business audio and video calling is possible through Lync, I’d love to see true VoIP calling integrated into the system too. However, I fully expect Skype calling to be integrated into the system after Microsoft’s acquisition of the Internet communications company is approved by antitrust regulators. So it’s possible we’ll see this included in less than a year.

Another thing I have a problem with is Office 365’s pricing. There are so many price options that small businesses and enterprises may have a hard time determining the best option for them. Small businesses have two options: $6 per user per month for access to Office Web Apps or $18 per user per month for Web Apps and rented full desktop versions of Office. But for businesses more than 25 people, the pricing ranges from $10 to $27 based on a set of options. It’s more complicated than it needs to be.

Next: Walkthrough and Final Verdict

Walkthough of key features

Here are some of the basics of the Office 365 and what you’ll be seeing if you decide to give it a spin.


Office 365 Home

The main Home screen is your access point to creating new Word, Excel, PowerPoint, and OneNote documents. It also gives you links to Outlook, Calendar, and Lync, which gives you instant messaging, audio and video calling, and online meetings. The setup is simple enough to get through, and it’s fairly responsive overall.


Office 365 Admin

The Administrator panel is seen by whoever set up the account originally. From here, you can add new users, assign licenses that have been purchased, and even make minor text edits to a simple website that is connected to Office 365. It’s not hard to use this page, but once you start clicking around, there are a lot of screens to go through before finding and assigning the right options.

Team Site

Office 365 Team

The team site page lets you and your team see all the documents that have been shared within the group. You can also use the page as a message board for conversing about documents or general work matters.


Office 365 Word

The Office 365 Web Apps version of Word is sufficient to the needs of the average user. Basic formatting, fonts, spell checking and view changes are all available.


Office 365 Excel

The Web Apps version of Excel is another matter. It feels way too basic. Users can’t even create charts and graphs, among many other missing features, which really hurts its overall potential. The solution here is to buy $24 per user per month licenses for users who need serious Excel editing abilities, which gives them access to the full version of Excel on the desktop, and keep the $6 per user per month license for those who don’t.


Office 365 Outlook

Microsoft’s Outlook has been a stalwart in offices across the country for a long while. The Web Apps version of the well-known mail software works and looks good. It does everything I expected it to do without needing to install a desktop version.

Verdict: a strong package all around

Microsoft is staking out the future with Office 365, and it fits right in with the larger trend towards more cloud-based services for businesses. Microsoft is even trying to get the software in some choice hands for a serious discount, as it did with the University of Nebraska. The big M is betting that having students using the software before they go out into the world will prove handy, and the school can act as a model for other universities considering 365.

Overall, Office 365 is a strong suite that can save money and help startups by giving them the same tools major enterprises have without having to invest in dedicated SharePoint and Outlook servers. Or if you’re a small business that has been looking to provide employees with an Office suite, Office 365 provides a low-cost alternative that lets you essentially rent Office.

If you’re unsure whether Office 365 is a good fit for your startup or small business, you could always give the 30-day free trial a shot. Perhaps you test both Office 365 and Google Apps with various employees to see how they respond. I’ll bet most prefer the familiarity and feature set of Office 365.