Office 365 provides an alternate to hosting Microsoft’s business server applications on the client’s own data-center. It uses cloud based services to provide off-premises solutions to client side hosted versions of Lync, SharePoint and Exchange Server. Ofcourse cost is the primary advantage of this switch-over.
The exact cost savings depends on the number of users and the price plan used by the company but a more general comparison can be made. Assuming an average sized company (50-100 people), the exact cost savings are as follows:
Management Staff cost savings: it would typically require 1 to 3 people to deploy, manage and upgrade software patches if we talk about on-premises solutions. So Office 365 totally cuts this cost as all these services are provided by Microsoft itself or its partners.
Hardware cost savings: it primarily involves three costs. Acquisition cost, management cost and depreciation cost. Significant savings are made in this aspect too. On an estimated saving of about $2000-$5000 is made in terms of the initial cost of buying the hardware. As mentioned above, this is not the end, there is hardware management cost and then we all know that hardware gets depleted (rather quickly in the present era) so there is a replacement cost which occurs every few years. These costs are taken out of the equation with the use of Office 365.
Licensing cost savings: the licensing cost for Office 365 varies from $4 to $20 per user per month depending on the features, number of users and the overall requirements and feature set that a particular organization requires. In general, the plans that Microsoft have devised for small business (our current example) is $ per user per month. Assuming 50 users, the monthly cost of Office 365 would be around $300 per month. On the other hand an on-premises solution which would include Lync Server, Exchange Server and SharePoint Server would cost a whole lot more than this.
The Lync server 2010 enterprise edition costs around $4000, this does not include the cost for CAL which is around $107(applicable separately for all the OS on which it is installed). Next we talk about the Exchange Server which again cost around $4050 and the CAL pricing is $110. As mentioned above, multiply it with the number of workstations and one can well imagine the where the cost would go. These costs do not yet include the above mentioned hardware costs which has separate overheads. Most importantly, one would also require the expertise of some deployment expert for the initial setup who would help guide the data center staff and that would incur some extra cost too. These are strictly the monetary advantages that Office 365 provides over on-premises solutions, other advantages like the need for intranet to perform your job is no longer a requirement and there are numerous other issues likes this that make it the ultimate option.