Views from Around the World

Recently, Osterman Research completed an assessment comparing the costs of different email systems.  While Novell sponsored the study, it’s critical to note that we had no influence on the analysis or the data gathering process.  

The study is important today for a number of reasons.  First, the number one message we hear from customers and prospects is that the reduction of costs, both capital and operating, is a key initiative in the economic downturn.  Second it calls out what we all “knew”, email is not a commodity nor is it irrelevant in our transitional consumption of social media.  For many people, email is where the day starts and where the day ends.  And that will not change anytime soon.

Some key data points are that the average user spends 152 minutes of their workday in email, nearly 30% of working time, and that those users in mid to large organizations are dealing with approximately 150 messages per day, and that assumes a good anti-spam architecture.  Email has replaced telephony as the number one means of outbound communication, with email comprising 74% of those communications.  93% of users rated email as at least important or critical to the day to day.  There is no other end user facing service with this much impact.

So if email truly is this important, why is there a perception that changing email systems or doing an implementation is trivial?  Frighteningly it comes down to assumption.  As the study finds, many organizations have NO IDEA of the real cost of operating email, and many think it’s all about the cost of the software.  They’re wrong.  The data tells us that 84% of respondents were at best somewhat confident that they had the ability to assess messaging costs.  84% aren’t even sure they know the real data.  I sure am glad these numbers aren’t acceptable guesses when launching rockets, or building nuclear power facilities.

The cost of labour is the highest expense line when an organization properly looks at email, although the amount of nickel and diming that occurs with some software models is frightening.  Cost of ownership and cost of operation are not linearly linked.  In the mean, a single GroupWise admin handles 20,800 FTE users, whereas the average Exchange shop needs a full time administrator doing nothing other than Exchange for every 1650 FTE users.  That means you need more than twelve times the number of staff with Exchange just to provide equitable service to a GroupWise installation.  And as the user count passes 5,000 the gap widens!

In a comparison of 1,000 user installations, Osterman found that GroupWise on Windows had a three year TCO of $419,024 and GroupWise on Linux had a three year TCO of $381,775.  Microsoft Exchange had a three year TCO of $1,068,212  and Lotus Domino had a three year TCO of $957,063

That means that GroupWise on Windows has a TCO over three years of just 39% of the TCO of a similar Exchange installation.  Now I, probably like you, will hear from time to time that costs are “about the same, based on licenses” or “we’re choosing to use Outlook/Exchange because of executive direction.”

I make no assertions that I know what goes through the heads of CEOs, but I’ve listened to Ron on all the quarter end calls with the analysts, and he has never said, “we’ve chosen to spend more than twice what’s necessary for similar services, shareholders be darned.”  In fact I’ll go out on the limb to suggest that it’s fiscally irresponsible to install Exchange instead of GroupWise given this data.  Are there other factors to be considered beyond those identified in the study?  A profound “maybe”.  One thing that’s for sure though.  No company in its right mind says “I want to spend more than twice what’s necessary because some executive likes Outlook better than an alternative.”  Let’s be completely fair, both Microsoft and Lotus do a good job in building their email offerings.  Let’s also be accurate and leverage the data in the findings.  You need more people to keep Exchange or Domino up and running compared to GroupWise.

And those more people?  They’re busier.  Osterman found that GroupWise customers averaged 5 minutes per month of unplanned downtime, compared to 45 minutes of unplanned downtime for Microsoft Exchange and 30 minutes of unplanned downtime for Lotus Domino.  More admin staff and more outages.  Sounds like a real good business decision doesn’t it?

I appreciate that decisions will get made, some with solid business reasons and some because “he said so”  We build an excellent email service offering.  It has the lowest total cost of ownership or if you prefer, lowest lifecycle cost, of the big three.  So when someone says “we’re going to select Exchange or Domino instead of GroupWise” I challenge you to ask the WHY question and to share the report data.  I make no guarantees that you’ll turn the deal around, but I will say that a battle unfought is a battle lost.  You’re smart people, make up your own minds.

The study is posted online at http://www.novell.com/rc/docrepository/public/1/basedocument.2009-05-08.9907690608/Comparing%20the%20Cost%20of%20Email%20Systems_en.pdf

Until next time, peace.

Ross

Over the last several months I’ve been asking senior IT execs where they see their organizations going and their greatest frustrations in getting there.  It’s been a fascinating set of conversations as you might imagine.

In addition to the usual and still consistent responses around controlling costs, reducing risk and working hard to make things simpler to use and operate the primary objective I keep hearing is that they want IT to be a Service Provider to the business.  When I ask why this is so important, I’ve learned very interesting perspectives.  One perception shared first by a CIO that I have since received considerable support for is the feeling of being less important to the business than other areas.  The phrase I heard that I appreciated most keenly was feeling like “I have to sit at the kid’s table.”  The implication is of low relevance and lower respect.  I found this disturbing because a great many senior IT execs have multiple degrees and have been leaders in other business units including finance, operations and business leadership.  Yet the IT brush paints these talented folks unfairly.

One CIO was particularly disturbed by this and has taken an alternative and very successful approach.  He shutdown all IT defined projects and banked his budget allocations.  In these times this was a very out of band decision.  He then went to his peers and asked them their business requirements to be delivered and operated by IT.  Those who were clear and specific received a business plan with service deliverables for their requirements.  Those who had no specific requirements received nothing.

In pretty darn short order, an executive meeting was called to find out what was going on.  The CIO explained his goal to be a service provider to the business and his intent to development service plans with each business unit needing the IT organization’s services.  He then offered to take little direct funding, instead proposing that the business units solicit the funding to “purchase” services from IT.  He was challenged immediately being asked if that meant that services could be purchased from externals.  To the surprise of his peers he said yes.  When his boss asked him if he was feeling well, he replied saying that if his organization could not deliver the required services, the business was best served by going outside.

Three months on a number of unique outcomes had occurred.  First, each “customer” had a documented service level agreement in place with IT with specific requirements, deliverables, bonuses and penalties.  Second, one of the challengers had arranged with IT to act as the reviewer of third party proposals to deliver some unique and specific services for which IT received funding to do the work.  Lastly, the CIO no longer felt ignored or respected less and neither did his team.  It goes to a simple concept.  His team really delivered when clear measurement and accountability was adopted, and because the service agreements were documented there was no “spec creep” because all parties had agreed on the deliverables.

Business outcomes included a reduction in third party consultants and contractors on seemingly endless projects, the ability to provide training to the IT and non-IT staff and a much tighter relationship between IT and its internal customers.

Is it all perfect?  No.  I still hear the need to provide a dashboard that coalesces the service level agreement deliverables that can be accessed by the internal customer without having to ask IT to provide it.  This of course provided the opportunity for an entry discussion on Novell’s Business Services Management offerings.  We aren’t close yet, but I wanted to share this approach with you.  The concepts have raised the level of awareness of the contribution of IT and in some cases have actually pulled more funding into projects to be delivered by IT than in the past would never have seen the light of day if only IT had been driving them.

Until next time, peace.

Ross