Customer Adoption of Office 365 In Europe. White Paper

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1 Customer Adoption of Office 365 In Europe White Paper

2 Barracuda Customer Adoption of Office 365 In Europe 2 Barracuda recently conducted a survey of our current customers across Europe to gather their views on migrating to Office 365, and to learn from the experiences of those who have already migrated. In this white paper we summarize the results of this survey, and provide some background to set the statistics in context, as well as identifying some emerging trends for the future. Background Office 365 is Microsoft s fastest growing commercial product ever, and the rate of adoption shows no sign of slowing. Microsoft s cloud revenue (which includes Azure and CRM as well as Office 365) is now over $9 billion per year and is expected to exceed $20 billion by 2018, and the number of Office 365 subscribers doubled over the last year to over 20 million. Pretty much everyone is considering Office 365 now, says Jeffrey Mann, a research vice president at Gartner. Against this background of change and market disruption, it is important for organizations to gain an understanding of the strengths and weaknesses of Microsoft s cloud productivity suite, and to identifying the opportunities it presents. Demographics Our survey covered over 450 existing Barracuda customers across the EMEA region (Europe, the Middle East and Africa). Around 60% of these are typical midmarket organizations with between 100 and 5000 employees, and the overall survey results give a good representation of our current Barracuda customer base within the EMEA region. The organizations who responded to the survey were spread evenly across a range of industry sectors, and there were no specific trends that could be attributed to individual sectors. Market Overview To start with, we looked at how adoption of Office 365 is progressing across the EMEA region. How many organizations are migrating? Office 365 Usage 42% have moved Yes we ve been using it for more than 1 year - 23% Yes we ve been using it for less than 1 year - 19% No we are not currently using it - 58% Across our customer base, 42% of organizations have already migrated at least some of their IT operations to the Microsoft cloud, and of these, 23% have been using it for over a year and 19% have just started within the past year. These figures are a way ahead of some industry predictions, which have suggested that up to 40% of organizations worldwide will be using Office 365 by the end of 2017.

3 Barracuda Customer Adoption of Office 365 In Europe 3 This goes against the general perception that adoption of cloud services within EMEA is progressing more slowly than in the USA, but it does support Microsoft s statement that Office 365 revenues are fairly evenly split between domestic and international markets. Migration Plans 42% not currently using Office 365 have plans to migrate No plans to migrate - 58% Within the next 0-6 months - 9% Within the next 6-12 months - 13% Within the next 12+ months - 20% Those customers who have not yet migrated indicated to us that we should expect a slower rate of adoption for the future. Only a fifth of them are planning to migrate within the next twelve months, with another fifth planning to in the year after, and the rest (about 35% of our customers) have no plans at all at the moment to migrate to Office 365. Across EMEA the area that varied most significantly from this was the DACH region (Germany, Austria and Switzerland). Only 25% of organizations in that region have already moved to Office 365, and 70% of the remainder do not have any plans to move in the foreseeable future. This low adoption rate could be attributed to the strength of the economy - a survey by independent research firm Techconsult in 2015 found that countries with challenging economic conditions were more open to cloud technology adoption. However, the data sovereignty laws in Germany (which are much stricter than the rest of the EU), are likely to be a significant factor and we may see a change after Microsoft open a local Office 365 datacenter in Germany later this year which will be run by Deutsche Telekom. The other significant variance was in the Middle East and Africa where only 33% of organizations have adopted Office 365 to date. However, a further 56% indicated that they intend to migrate eventually, so this is probably just a slower rate of adoption rather than an a greater resistance to cloud services. Which cloud services are driving migration? The most widely used feature in Office 365 is Exchange Online, which manages in the cloud and removes the need for an organization to run their own Exchange mail server. Looking at those Barracuda customers which have already migrated, 88% are using Office Office 365 Features Sharepoint - 52% OneDrive for Business - 71% - 88%

4 Barracuda Customer Adoption of Office 365 In Europe to manage their , whilst 91% of those planning to adopt Office 365 will use it for . The second popular feature is SharePoint Online, which provides a wide range of capabilities including document management and collaboration, as well as workflow and content management applications. 51% of customers that have migrated to Office 365 are using SharePoint Online, whilst 55% of those planning their migration are intending to use it. OneDrive for Business is growing in popularity as Microsoft continue to make significant improvements to the service and position it as a central part of the Office 365 platform. Whilst only 40% of those planning their migration say that they intend to use OneDrive, 71% of those who have already migrated have decided to use it. Office 365 provides a wide range of other cloud services that Barracuda customers are using, including social networking and communications. The recently released Enterprise E5 plan includes a full cloud-based telephony service based on Skype for Business, so we can expect this to become a popular feature replacing existing on premises phone systems. Are customers moving everything to the cloud? We asked our EMEA customers whether they are moving all of their services to Office 365, or retaining some of them on premises in a hybrid model. Recent enhancements to Office 365 mean that it is now easier to put in place a consistent management platform that spans across both cloud and local data centers. Office 365 implementations typically take a phased approach, first moving a single complete application such as , followed in turn by other applications such as OneDrive and SharePoint until all applications are in the cloud. However some organizations are now adopting an alternative strategy of retaining some of their core productivity workload on premises. This allows them to maximize their existing investments in hardware and software, and retain critical data or applications locally, whilst supplementing these with cloud services which can be scaled up or down as needed. This approach also enables them to build confidence in the Office 365 platform whilst minimizing risk. Deployment Deployment Plans 43% Fully 57% Hybrid 34% Fully 66% Hybrid Feedback from Barracuda customers is that the early adopters are more likely to fully embrace cloud services. Of those who have already migrated to Office 365, 43% have moved all of their services to the cloud, with the rest keeping some services on premises in a hybrid model. In contrast, only 34% of those customers planning to move to Office 365 will be moving everything to the cloud.

5 Barracuda Customer Adoption of Office 365 In Europe 5 Making the decision to migrate Next we looked at how our customers made the decision to move to Office 365. Who are the decision makers? It is often suggested that the decision to migrate to Office 365 is a strategic business decision and is therefore taken at a senior or board level, but this is not borne out by the feedback from our customers. Looking at those who have already migrated, over 72% of those people involved in the decision were in an IT specific role (either an IT Director, IT Manager or IT Administrator), and in 51% of cases this person was the sole decision maker. Senior executives were consulted in a third of cases, but they were the sole decision maker in only 15% of cases, and this drops to 11% for those customers who are still planning their migration. Decision makers 50% 40% Involved in decision Sole decision maker 30% 20% 10% 0% Senior Executive IT Director IT Manager IT Admin Other What are the reasons for not migrating? Feedback from those customers who are not planning to migrate to Office 365 showed that a wide range of concerns and factors are influencing their decision. A simple no cloud policy across the organization was the biggest reason (stated by 48% of customers). This policy will have been based on a range of other underlying factors such as security and control. Also, some highly regulated industries and some specific geographies as a whole are still generally quite resistant to moving to the cloud. Data sovereignty is a concern for organizations subject to compliance regulations which mean that they need to keep their data within their own country, and away from the control of American companies such as Amazon, Google and Microsoft. In response to this we are seeing new datacenters in some countries being owned and operated locally (for instance, the Office 365 datacenters in Germany will be run by Deutsche Telekom). Reasons for not migrating We have a no cloud policy - 48% Security concerns - 44% Hassle of migration - 13% No budget - 23% Other - 30%

6 Barracuda Customer Adoption of Office 365 In Europe 6 Security and privacy concerns were the second biggest reason, quoted by 44% of customers. Many people still have concerns about privacy and security in multi-tenancy public cloud environments such as Office 365, and the issues raised by cases involving people such as Edward Snowden have supported these concerns. Cloud providers such as Microsoft are making stringent efforts to address these concerns and there is a growing body of opinion, particularly amongst security experts, that cloud services are just as secure as on premises systems, and possibly even more secure due to the level of expertise that Microsoft is demonstrating in this area. The cost of migrating to Office 365 was noted as a significant factor, with 23% of customers saying that they did not have the budget to undertake such a move at the moment. Although Office 365 does offer a long term overall reduction in ongoing costs, it does require an initial investment in a number of areas such as data migration, network infrastructure and training. The hassle of migration is another important reason, with 13% of customers stating that this was deterring them from making the move to Office 365. This situation is changing rapidly as Microsoft are making the migration process easier, and there are an increasing number of third party organizations providing tools and services to support the migration process. Other factors that were identified in the survey are mostly IT-related issues, including concerns over Internet performance, reduced control, and job security for existing IT staff. The migration process We then asked our customers in the EMEA region for their feedback on the process of migrating to Office 365. How long does migration take? The traditional view is that the migration process can be complex and lengthy, with organizations not being adequately prepared and projects often running for longer than anticipated. So we were surprised that our survey revealed the opposite. It is usually a much easier process than previously thought, with 64% of organizations reporting that their migration was completed either on time or earlier than anticipated, and 63% completing their migration within three months or less. Migration Schedule 63% fully operational within 3 months or less Less than a month to be fully operational - 38% Between 1-3 months to be fully operational - 25% Between 3-6 months to be fully operational - 19% More than 6 months - 18%

7 Barracuda Customer Adoption of Office 365 In Europe 7 Breaking this down, it is remarkable that 38% of customers were fully operational in Office 365 in under a month, with a further 25% completed in three months. Only 18% of our EMEA customers took more than six months to complete their migration and be fully operational in the cloud. Do organizations need a partner to help with migration? Almost half of those customers who have completed their migration to Office 365 did not involve an external partner in the process, however a greater percentage of those who are planning their migration in the future (67%) do intend to consult with a Value Added Reseller (VAR) or Service Provider to assist with their migration to and operation of Office 365. This supports the view that the early adopters are more likely to take the risk of managing the move themselves, whilst the more pragmatic and conservative organizations who are later in moving to Office 365 are more likely to look for a third party to support them or to give them guidance. Planned Partner involvement 67% plan to consult with a partner Microsoft themselves do provide a lot of support, including information and tips on areas such as security and network configurations, options for managing user profiles, the different approaches to data migration that are available, and how to take a phased approach using a hybrid setup. They have also provided an array of free online tools that customers can use to manage their migration. However many organizations, in particular those smaller ones that do not have a skilled IT department, will be concerned about their ability to identify and resolve any issues that arise in a timely manner without disrupting their day to day operations. So they often turn to those external organizations we mentioned earlier who can provide tools and services to support the migration, as well as being able to manage the whole migration process on behalf of the customer.

8 Barracuda Customer Adoption of Office 365 In Europe 8 Concerns with Office 365 Finally we asked our customers how well Office 365 meets their business needs in four key areas spam filtering, phishing and denial of service attacks, compliance archiving, and backup. What concerns do organizations have with Office 365? Spam filtering Phishing & DoS attacks Fully satisfied - 12% Fairly satisfied - 31% Adequately satisfied - 35% Not really satisfied - 15% Not at all satisfied - 8% Fully satisfied - 14% Fairly satisfied - 30% Adequately satisfied - 36% Not really satisfied - 15% Not at all satisfied - 6% Looking at spam filtering, the responses from customers who are planning to migrate and from those who have already migrated are very similar, with only around 13% feeling that Office 365 fully meets their needs. The majority (66%) are either fairly happy or neutral on the functionality provided by Office 365 in this area. Feedback on the protection Office 365 provides against phishing and denial of services attacks was broadly similar, with little difference between current and future adopters. Only about 15% felt that it fully meets their needs, and again the majority were either fairly happy or neutral on this topic. Compliance archiving Backup Fully satisfied - 17% Fairly satisfied - 28% Adequately satisfied - 34% Not really satisfied - 11% Not at all satisfied - 10% Fully satisfied - 20% Fairly satisfied - 23% Adequately satisfied - 28% Not really satisfied - 13% Not at all satisfied - 16% Responses from our customers on archiving for compliance gave a slightly different picture from customers before and after migration. 58% of those customers who are planning to migrate expect that Office 365 will meet their archiving needs completely or nearly so, whereas less than half of those who have already migrated (46%) are finding that this is actually the case. There is a more marked change in the feedback our customers gave us on backup before and after migration. 60% of those planning to migrate expect that Office 365 will meet their needs for backup either completely or nearly so, but this figure drops to 43% after migration, with 29% of customers rating it as only adequate and 15% telling us that it does not meet their needs at all. These concerns over security, backup and archiving are widely voiced, and Microsoft are responding to them by making incremental improvements in a number of these areas, particularly around phishing and denial of services. However these changes are unlikely to make a substantial difference to the overall perception in the short term.

9 Barracuda Customer Adoption of Office 365 In Europe 9 How are customers addressing these concerns? Despite the concerns we have just highlighted, over half of those organizations who have already moved to Office 365 (57%) have not invested in any 3rd party solutions to address these issues, and therefore seem prepared to compromise in these areas. This is in sharp contrast to feedback from those organizations still planning their move, where a significant 83% do intend to employ 3rd party solutions. Use of third party solutions Third party backup only - 11% Third party archiving only - 14% 83% intend to employ third party solutions Third party security only - 7% Combination of two solutions - 15% All three solutions - 12% Not using any third party solutions - 17% We re planning to use our own existing tools - 25% Looking across all the organizations we surveyed, only a small subset (12%) have either implemented or will be implementing 3rd party solutions across all the three areas of security, archiving and backup. A larger number will be using solutions that cover either one or two of these areas, with archiving seen as the most important, followed by backup. Finally we asked those customers who have already migrated at what point they decided to supplement Office 365 with additional 3rd party solutions. Only 16% of respondents who bought 3rd party archiving, backup or security solutions did so after migration, with the rest either buying them as part of their migration project, or using existing solutions that were already in place. We should bear in mind that since this is a survey of existing Barracuda customers, they may already have existing Barracuda products that they can continue to use with Office 365, and this may affect this statistic to some degree. Third party solutions decision timing 16% bought third party solutions after migration At time of Office 365 purchase - 21% Within 6 months of purchasing Office % More than 6 months after we purchased Office 365-4% We already had these solutions in place - 63%

10 Barracuda Customer Adoption of Office 365 In Europe 10 Conclusions Our survey confirms that adoption of Office 365 is already widespread across the Barracuda customer base and will continue progressing at a strong pace, although there are a significant number of organizations that are not considering it at this point, and adoption is slower in some cases due to specific local factors. The biggest reason for not migrating is the simple no cloud policy that some organizations have in place, with concerns over security and privacy also being a major factor, as well as concerns over the cost and hassle of migration. IT managers and directors play a key role in deciding whether to move to Office 365. This is a change from the previous perception that senior executives were the decision makers, and probably indicates the growing maturity and wide spread acceptance of cloud solutions. Organizations that have already migrated to Office 365 (the early adopters ) are more likely to have adopted a 100% cloud solution and have managed the migration themselves, whereas those still looking to migrate are more likely to adopt a hybrid solution as well as bringing in a third-party organization to assist with their migration. Migration to Office 365 is typically a much faster process than we previously thought, with many projects taking under three months, and often completed on time or earlier than planned. Most organizations have concerns over security, archiving and backup in Office 365, with only a small percentage being happy that it fully meets their needs. The majority of those that have migrated are not addressing their concerns and seemed prepared to compromise in these areas. In contrast, those organizations that are still planning their migration are more likely to consider 3rd party solutions that enhance Office 365 capabilities. About Barracuda Networks, Inc. Barracuda provides cloud-connected security and storage solutions that simplify IT. These powerful, easy-to-use, and affordable solutions are trusted by more than 150,000 organizations worldwide and are delivered in appliance, virtual appliance, cloud, and hybrid deployments. Barracuda s customer-centric business model focuses on delivering highvalue, subscription-based IT solutions that provide end-to-end network and data security. For additional information, please visit barracuda.com. Barracuda Networks and the Barracuda Networks logo are registered trademarks of Barracuda Networks, Inc. in the United States. All other names are the property of their respective owners. UK 2.0 Copyright Barracuda Networks, Inc. Barracuda Networks Brunel House Stephenson Road Houndmills Hampshire RG21 6XR, UK t: +44 (0) e: w: barracuda.com

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