Microsoft’s SharePoint Online Storage Increase Benefits More than Just Existing Customers

Just last month, Microsoft announced that it would increase the shared storage for SharePoint Online by 20 times the current limit. Today the limit is 1 TB for the tenant and an additional 500 MB per user. This change will increase the per-user storage to 10 GB. Is there an underlying reason for Microsoft’s increase, besides the obvious one that users can now store more information and content in SharePoint Online?

Independent consultant and Microsoft expert Tony Redmond brings up some good points about this upcoming change, scheduled to go into effect July 2018. In a recent article for Petri, Redmond writes that because SharePoint Online is the base storage for Microsoft Teams and Office 365 Groups, people need the extra allocation to keep their collaboration going. This is absolutely a valid point: a lot of focus, both from Microsoft Marketing and Field Sales, goes into positioning Microsoft Teams as the go-to service for collaboration, so additional storage is required to support these two services as they see more use.

SharePoint Online has been a no-brainer for file server and smaller SharePoint farms, but when we are talking about larger setups, the costs of the storage has sometimes posed a significant burden on the project.

Another – and much more interesting – reason for the change is that with Microsoft’s decision to increase storage, SharePoint Online becomes a much more compelling option for organizations who are still on-premises. SharePoint Online has been a no-brainer for file server and smaller SharePoint farms, but when we are talking about larger setups, the costs of the storage has sometimes posed a significant burden on the project. Keep in mind that Microsoft has had a second option to store content and run an Enterprise Content Management System: Microsoft Azure.

Especially when it comes to larger projects, Microsoft Azure has been a valid alternative. SharePoint Online is a shared Software as a Service platform. Microsoft Azure, on the other hand, is an Infrastructure as a Service platform where organizations have full control; very similar to their own, on-premises environment. Of course, by using Microsoft Azure you would need to take the infrastructure and administration side into consideration, so we aren’t really comparing apples with apples, but let’s focus on something that is comparable between the two options: the cost of storage.

Let’s look at the following scenario.

If you are a 5,000-user company, your shared storage in SharePoint Online was 1 TB + (0.5GB * 5000) = 3,524 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 have been better economically to go for an Azure Storage environment versus paying to increase your SharePoint Online storage.

However, with Microsoft’s new increased storage allocation, you get 51 TB of free storage. This reduces your storage deficit significantly. It also reduces your yearly cost to $422.40.

For an organization deploying a non-Microsoft content repository, the option of Azure Storage was even more favorable. The main reasons why organizations often do not consolidate their content management environment to Office 365 or a new cloud service are A) maximizing the ROI of their existing systems, B) preventing disruption of the workforce, and C) maintaining security and control. However, many organizations look differently at a “lift-and-shift” of their entire ECM environment to Azure. They still are in control, the business ROI is still being protected, and the disruption to the workforce is minimal.

The change in SharePoint Online storage allocation does bring a new, compelling argument to the table when organizations are considering their move to the cloud. With a lift-and-shift, there are still yearly costs to be paid: not just for their existing storage platform, but also for the VMs, maintenance, IT operations, etc. If the prohibiting factor was cost or ROI driven, this additional free storage might now tip the balance in favor of Office 365 instead of any Azure or on-premises play.

Microsoft’s storage increase will provide a nice advantage to existing customers that are already on Office 365 or were already considering a move to SharePoint Online or MS Azure. But now there will be a significant gap in the economic benefits of hosting an existing, third-party ECM system in Microsoft Azure versus going all-in on Office 365.

So, in addition to benefiting its existing and prospective customers, this change is also a very strategic move for the tech giant; the opportunity this provides for Microsoft to take out competitor ECM systems should not be underestimated.

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