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Microsoft employees mark the launch of Office 365 for businesses five years ago today. (Photo by Microsoft Sweden, via Flickr.)
Microsoft employees mark the launch of Office 365 for businesses five years ago today. (Photo by Microsoft Sweden, via Flickr.)

Microsoft’s Office 365 became generally available for businesses five years ago today, and it has grown remarkably in the time since, becoming the most popular enterprise cloud service, a new report says.

An analysis of 27 million employees performed by Skyhigh Networks, a cloud security firm based in Campbell, Calif., showed that “in the last two years, Office 365 has eclipsed all other cloud providers to emerge as the most widely used enterprise cloud service by user count,” according to Skyhigh’s 14-page report.

Microsoft’s Office 365 charges users based on recurring subscriptions, with the promise of regular updates and the ability for Microsoft to take on the challenge of running related servers in the cloud. Its release five years ago was a key element of the company’s broader shift away from the traditional one-time software licensing fees that drove Microsoft’s business in the early days of the company. As Skyhigh notes in its report, “It’s all part of Satya Nadella’s vision for remaking Microsoft into a subscription company where customers rent rather than buy software.”

skyhigh
Graphic via Skyhigh Networks.

The Skyhigh analysis shows a 320-percent increase in Office 365 enterprise users from third-quarter 2015 through second-quarter 2016 to date. Though many pieces of Office 365 continue to run on the user’s desktop computer, just as they always have, one of every five corporate employees (20 percent) uses an Office 365 cloud service, up from less than 7 percent nine months ago. Those services could include, for example, the OneDrive online-storage feature or the internet-based versions of Exchange, Excel, Outlook, PowerPoint, Skype or Word that are included in some versions of Office 365 for business.

Furthermore, only 22 percent of employees have migrated to the cloud, leaving a large growth opportunity, the study noted. Some 58 percent of “sensitive” data in the cloud — including business plans, medical records and financial forecasts — is stored in Office documents, the study showed. About 30 percent is in Excel, 17 percent in Word and 10 percent in PowerPoint.

Among companies with 100 or more users, 79 percent this quarter have installed OneDrive for Business. Some 67 percent have installed Exchange Online for e-mail, calendars and contacts; and 60 percent have installed Skype of Business Online for VOIP. But actual usage of these cloud-based services remains low:  only 19 percent of workers have used OneDrive for Business, 10 percent have used Skype for Business Online and 8 percent have used Exchange Online.  Skyhigh said one reason for such low usage is that users have not yet been moved to the online versions of the products.

As long ago as March 2015, Office 365 had surpassed Google Apps for Business in the enterprise, according to Bitglass’s 2015 Cloud Security Report, its latest. Thought the underdog in 2014, Microsoft the next year more than tripled its adoption, to 25 percent penetration from 7.7 percent in 2014. Google had penetration of 23 percent in 2015, compared with 16 percent in 2014. Furthermore, over twice as many companies (13 percent vs. 29 percent) were planning to use Microsoft Office rather than Google Apps as of March 2015, Bitglass found.

Other competing online productivity suites include iWork, LibreOffice and Zoho.

Office 365 has 70 million “active” users, representing about 6 percent of its total 1.2 billion Office users, according to a second study released today, “Opportunities and Challenges for Microsoft Ecosystem Partners,” from harmon.ie.  More than 25 percent of the 212 Microsoft partners responding to that survey — including software integrators, independent software vendors and value-added resellers — said cloud migration will account for more than half their business by 2017, a 62 percent increase from last year.

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