Microsoft pays $250K for university to move to Office365

It's not uncommon for companies to offer incentives to move to their products, but this week Microsoft paid the University of Nebraska $250,000 to move to it's flagship Office 365 cloud email solution. Apparently the funds come directly from an account Microsoft maintains called the "business incentive funds" which are used directly to coax clients into their products.

Information Week reports that the University of Nebraska is currently using IBM Lotus Notes for its systems but they will now move all students and faculty to their new cloud solution in the next 12-18 months. In a FAQ on the university website, they say that the "funding will pay for some consulting and licenses to convert a large percentage of our users from Lotus Notes to Office 365" and goes on to say that "[they] will also use that funding to pay for a Microsoft Premier Support agreement covering email and Microsoft Office applications for the entire university."

However, apparently the whole university except the Medical Center will be moving across, citing issues with cloud security that does not meet standards under the Health Insurance Portability and Accountability Act.

Microsoft outbid not only IBM, which does offer a cloud based solution of some sort, but also had to outbid Google, who had already tried to sell their products to the university. The choice ultimately came down to money, with a statement from the university saying "Microsoft was able to provide a more competitive pricing structure than Google," and that the move will cut its email operating costs from $1 million down to $500,000.

Office365 was released to the public last week at multiple launch events and is Microsoft's latest attempt at taking on Google's cloud offerings for small to medium businesses, as well as enterprises.

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35 Comments

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As a former staff member at UNL (within 9 months), I know that UNL just recently switched all of the students over to live@edu accounts and that all students are currently using microsoft live accounts. Please get your facts straight...

As a student of the university of Nebraska, I know for a fact that the faculty are the only ones getting moved to this. The students are all on gmail accounts already.

HawkMan said,

Only when you don't know what you're talking about.

People can't seem to understand that all MS is doing is covering the cost for the school to change over from Lotus, any big migration to a new product has a cost, this way the School isn't paying for it. Hell, MS is doing a good thing here.

GP007 said,

People can't seem to understand that all MS is doing is covering the cost for the school to change over from Lotus, any big migration to a new product has a cost, this way the School isn't paying for it. Hell, MS is doing a good thing here.

Good for the school, not for Microsoft's reputation. Unless, of course, they pay everyone to switch, you know, to keep it fair.

MS Lose32 said,
Good for the school, not for Microsoft's reputation. Unless, of course, they pay everyone to switch, you know, to keep it fair.

Only reason they do it is because this is a school, you know, a not-for-profit organization. A business should be able to pony up the cash.

Panda X said,
Seems a little odd that Microsoft is paying people to move to their services. Isn't that a loss?

Short term yes, but with the exposure of the product to all the students and teachers long term they will make a gain.

Panda X said,
Seems a little odd that Microsoft is paying people to move to their services. Isn't that a loss?

just like subsidizing cell phones.. why is the iphone 3gs free??? because I have to pay monthly for a few years.. as soon as this school switches they will not switch away for a long time..

article said,
and that the move will cut its email operating costs from $1 million down to $500,000.

I don't think Microsoft even needed to pay them money, if they can save $500K by converting to their service.

FMH said,

I don't think Microsoft even needed to pay them money, if they can save $500K by converting to their service.

they may need money to actually shift it.. how do you know that the servers will be based in microsoft or at the university.. maybe they want their own 365 servers at the school

Last I had heard this was going to be a cloud solution. $250k most likely sweetened the deal enough to convince them to drop Lotus and forget Google.

I would choose Office 365 over Lotus Notes any day. I am also that Google is getting kicked out of these deals, they are in too much things, give others a break, gosh, nobody wants your watered mediocre garbage. Microsoft should try selling the Media Department on its Amalga Health care service and complement it with CRM by showing them they can have it their way, either on premise or in the cloud or as a hybrid solution.

Paid to move over for now, but will be paying for the services in the future eventually. Because there's a cost associated with moving from one platform to another that is never really paid back, it's usually one of many stumbling blocks to migrating to any new system.

Besides, get a user hooked now, and they'll want it in the future. It's all about the long game.

They'd already invested millions in custom developing apps for Lotus Notes and it was only getting worse. I'm glad they finally flipped the switch and came to their senses. Their Lotus Notes implementation was/is absolutely terrible.

Why is office 365 being depicted as an "email in the cloud" service? I thought it was WAY more than that. I mean, if they wanted cloud email all they had to do was get themselves a license for MS exchange with the outlook web app

Julius Caro said,
Why is office 365 being depicted as an "email in the cloud" service? I thought it was WAY more than that. I mean, if they wanted cloud email all they had to do was get themselves a license for MS exchange with the outlook web app

99% of enterprise IT customers will be buying Office 365 for the hosted Exchange. The Office web apps and hosted Sharepoint are nice bonuses that are bundled in, but neither would be a primary driver of the decision to buy Office 365.

Running Exchange on your own servers, or getting a service provider to host it, would cost more than Office 365.

Simon- said,
LOL! Of course they outbid IBM and Google... PAID to use it.
I didn't think that Office 365 was THAT bad.

What? It's extremely common for companies to bid on providing these services to institutions. This isn't much out of the ordinary.

Simon- said,
LOL! Of course they outbid IBM and Google... PAID to use it.
I didn't think that Office 365 was THAT bad.
Firstly, it's an investment and it definitely isn't out of the ordinary. Secondly, you're implying that IBM's and Google's cloud solution is "bad" too since they offered the University money as well. And finally, Office 365 isn't "bad".

What I mean is, usually competing suppliers bid for the contract by offering more and/or a lower price, but not to the point where it actually costs more than what they will receive, let alone actually paying a customer to use their solution rather than the customer using the product on it's merits.

I didn't think that Office 365 was bad either, but by the sound of this deal, the University of Nebraska not only is not willing to spend a dime on it, but also needs to paid to accept it.

I don't see anywhere in the article that IBM or Google's bids included offering to PAY the University of Nebraska to use their products, only that they offered their products without payments (and Google Apps for Education is actually FREE including support).

In the business world, this is true--but in the educational sector? No. Google does this same thing all the time, as does apple. They are willing to go to great lengths to get their software into the hands of people that will take their knowledge of it into the job market and make their preferences known to their employers. Apple gave away millions of computers to schools in the 90s, does that mean they didn't have any faith in their technology?

Simon- said,
What I mean is, usually competing suppliers bid for the contract by offering more and/or a lower price, but not to the point where it actually costs more than what they will receive, let alone actually paying a customer to use their solution rather than the customer using the product on it's merits.

I didn't think that Office 365 was bad either, but by the sound of this deal, the University of Nebraska not only is not willing to spend a dime on it, but also needs to paid to accept it.

I don't see anywhere in the article that IBM or Google's bids included offering to PAY the University of Nebraska to use their products, only that they offered their products without payments (and Google Apps for Education is actually FREE including support).

For MS it is more to do with the students and teachers, soon they will all be using Office 365 on a daily basis and it is more than possible that a certain percentage of them will like it and buy it for home use or when they leave university. So for me it is a good buisness move by MS to do it.

Simon- said,
I didn't think that Office 365 was bad either, but by the sound of this deal, the University of Nebraska not only is not willing to spend a dime on it, but also needs to paid to accept it.

That would only be true if you think close to half a million dollars a year in subscription fees is equivalent to "not willing to spend a dime."

Simon- said,
LOL! Of course they outbid IBM and Google... PAID to use it.
I didn't think that Office 365 was THAT bad.

The students will become used to it and like it, and then after they leave carry on using it and paysing MS, so they will gain more money in the future.

timmmay said,
Nice, I wonder if they'll pay me to move to it too??

UNless your have 10 000 dauthers and sons ready to embrace MS products i highly doubt it

LaP said,

UNless your have 10 000 dauthers and sons ready to embrace MS products i highly doubt it

Hmm I'll work on it ;D

timmmay said,
Nice, I wonder if they'll pay me to move to it too??
MS has to pay you to use its products. Wow! That's just desperate stuff. Now this is exactly why the stock won't go up.

Jebadiah said,
MS has to pay you to use its products. Wow! That's just desperate stuff. Now this is exactly why the stock won't go up.

New to the whole corporate bidding process are we?