Is SharePoint 2016 the Last On-Premise Version?

4th April 2016

The launch of Windows 10 in 2015 was a watershed moment for Microsoft.  It was the point at which the company fully embraced the Software as a Service (SaaS) model for their biggest product and moved away from the traditional concept of issuing new software releases to offer incremental, ongoing upgrades.

The model used by Office 365 is similar, although the recent launch of Office 2016 as a standalone product shows that the company is still committed to regular updates to their core productivity suite alongside the rolling upgrade model.

Since SharePoint 2013 was launched, there has been speculation about the point at which Microsoft would move towards SharePoint being available exclusively as SaaS. Of course the model is already available; SharePoint Online provides users with rolling updates and patches, but for now, there is still demand for an on-premise version.

However, there are a lot of indications that SharePoint 2016 will be the last major version of SharePoint to carry a number, here are some of them:

The Growth of Office 365

According to a study by Sky High, a US based cloud security firm, by August 2015, around 6.3% of organisations had migrated to Office 365 on a subscription basis.  That might not seem like a vast number but it’s hugely significant.

There are many reasons why organisations skip software upgrades: acquisition costs and the resources required for implementation being two of the biggest. As a result, the market share of the different versions of Office is quite diverse as shown in the following charts from MS Office forums:

 

According to this data, just under 2% of the users surveyed are still using Office XP – software that is almost 15 years old!

A relatively small number of the people using the service (10%) are using the latest Office 2016 version, while almost 80% of users surveyed still rely on the 2010 and 2013 versions, and why wouldn’t they?

Both Office 2010 and 2013 are still completely functional and offer the fully supported software packages that most people require. The cost of upgrading a single user can run to several hundred pounds and without a compelling reason to do so, many organisations are happy to stick with what they have.

At some point however, people will have to upgrade and the likelihood is that they’ll move to the subscription model because in most cases, Office 365 is more cost effective and provides greater flexibility.

If the trend is for businesses to skip two versions of Office and perform a slow migration once the latest version is proven to be stable, we would expect to see the move from Office 2010 to Office 365 to spike this year and if so, it could push the market share of Office 365 from 6-7% to 40%.

One factor driving the adoption of newer versions of SharePoint is the end of mainstream support for previous versions. Standard support for SharePoint 2007 from Microsoft ended in 2012, with extended support for certain organisations extended to October 2017.

This means that many businesses who are using older versions of SharePoint are doing so without support. But, the need to remain compliant with software requirements in certain industries, coupled with a growing skills gap for older versions, will certainly increase migration towards newer SharePoint releases.

Given that Office 365 is fully integrated with SharePoint Online, it makes sense that organisations on the platform are more likely to take advantage of online features and migrate away from on-premise versions of SharePoint too.

This anticipated fall in demand for an on-premise version of SharePoint, driven by an increased uptake of Office 365, reduces the incentive for Microsoft to release versions beyond SharePoint 2016.

Azure Stack & Compliance

Some of the biggest barriers for UK organisations adopting Azure as a cloud service are information security regulations; certain types of personal information must be stored in UK data centres.

This means that organisations are unable to use Microsoft’s existing Azure data centres in Amsterdam and Ireland and as such, cannot move to SharePoint Online unless they are integrated into local data centres via a hybrid cloud approach.

There are two factors that may resolve this issue:

  • Microsoft have plans to open a UK data centre in 2016 so organisations with specific information control requirements will be able to migrate to the cloud and remain compliant.
  • In lieu of a UK data centre, the availability of Azure Stack means it’s possible to create a Microsoft cloud environment in any data centre using Azure.

Together, these factors enable organisations that were historically excluded from the cloud to adopt SharePoint Online.

Security Requirements

According to a 2015 Cloud Security Alliance adoption survey of 212 large enterprises, the overwhelming IT priority was information security.  Globally, more than 65% of executives cited it as a major concern and key decision-making factor in the adoption of new technologies.

One of the biggest issues with on-premise versions of SharePoint is the vulnerability risk that they have.  When updates and patches are managed locally, rather than centrally, there is a likelihood that they will not be applied in a timely manner.

With SharePoint Online, patches can be applied centrally to increase security and ensure that all users and data are protected when a threat is discovered.

As concern around data protection increases, it’s likely that it will become a significant motivator for organisations to adopt SharePoint Online, rather than on-premise versions, particularly if this becomes a major marketing message from Microsoft.

Summary

Increasing acceptance of SaaS in organisations, coupled with the removal of barriers to adoption of cloud technologies means that the demand for on-premise versions of SharePoint beyond SharePoint 2016 is likely to be fairly limited.

From a purely economic perspective, that might be enough to discourage Microsoft from releasing a future version, however, if they do decide that SharePoint 2016 will indeed be the last on-premise version, it does not mean that businesses will be forced to upgrade.

At igroup we manage SharePoint for over 100 organisations and many of our clients are using older versions because they are highly customised and continue to be appropriate to their needs.

There is still a feature gap with SharePoint Online which means that it’s not yet suitable for all organisations to adopt, however this is closing.  While it may not yet fully match the feature list of on-premise versions, this won’t be the case for long and any arguments against adoption will narrow.

So will SharePoint 2016 be the last on-premise version of SharePoint?  At this stage, Microsoft have not publicly confirmed this is the case, but given the trends in the market and slowing demand for traditional models of buying software, we believe it’s highly likely that it will be.

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