Microsoft Office 365Customer Solution Case Study

Mining Group Facilitates Business Growth, Saves $260,000 with Office 365

OverviewCountry or Region: AustraliaIndustry: Mining and extraction

Customer ProfileLocated in the iron ore-rich Pilbara region of Western Australia with close proximity to Asia and India, Fortescue Metals Group is the world's fourth largest iron ore producer and is still growing.

Business SituationTo keep pace with the company’s rapid growth, the IT staff faced the challenge of quickly making its messaging system scalable and adding tools to help remote employees collaborate.

SolutionFortescue moved to Microsoft Office 365 to deliver a more scalable messaging service and to enable employees to better manage operations with the additional communications and collaboration capabilities.

Benefits Facilitates business growth Reduces IT administration and costs Improves agility Provides enterprise-class reliability and

security Improves productivity and team

collaboration

“With Office 365, we have enabled our existing IT staff to step out of their traditional IT silos and provide more strategic services to the business.”

Vito Forte, Chief Information Officer, Fortescue Metals Group

In 2003, Fortescue Metals Group was formed in Perth, Australia, and has established itself as one of the world’s largest iron ore producers. Faced with issues from its on-premises messaging server environment—which was not built to handle the company’s accelerated growth—the IT staff decided to move from Microsoft Exchange Server 2007 to Microsoft Office 365, which includes Microsoft Exchange Online, Microsoft Lync Online, and Microsoft SharePoint Online. Fortescue selected the Microsoft hosted solution because it believes the reliable and connected services can scale to keep pace with its projected growth, reduce IT administration and costs, and improve employee productivity and team collaboration. As a result, the IT staff can take advantage of the additional capacity to better align its services to the business.

SituationLocated in the iron ore-rich Pilbara region of Western Australia, Fortescue Metals Group formed in 2003. Since then it has established itself as the world's fourth-largest iron ore producer. In its first year of full operations in 2008, it produced 27 million metric tons of iron ore. Three years later, in 2011, the company mined, railed, and shipped 40 million metric tons of iron ore to customers in China. Over the next two years, it expects to triple in size, increasing iron ore exports by 180 percent and adding thousands of new employees and contractors.

To help the IT department keep pace with the company’s strategy of rapid growth and expansion, Fortescue hired Vito Forte as Chief Information Officer in January 2011. Forte sought to transform IT from a traditional model of managing hardware and data centers to a model of delivering technology services to increase innovation and facilitate business growth. Forte says, “IT becomes more important within our industry as we digitize more business processes, and we are expected to deliver always-on communications. We are not here to manage IT for the sake of IT. Everything IT does at Fortescue should be optimized to help our operations get quality ore on the ship and to our customers.”

For email, Fortescue managed a Microsoft Exchange Server 2007 messaging environment. The environment was not built to handle the company’s accelerated growth, which resulted in email downtime from ongoing system issues and maintenance, slow onboarding of new hires, and added costs for hardware and

storage. The IT department faced the challenge of quickly making the messaging solution scalable. Forte says, “Our Exchange Server infrastructure was built to handle 1,000 accounts. In the last year, we have added over 4,000 employees and contractors. We had to determine how to handle this scale, and we had to move fast.”

The IT staff considered upgrading to Microsoft Exchange Server 2010, but they were concerned about how much time and effort it would take for them to deploy. They were also concerned that by the time they completed the deployment, the next release of Exchange Server would be available and it would be time to upgrade again. In addition, they estimated that they would have to hire additional system administrators to manage an on-premises server environment sized to meet the company’s future growth. Forte says, “Even with the company’s planned growth, our goal is to operate successfully with a third of the headcount at an equivalent mining operation. To help control IT costs, we wanted to avoid hiring additional system administrators.”

With over 2,500 kilometers (approximately 1,550 miles) between corporate offices and the mining sites, the company also wanted to offer employees, contractors, and close partners more collaborative capabilities for issue resolution, document sharing, and team management. Fortescue did not have an organizationwide solution for real-time communications other than the phone. It used Microsoft Office SharePoint Server 2007 for its intranet portal solution, but because the IT staff spent so much time managing the messaging infrastructure,

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“With the connectivity and seamless interaction of the Office 365 services, we made it easy for employees to access the people and information they need to get to, which makes it

they did not have the capacity to deploy additional SharePoint Server solutions.

As Forte and his IT staff evaluated options, they kept raising the same questions: How could they scale their hardware and services quickly enough to keep up with business growth? How fast could they implement a solution to ensure minimal disruption to their remote workforce and 24-hour, seven-days-a-week operations? How could they ensure high availability for the new email solution? Forte says, “We could spend the time and money to do all these things on-premises, but if our function is to help get quality ore to the ship on time, we had to ask ourselves: How does managing email servers on a daily basis help our core business? It doesn't. We needed to go in a new direction.”

SolutionTo deliver a more scalable messaging service, Fortescue decided to move to the cloud-based services of Microsoft Office 365. Office 365 unites familiar Microsoft Office applications with the power of Microsoft productivity servers into one connected, online solution that includes Microsoft Exchange Online, Microsoft Lync Online, Microsoft SharePoint Online, and Microsoft Office Professional Plus. Not only did Forte and his IT staff believe that Office 365 provided Fortescue an immediate answer to its scalability problem, but they also believed that Office 365 offered the most reliable, secure, and comprehensive cloud-based solution for enterprise communications and collaboration in the marketplace. In addition, by continuing with the Exchange Server platform, they ensured a smooth transition for employees and IT staff.

“With the way Office 365 is being delivered, we believed it would offer us the simplest and most non-disruptive transition to the cloud,” says Forte. “We did not consider Google because we did not want to risk disrupting our operations by introducing something totally new to employees. Plus, this wasn’t just about email. We believe the additional communications and collaboration capabilities we’re getting from Office 365 will enable our employees to better manage our operations.”Beginning with Lync Online, Fortescue executed an aggressive migration plan to move to Office 365. The company believed Lync Online was the easiest place to start because it had no similar solution in place. Forte says, “Lync Online gave us the chance to get authentication and federation to work properly, without disrupting email.” Within 60 days of the company’s decision to move to Office 365, all 4,500 employees and contractors were using Lync Online and its real-time communications and collaboration capabilities, such as instant messaging, presence, PC-to-PC calls, conferencing, and desktop sharing. Whether at the office, shipyard, mining site, or home, employees can instantly communicate with other employees. Fortescue also enabled federation in Lync Online so its employees can easily communicate with contractors and partners who also use Lync. Forte says, “This is the way people want to communicate these days, whether they are at work or at home. By using Lync Online, we enabled our entire workforce to communicate online and in real time almost instantly and with minimal effort from our IT staff.”

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“We estimate eliminating [AU]$250,000 [US$260,000] in third-party costs in the first year due to our move to Office 365.”

Michael Alberghini, Head of IT Strategy and Operations, Fortescue Metals Group

After Fortescue completed the Lync Online deployment, it migrated the Exchange Server mailboxes to Exchange Online. At some points, it was able to migrate 600 mailbox accounts a night. With Exchange Online, the employees can still use the Microsoft Outlook messaging and collaboration client to access their inboxes and calendars. When working remotely, they can use Microsoft Outlook Web App or access Microsoft Outlook Mobile from their mobile devices. Forte says, “Because our employees still use Outlook every day, most of them did not even notice that their accounts were moved to the cloud, which is exactly what we wanted.”

Next, Fortescue will deploy SharePoint Online to help employees collaborate better using capabilities such as MySites, Team Sites, document sharing, and coauthoring. For example, the IT staff will provision a Team Site in SharePoint Online to sit outside the firewall to help project teams that include employees, contractors, and external engineering partners to collaborate on design documents and track status with project dashboards. Fortescue also plans to migrate its Office SharePoint Server 2007 intranet solution to SharePoint Online.

In addition, the company will complete its upgrade from Microsoft Office 2007 to Microsoft Office 2010 that it started before moving to Office 365. All employees can then take advantage of how Office 2010 and Office 365 interoperate by accessing capabilities such as presence, instant messaging, and desktop sharing through documents and spreadsheets. Finally, the company will continue to deploy Windows Phone 7 mobile devices to its employees.

Fortescue has approximately 650 users already using Windows Phone 7 devices to access the Office 365 online services including email, calendars, and Microsoft Lync Mobile.

Forte says, “We are happy with the smooth transition to Office 365. A measurement of this project’s success is that it’s been quiet, and quiet is a good indication that employee work has not been disrupted.”

BenefitsBy moving to Office 365, Fortescue has transformed its IT services to keep pace with company growth and focus on its core business functions. Additionally, with the seamless platform services in Office 365, Fortescue is seeing improvement in employee productivity and team collaboration. Facilitates Business GrowthFortescue more than doubled its employee and contractor count in 2011, and it continues to grow in 2012. The IT department is confident that it can keep up with business growth because they can rely on Microsoft to manage server activities, such as monitoring, patches, upgrades, disk space, and backups, at the Microsoft data centers. With the Office 365 subscription model, the company can budget for growth using predictable per user, per month costs. In addition, the company will financially benefit from kiosk-level pricing for some mining contractors, who can be quickly onboarded to Office 365 and then share PCs at the mining sites to access email through Outlook Web App.

With its previous on-premises infrastructure, the onboarding process used to take the IT staff days or weeks because,

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before they could start, they had to determine if their infrastructure could handle more data. They can now add new accounts quickly through the Office 365 administration console. Forte says, “When someone tells me we are hiring 300 people this month, I can confidently say, ‘No problem’ because we can make that happen in a day with Office 365. The speed with which we can get new employees and contractors to work effectively is fantastic.”

Reduces IT Administration and CostsBy moving to Office 365, Fortescue reduced IT administration and delivered additional services to employees without increasing IT headcount. The company believes it can continue to control IT headcount as Fortescue grows because Microsoft manages most of the administration required to run the services. With the remaining administrative tasks, Fortescue will push these activities from system administrators to the IT service desk. As a result, systems administrators can take advantage of their additional capacity to better align IT services to the business.

“We no longer need to worry about the challenges we faced with an on-premises environment, such as scalability issues, email downtime, server monitoring, and change control,” says Forte. “With Office 365, we have enabled our existing IT staff to step out of their traditional IT silos and provide more strategic services to the business.” For example, the IT staff will help employees take advantage of the collaboration capabilities in SharePoint Online, so employees can work together and with external partners, to do their jobs better and faster.

Fortescue will also reduce IT costs related to hardware, storage, and third-party software. It anticipates it will retire about 30 percent of its server hardware from its previous on-premises infrastructure. It will repurpose the rest of the hardware for other core business applications. Because Office 365 includes email archiving and antivirus/antispam capabilities, the company has removed the need to buy and maintain licenses for some third-party applications. Michael Alberghini, head of IT Strategy and Operations at Fortescue, says, “We estimate eliminating [AU]$250,000 [US$260,000] in third-party costs in the first year due to our move to Office 365.”

Improves AgilityBecause Microsoft manages upgrades and updates in Office 365, Fortescue will always receive the latest capabilities in Exchange Online, Lync Online, SharePoint Online, and Office Professional Plus, with minimal employee disruption and IT effort. Alberghini says, “We have seen the roadmap for Office 365, and we look forward to the opportunity to stay current with the product life cycle. The best part is we don't have to mobilize an IT project to determine how to migrate from one version to another. Instead, we can focus on the organizational change and how to help our employees take advantage of the newest capabilities.”

Provides Enterprise-Class Reliability and Security for Business ContinuityForte says, “As Fortescue relies more on data automation, communications, and collaboration, digital failure is not an option, which is why we trust Microsoft to keep our services online.” As a subscriber to Office 365, Fortescue takes advantage of

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“We have seen the roadmap for Office 365, and we look forward to the opportunity to stay current with the product lifecycle. The best part is we don't have to mobilize an IT project to determine how to migrate from one version to another.”

Michael Alberghini, Head of IT Strategy and Operations, Fortescue Metals Group

premium antispam and antivirus protection; georedundant data centers; 24-hours-a-day, seven-days-a-week IT-level phone support; and a financially backed, 99.9 percent uptime service level agreement. Alberghini adds, “We believe that Office 365 is inherently more secure and reliable than any on-premises environment we build ourselves, because the Microsoft business model for multitenant use is so dependent on it. We trust Microsoft to apply the very best of best practices to the Office 365 environment. As evidence, we have had no outages since we started our move to Office 365, but I can recall about a dozen outages on our on-premises infrastructure during the migration period.”

Improves Productivity and Team CollaborationWith virtually anywhere connectivity to Exchange Online and instantaneous communications in Lync Online, employees at corporate offices and mining sites can communicate better and resolve issues faster. By federating with partners, Fortescue also expects to improve team collaboration and project execution, especially for construction teams working on time-sensitive infrastructure projects. It sees these improvements in employee communications and collaboration capabilities as critical in helping reach its goals for expansion. “Using technology to collaborate didn't exist at this company until we started this process,” says Forte. “With the connectivity and seamless

interaction of the Office 365 services, we made it easy for employees to access the people and information that they need to get to, which makes it easier for them to do the things they need to do.”

Forte concludes, “Our philosophy is IT should not be in the way of our core business function, and we applied this approach to our migration to the cloud. We see Office 365 as the plumbing to enable communications and collaboration across our operations.”Microsoft Office 365Microsoft Office 365 brings together cloud versions of our most trusted communications and collaboration products—Microsoft SharePoint Online, Exchange Online, and Lync Online—with the latest version of our Office desktop suite and companion web applications for businesses of all sizes.

Office 365 helps save time and money, and it frees up valued resources. Simple to use and easy to administer, it is financially backed by a service level agreement guaranteeing 99 percent reliability. Office 365 features robust security, IT-level phone support, geo-redundancy, disaster recovery, and the business-class privacy controls and standards that you expect from a world-class service provider.

For more information about Microsoft Office 365, go to:www.office365.com

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For More InformationFor more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers in the United States and Canada who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:www.microsoft.com

For more information about Fortescue Metals Group products and services, call (61) (8) 6218 8888 or visit the website at: www.fmgl.com.au

This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.

Document published May 2012

Software and Services Microsoft Office 365− Microsoft Exchange Online− Microsoft Lync Online− Microsoft SharePoint Online

Microsoft Office− Microsoft Outlook 2010

Windows Phone 7