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Will Office 365 draw more businesses into the cloud?

The release of Microsoft Office 365 - an integrated, cloud-based productivity suite - may encourage more businesses to consider using hosted services.

April sees the launch of Microsoft's revamped business productivity suite Office 365. The new package is the latest in a series stretching back as far as 1990 - years before the IT revolution kicked into full gear. Like previous versions of Office, it promises to help companies manage their finances and administrative affairs, while offering a variety of other functions to assist firms in areas such as sales and marketing. But the next-generation of Office - currently available in beta form - represents a significant step forward. This time, Microsoft is seeking to harness the power of the cloud to deliver an integrated, on-demand hardware and software platform.

The Software-as-a-Service offering brings together Office with a number of other Microsoft solutions including Exchange Online and SharePoint Online. Crucially, the software giant will manage the applications on behalf of the end user, reducing the IT management burden faced by enterprise users. Microsoft is planning to launch the suite in at least 40 countries around the world, and the impacts of this global launch could potentially be far reaching.

Many businesses are already choosing to embrace the hosted IT service model. A recent study conducted by Information Week revealed that 43 per cent of businesses have either embraced cloud computing or are planning to do so in the next 12 months. When questioned in 2010, just 27 per cent of businesses said they were obtaining IT services via the web. Also, Gartner's 2011 CIO study found that chief information officers view cloud investments as their number one priority for the coming year.

However, words and action are two different things. While IT leaders may plan for the adoption of new technologies such as cloud computing and virtualisation, obstacles can sometimes be put in their way. During the recession, IT investments were in many cases mothballed due to cashflow problems, and in other instances, board level interference prevented CIOs from going through with their plans. If a chief executive or managing director has concerns over issues such as cloud security, this can slow down progress and hamper efforts to embrace cost saving IT.

Perhaps the relocation of Office - a staple of the boxed, packaged IT generation - into the cloud will serve to re-emphasise the growing importance of cloud computing. Microsoft, with all its might in the software market, seemingly suspects that its tried and tested business model is becoming obsolete in the 21st century. Increased activity in the cloud sector suggests the firm is looking to move with the times, and defend its market position. As more vendors provide mainstream IT services via the web, the variety of choice for non-cloud users will diminish.

Business users are unlikely to mount much serious opposition to progress. While firms were once happy to purchase regular, hard copy software updates, the benefits of future-proofed, dynamic and evolutionary IT tools are too obvious to ignore. There appears to be little value in continuing to purchase update versions for software packages when these can be provided freely and automatically over the internet?

Not every business uses Microsoft products, and for many, the launch of Office 365 will pass unnoticed. But the move is still somewhat symbolic. Office, as a highly familiar package - a desktop IT staple for 20-odd years - is shifting to the cloud, and has the potential to take its customers with it. For those looking for a little more persuasion that cloud computing is the way forward, Microsoft may provide it through its actions. Aware of the benefits of hosted services, but ever-reluctant to embrace change, this migration persuade more companies to join the revolution.