The Real Cost of Email
Del.icio.usRecently, 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
May 29th, 2009 at 6:26 pm
Good post, Ross. Perhaps someday soon, cost scrutiny on e-mail systems will be as important as that of the brand of coffee offered in lunchrooms.