For many enterprises, the potential cost saving of moving to Office 365 are simply not enough to offset the time and effort of migrating to a cloud-based system, says Wes Miller, an analyst at Directions on Microsoft. "The migration is costly, complex, and fragile--and risks downtime with some of the most important services within an organization," he says. "These can't be underplayed, and for a lot of organizations, it just isn't worth the pain of migration to save the money."

Miller says it typically takes more than two years to recoup any operational savings following a migration to Office 365, and pointed out that projects that risk so much near-term disruption for gains that far into the future are unlikely to be a high priority for many CIOs. "In many ways, Office 365 suffers from the fact that the on-premises services are "good enough," and the operational costs are already understood and part of the organization," Miller says.

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Another factor weighing against Office 365 that shouldn't be underestimated is that, in many cases, the operational teams that could be reduced if Exchange, SharePoint and Office are moved into the cloud are the same ones that have a role in making the decision to migrate to Office 365. Few people make decisions that are likely to make themselves redundant.

Given all of the above, Koehler-Kruener says that lack of clear functional benefits makes selling Office 365 to organizations very tough for Microsoft. "You really have to ask yourself what the added value of Office 365 is when the client already has an on-premises deployment," he says. "It's fairly easy to see the benefits of Hosted Exchange, but what exactly are the benefits of cloud-based versions of Excel, PowerPoint and Word? It's really not clear."