Ever hear of the “Butterfly Effect“? The effect has to do with Chaos Theory and the way that tiny changes in an initial condition can create huge consequences later on. Proponent and Meteorologist Edward Lorenz once gave a talk entitled Does the flap of a butterfly’s wings in Brazil set off a tornado in Texas?”  His math model said yes, small, even tiny changes will, in fact, create monumental consequences later on.

I know the announcement of Office 365 was not exactly “tiny.” But I also know that a lot of IT organizations who have SharePoint® implemented on-premises are probably not thinking that it is particularly relevant to them at the moment. It’s interesting for sure, particularly for small to mid-size businesses. But if you are reading this blog on our Bamboo Nation^TM community, you have probably already invested in SharePoint deployments on-premises at your company.

You could be thinking that people have been licensing Microsoft SharePoint, Exchange, and Community servers from hosting providers for a long time, and Office 365 seems like just another flavor. After all, arguments about “hosted” versus “on-premises” feel like a type of religious war. You may be asking why you should have that fight at all when, in fact, everything is working well already. Finally, Office 365 is just the way that Microsoft is warding off Google Docs and other lesser-known cloud-based barbarians at their gate, right?

I don’t think so. Actually, I think we are all going to eventually experience something akin to the tornado in Texas that came from the flap of the Butterfly’s wing. Immediately post-announcement, there’s been some criticism in the press about what Office 365 doesn’t do relative to its on-premises MS/Office kin. Information Week’s Paul McDougall, for example, writes about the “7 Missing Features for Enterprises.” Such criticisms are factually useful as news in the short term. But they can also lull us into a kind of skepticism about the larger trends underway. Here are five directional things that I’ve been thinking about:

1. What today seems technically simple (to some – inferior) has a way of ending up as the basis of the next wave of innovation. Read The Innovator’s Dilemma for some great examples. Plenty of folks criticized Windows vs. DOS, PCs vs. Minis, Web vs. client-server applications, flash disks, Twitter and LinkedIn, and all kinds of changes to the status quo. In fact, lots of content management, records management, case management, and other legacy software providers have historically been pretty critical of SharePoint itself as “toy-like,” while it continued to siphon off its business.
2. My personal bet is that there are plenty of organizations, particularly the small and medium-sized ones that Steve Ballmer referred to in his Office 365 press announcement. However,  will be not just willing, but enthusiastic about trading-off specialized features not yet in Office 365. The trade-off is for simplicity, lower in-house costs, and better usability that Office 365 (and, yes – other offers like Google Docs) promise the world.
3. Office 365 is really just the very tip of a larger Microsoft strategy. The other key trends to watch are Azure Services and Appfabric directions, Microsoft’s migration of Office 365 onto the Azure platform, and the integration of Dynamics directly into Office 365. As these combinations unfold, an increasingly powerful and extensible platform for business applications in the cloud starts to emerge.
4. De facto standards really matter. Microsoft dominates the Office Productivity market with Microsoft Office and its SharePoint software has been one of the fastest product technology adoptions in modern history. The result, in this case, is that with the Microsoft stack, customers will be able to have both their cloud and on-premises religions at the same time and then make implementation decisions based on what’s important to them. Software versions will matter of course and those ever-present license fees that Microsoft is so interested in charging you are not going away anytime soon. But at least technically, in the long run, the religious war of on-premises vs. in the cloud will become irrelevant.
5. As part of the Office 365 launch, Microsoft showed how users can access sites and simultaneously share content from their mobile devices. For me personally, that fell into the category of “cool stuff that I’m never going to use or even think about.” But I was wrong. After thinking about it, I concluded that my mental paradigm was totally upside-down.
6. Imagine a time in the not-too-distant future when you no longer turn on your PC when you come into your office (if you actually come into an office). Instead, you simply take your smartphone off your hip, plug it into a display and keyboard, and start communicating. I personally don’t get very excited about using Word, Excel, or even Access SharePoint from some 3×5 inch piece of plastic that constantly misspells my mobile email messages. But I do start to get extremely interested when I consider that the smartphone I carry will probably become my personal computer in the years ahead. That little piece of plastic is going to need to have a way to easily plug into corporate resources. It will actually run mission-critical software applications. IT organizations are going to need to be sure it’s secure, reliable, and able to handle the load that my PC front-end to servers handle today.
7. Now imagine if your SharePoint implementation(s), no matter where they reside, were able to expand departmental end users through a wide variety of configurable and commercially available cloud applications. Imagine if end users, rather than administrators, could easily and safely configure them. Then imagine what could happen if technically savvy specialists could customize them programmatically through Azure. The image that starts to crystalize is no longer just a picture of Office 365 or even of SharePoint per se, but one of a completely new type of enterprise applications platform. A truly collaborative platform, that leverages the entire Microsoft ecosystem. It spans the cloud and on-premises environments and allows customers to implement business productivity applications. It also expands for either centralized or departmentally (or even individual users) and has the potential for unlimited scalability at a variable cost.

That’s why my thoughts go to the Butterfly Effect. Why I feel like Office 365 is just like the flapping of the Butterfly’s wings. The “Tornado in Texas” will go far beyond what we see today. It’s actually the complete reconstituting of what is possible. Also how we will think of and use enterprise software applications over the next decade.

Oh, and the way, those “commercial off-the-shelf cloud applications” are not just marketing hyperbole. We are working on them now. Go look at Bamboo’s Cloud Parts® beta. Get an idea of how Office 365 or any hosted SharePoint environment can be extended. Enhance your environment with add-on off-the-shelf software components right now. It’s in the cloud. No assembly is required.