Office 365 is the latest incarnation of Microsoft’s Business Productivity Online Suite (BPOS) , a set of cloud computing services available from Microsoft Online Services that provides customers with hosted versions of Microsoft server applications for messaging, collaboration and productivity.
(Related: See our guide on the differences between Microsoft Office 365 and Microsoft BPOS .)
Like BPOS, Office 365 delivers messaging services via Exchange Online and collaboration services via SharePoint Online, while audio/video conferencing, IM and presence are delivered via Lync Online (formerly Office Live Meeting and Office Communications Online).
Unlike BPOS, however, Office 365 delivers services using the latest versions of Microsoft server products such as Exchange Server 2010  SP1, SharePoint Server 2010  and Lync Server 2010 . On the client side, Office 365 provides users with anywhere access to their e-mail, documents, contacts and calendar on almost any device, including PCs, Macs , Windows Phones, iPhones, Android  and BlackBerry  mobile devices. By using Office Web Apps, users can view, edit and share documents directly within a web browser.
Consider first the cost of licensing individual Microsoft server products such as Exchange Server and SharePoint Server. Add to that the cost of purchasing server-class hardware for running these products. Then factor in the ongoing cost of administering these servers, maintaining them and troubleshooting when something breaks down.
All of this can add up to a significant upfront investment. Now compare this with Office 365 pricing, which begins at $6 per user per month for small businesses (or $24 for large enterprises). If you are running a business, which would you rather choose — a large and risky upfront investment or a low monthly cost for a secure, reliable service?
How will your users perform their work if an Internet outage occurs? That's where Office 365 differs from other business productivity cloud services such as Google Apps. Office 365 integrates seamlessly with Microsoft Office installed locally on client computers, either Office 2010 or Office 2007 SP2 on PCs or Office 2011 or Office 2008 on Macs. In fact, the enterprise offering of Office 365 even includes Office Professional Plus 2010. This allows users to remain productive even when Internet connectivity is interrupted.
Can you really trust your business data on the cloud? For more than 16 years, Microsoft has been running some of the largest and most reliable online services in the world, with more than 200 cloud services, 1 billion customers and 20 million businesses worldwide. In December 2010, these services were deemed compliant with the Federal Information Security Management Act of 2002 (FISMA) , a primary security requirement for U.S. federal agencies.
With Office 365, e-mail and documents are securely stored in geo-redundant data centers located around the world and maintained by Microsoft Global Foundation Services (GFS) . This means you don't have to worry about backing up your Exchange mail store or SharePoint sites because Microsoft does it for you.
If you're already using BPOS, you may not need to do anything. Microsoft can add the new functionality in the data center. If you're still running Office 2003, you'll need to upgrade to Office 2007 SP2 or later, but you won't need to migrate any of your data. If you're currently using Office Communicator 2007, you'll need to upgrade to Lync 2010. Once Office 365 is released sometime in 2011, current BPOS users will have 12 months to pilot the system before deciding whether to upgrade.