Microsoft Office 365

The economic benefits of the SharePoint Online storage increase

On April 27th 2018 Microsoft announced that it will increase the shared storage for SharePoint Online 20 times the current limit. Today the limit is 1 TB for the tenant and per user you get another 500 MB added to the shared storage. With the increase it will still be 1 TB tenant storage but the per user storage will increase to 10 GB per user. So, what does this actually mean? Of course, there is the obvious we can store more information and content in SharePoint online? But is that the only reason for the increase?

 When you read the article of Tony Redmond (Twitter @12Knocksinna) you will see that he brings up some good points. Because SharePoint Online is the base storage of Microsoft Teams and Office 365 Groups people need more storage to keep their collaboration going. And that is absolutely a valid point, a lot of focus, both from Marketing and Field Sales at Microsoft goes into positioning Microsoft Teams and to support the growth the need for additional storage grows as well.

 The second reason is that with the increase storage, SharePoint Online becomes a very interesting option for people who are still on-premises. SharePoint Online has been a no-brainer for fileserver and smaller SharePoint farms but when we are talking about larger setups, the costs of the storage can be a significant burden on the project. Keep in mind that Microsoft has a second option to store content and run an Enterprise Content Management System, Microsoft Azure.  

 Especially when it comes to larger projects Microsoft Azure can be a valid alternative. SharePoint Online is shared software as a service platform, where you don’t have access to the base code, where you need to adjust how you do things and most importantly you need to feel comfortable with the changes Microsoft throws at you when it releases new features. Microsoft Azure is an infrastructure as a service platform where you have full control. It is like having your own environment. Of course, you need to take the infrastructure and administration side into consideration, so we aren’t really comparing apples with apples, but Enterprises are making the same comparison. But let’s focus on something that is comparable: the cost of storage. Included in this blog post is an excel sheet that will help you calculate the cost of storage in SharePoint Online and Azure Blob storage in case you were thinking about storing it on Azure. Note: prices are in list prices, so if you have an Enterprise Agreement in place or you buy storage through CSP, these numbers might be different for you.

 Let’s look at the following scenario. If you are a 5000-user company, your shared storage in SharePoint Online was 1 TB + (0.5GB * 5000) = 3524 GB or about 3.5 TB. If you have a large repository let’s say 50 TB, your storage deficit is about 46.5 TB, which could result in a financial impact of a yearly cost of $114,000 on top of the changes you need to do to your environment conversion as well. When we compare the cost with Azure the price will vary between $72,000 and $86,000 MSRP. In this case it would be better economically to go for an Azure Storage vs an increase in the SharePoint Online storage. However, with the new storage allocation you get 51024 GB. This reduces your storage deficit significantly. It also reduces your yearly cost to $422.40.

 When we would look at the same exercise for a non-Microsoft repository, the story of Azure Storage was even more compelling. The main reasons why organization do not consolidate their environment in Office 365 or a new cloud service are “Maximizing the ROI of Existing Systems”, “Disruption of the Workforce” and “Security and Control”. Read more about on the SkySync blog here. However, a lot of organization look differently at a lift and shift to Azure. They still are in control; the business ROI is still being protected and the disruption is minimal. The change in storage does bring a new compelling argument to the table when organization are considering their move to the cloud. With a lift and shift there is still yearly costs to be paid, not just for the storage but also for the VMs, maintenance, IT operations, etc. If the prohibiting factor was cost or ROI driven, the new storage setup of Microsoft might tip the balance in favor of Office 365 instead of any Azure or on-premises play.

 The storage increase might be a very much needed decision for people who are already on Office 365, but I feel very strongly that the opportunities it brings in a non-Microsoft ECM System compete cannot be underestimated.

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