Office 365 business continues to show impressive growth, although Microsoft is impressing upon partners that the real money here doesn’t come from selling subscriptions, but in integrating it into other solutions and building their own custom offerings on top.

TORONTO – At the Microsoft Worldwide Partner Conference, Office 365 occupied a featured spot – as befits one of the core solutions in Microsoft’s inventory. The messaging this year, however, was more about product momentum, and about partner opportunities in building on top of it, rather than just selling subscriptions.

Kirk Koenigsbauer, Corporate Vice President, Office 365 Client Applications, emphasized momentum in his second day keynote. He indicated that Office 365 now has 70 million commercial active users, and that it posted a 57 per cent year-over-year growth in terms of net seats added.

“Office 365 continues to be a locomotive of growth in terms of getting people into Microsoft,” said Giovanni Mezdec, General Manager of Office Partners.

Koenigsbauer introduced a very big win for the company in his keynote, bringing Facebook CIO Tim Campos on stage to discuss why Facebook is now adopting Office 365 for their 13,000 employees.

These wins, in turn, fuel partner momentum

“The vibrancy around Office from an ecosystem perspective is at its peak,” Mezdec said. “We have a 50 per cent year over year increase of partners driving monthly active users – partners with a customer active that uses Office 365 every month.”

Compared to some past years, new features and functionality in the platform components were more limited, as some of the key announcements had been made this spring. The major announcement at the show was around Skype for Business.

“Customer interest has been shifting,” Mezdec said. “While the cloud initially was about migration, now they want to use it to transform their business. We are innovating to fuel that opportunity with Office 365, and particularly Skype.

The new announcement here is the Skype Operations Framework (SOF). It’s an end-to-end planning, deployment and operations methodology for Skype for Business, which gives partners a comprehensive guide and toolset for implementing and managing a reliable, cost-effective communications service with Skype in the cloud.

“This will help partners further unlock the Office 365 opportunity,” Mezdec said. “The maturity of that voice portfolio is growing. It lets partners focused on communications expand in productivity – and vice versa – in one solution.

“Voice has a lot of interception points with legacy systems,” Mezdec added. “The SOF framework helps partners build managed service offerings around it. We have been working with partners for a while to get feedback on it, and now we have given it to everyone so all partners can learn from it.”

New security innovations – always in demand – which were added to Office 365 earlier this year, were also highlighted. Customer Lockbox allows a user to control how a Microsoft support engineer accesses their data. Office 365 Advanced Security Management, part of Microsoft’s Cloud App Security Service from last year’s Adallom acquisition, was announced in June.

“These are both things that make the product stronger,” Mezdec said. “The real opportunity from security though is for the partner to bring Office 365 into their security practice.”

This messaging – that partners need to build Office 365 into other solutions, and build other solutions on top of Office 365, was the core theme around the offering at WPC.

“We all know there has been a shift from when Office was a transactional business, but I think some people tend to think that business was more lucrative than it was,” Mezdec said. “In the transactional business, you always needed a lot of volume to make money. It was beautiful only if you brought in enough.

“Now, everybody has possibility of looking at customers’ business problems and helping customers solve those problems,” he said. “They can now take Office 365 and build on top of it, doing things like extending SharePoint into Workflow apps. Other layers of opportunity are to create a managed service offering on top, or to build a set of analytics that show how people are using it. There’s more work, but also more money to be made. I think the transition is a net plus from a partner perspective.”

Mezdec said that partners’ questions at WPC on these topics have changed significantly over the last couple of years.

“Two years ago they just wanted to know things generally,” he said. “Now they want to go deeper. They want to know how to build value added applications on top. They want to know how to ramp up fast when they expand say, from Exchange to Skype. They want to know how to create a bundle for an offering.”

Mezdec said that partner evolution in these areas is similar to the one Microsoft undertook itself.

“The transformation is not very different from what we have done as a company,” he said. “We all have to do a very similar journey.”