Rob Koplowitz and I collaborated on this research.

The days of Microsoft SharePoint being only a locally installed software product are over. Microsoft's commitment to SharePoint in the cloud is evident in its massive data-center investments, its costly retrofitting of the code base to support multitenancy and access via subscription, and its emphasis on "cloud" in sales and marketing efforts. SharePoint Online's potential value is intriguing: lower costs, faster implementations, automatic upgrades, and more. The reality: Office 365/SharePoint Online are still only release two, and Microsoft usually needs three releases to get a product right. The questions you face: Will SharePoint in the cloud work for your organization? Is your organization ready to capture the benefits now? Should you wait for the proverbial release three of this Microsoft product — or should you engage now? This research answers these questions using the experiences of early SharePoint Online adopters and analysis of Microsoft's product capabilities today.

In Forrester's experience, most application development and delivery (AD&D) professionals do not fully understand either the significance or impact of SharePoint's shift into the cloud. How could they? Most have no experience with either of Microsoft's SharePoint-in-the-cloud offerings — Business Productivity Online Suite (BPOS) or its successor, the SharePoint Online component of the Office 365 suite. Those who do have experience with SharePoint in the cloud can help the rest of us begin to plan for the shift ahead — and according to them, we'll need very thorough plans to succeed.

SharePoint in the cloud has been a journey. Microsoft first committed to provide SharePoint in the cloud in late 2008 as part of BPOS. Initial customer feedback on BPOS was mixed: Early adopters who could benefit from basic collaboration sites hosted by Microsoft were happy, but many other customers struggled with the new service. Some of the issues were the result of BPOS' limitations; others were the case of "we didn't know what we didn't know" about SharePoint in the cloud, as one customer put it.

BPOS also provided valuable insight into the stark differences between cloud services and locally installed products. For Microsoft to offer SharePoint as a cloud service, it had to constrain use of the product. This was a massive change for the SharePoint community – particularly SharePoint developers — which had grown accustomed to using the product’s extensive customization facilities virtually without limitation.

With the release of Office 365, Microsoft made several improvements to SharePoint in the cloud. Specifically, Microsoft closed the functional gap between the cloud and on-premise versions of SharePoint, opened broader possibilities for custom code in the cloud, improved its processes to assess the realities of migrating from SharePoint on-premise to SharePoint Online, and significantly expanded its partner ecosystem for SharePoint in the cloud.

Microsoft releases major new versions of SharePoint every two to three years, which means SharePoint 2010/Online's successor will soon be here. And it is the proverbial Microsoft third release, which historically means a Microsoft product is finally "ready for prime time." Microsoft has revealed scant details about its plans for the next release of Office 365, but its recent actions give us clues about the product's outlines — particularly its SharePoint Online component:

  • SharePoint will embrace HTML5.
  • Office 365 and SharePoint Online will provide native mobile support.
  • Microsoft will promote SharePoint Online customization in a service-oriented architecture.

Success with SharePoint has always started with a real strategy, but this rule is doubly applicable to SharePoint in the cloud and triply important for organizations hoping to move on-premises applications into the cloud. Whether you decide to adopt SharePoint Online now or wait for the next release, your strategy should contain six elements:

  1. Make governance your first task.
  2. Determine if "vanilla" functions provide sufficient return on investment (ROI).
  3. Establish your customization strategy.
  4. Create realistic migration expectations — and a plan.
  5. Carefully evaluate threats to application response time — and potential solutions.
  6. Realistically break down your integration requirements.

Forrester clients can read the full report at this link.