Cost of Ownership Analysis: Compare Your Existing Messaging Infrastructure With Google Apps
Do you know what your organization is paying for your current Exchange, Lotus Notes or Groupwise email platform? Are you currently evaluating migrating your Exchange, Lotus Notes or Groupwise email platform? If you must move off of your existing email platform, you should be able to show good return on investment (ROI) and strong economies of scale, because chances are, you will have to undergo the pain of another scheduled upgrade as vendors release new product versions every few years.
If your organization needs to migrate your existing email platform, the following information may be crucial in making an informed decision. It contains cost of ownership for Exchange, Lotus Notes and Groupwise platforms and compares them to the cost of owning a Google Apps messaging and collaboration solution. The information presented in this analysis summarizes findings from the following industry articles and white papers:
- A Novell report that compares GroupWise 7 to Exchange 2007 and examines the costs associated with migrating from Exchange 5.5 to GroupWise 7 or Exchange 2007.
- A white paper from The Radicati Group, Inc. that analyzes the total cost of ownership of a Microsoft Exchange 2003 implementation.
- A white paper from Nexus Secured Communications that analyzes the cost of ownership of Lotus Notes and Microsoft Exchange.
All of the supporting information provided in this analysis can be reviewed via the links on this page as well as by downloading a copy of the White Papers from the Radicati Group and Nexus Secured Communications on the cost of ownership for each system.
Exchange 2007 Implementation (Source: Novell)
To migrate to Exchange 2007, you must build the infrastructure, purchase the hardware, create the server roles, configure the operating system, purchase the server license(s), purchase the Exchange 2007 CAL's, purchase the Outlook client, and if you require Firewall and Antispam services you will have to purchase the optional Exchange 2007 Enterprise CAL.
Exchange 2007 Requirements
1. You need Active Directory fully deployed on its own servers with all users added.
2. You need x64-bit hardware.
3. You need Windows 2003 R2 Server x64 Standard or Enterprise operating systems.
4. You need Exchange 2007 Server Standard and/or Enterprise Edition for each Exchange Server Role.
5. You need Exchange 2007 Client Access License for each user in the Exchange 2007 system. You also need a Client Access License
... for each user in Active Directory.
6. You need the Outlook 2007 client.
7. (Optional) You might want Exchange 2007 Enterprise CAL for Unified messaging, Firewall and Antispam services.
Exchange 2007 Costs
So how does all this look when you add it up with numbers? Let's assume you have a 5,000 user environment. Let's further assume you have to build the Exchange 2007 from scratch - because you do if you are migrating from GroupWise OR from Exchange 5.5/2000/2003!
Redundancy or clustering have not been considered in the tables below. The cost of Admin and end user training have not been included in the tables below. The assumption is you already have a SAN already and all storage will be on the SAN. Prices have been provided from CDW. Special volume discounting has not been considered. The tables below provide an estimate of what it takes to build a brand new Exchange 2007 5000 user system. Click here to see the full Cost of Ownership analysis of an Exchange 2007 implementation.
| Server Function | Number Needed | Hardware Unit Price | Hardware Total Price |
| Active Directory Server | 2 | $8,712 | $17,424 |
| Exchange Client Access Server | 1 | $8,712 | $8,712 |
| Exchange Hub Transport Server | 1 | $8,712 | $8,712 |
| Exchange Mailbox Server | 3 | $14,056 | $42,168 |
| Total Hardware Price | - | - | $77,016 |
Table 1: Exchange 2007 Hardware Costs
Products | Number of Licenses Required | MSRP Per Unit Cost /
Total Required | CDW Per Unit Cost /
Total |
| 1 Exchange 2007 Enterprise Server Edition License | 5 | $3,999 / $19,995 | $3,932.99 / $19,664.95 |
| 1 Exchange Standard CAL User License | 5000 | $67 / $335,000 | $69.99 / $349,950 |
| 1 Outlook 2007 Client License | 5000 | $109.95 / $549,750 | $84.99 / $424,950 |
1 Windows 2003 Server R2 Standard (x64) Edition License
(+ 5 CAL's, 20 CAL's Total) | 4 | $999 / $3,996 | $959.99 / $3,839.96 |
1 Windows 2003 Server R2 Enterprise (x64) Edition License
(+ 25 CAL's, 75 CAL's Total) | 3 | $3,999 / $11,997 | $3,709.99 / $11,129.97 |
1 Windows Server CAL's License
(5000 CAL's needed minus 95 CAL's from server licenses) | 4905 | $39.95 / $195,954.75 | $29.99 / $147,100.95 |
| Total Price | - | $1,116,692.70 | $956,635.83 |
Table 2: Exchange 2007 Licensing Costs
GroupWise7 Implementation (Source: Novell)
If you are implementing GroupWise 7 instead of Exchange 2007 there are the same assumptions as with Exchange 2007 for a 5000 user GroupWise 7 system, new installation. You will need to purchase the hardware (x32-bit server), install eDirectory on a SUSE Linux, Windows or NetWare box where GroupWise is running, design the post office for maximum performance, purchase the GroupWise user licenses, and download the the GroupWise 7 client. The tables below list the costs of implementing a new GroupWise 7 system running on Windows 2003 R2 Servers versus running on SUSE Linux Enterprise Server 10. The cost of Admin and end user training have not been included in the tables below.
| Server Function | Number Needed | Unit Price | Total Price |
Primary Domain and One Post Office
(eDirectory for Management of GroupWise 7) | 1 | $8,363 | $8,363 |
| Post Office Domain and One Post Office | 1 | $8,363 | $8,363 |
| One Post Office | 2 | $8,363 | $16,726 |
| Gateway Domain, One Internet Access and One WebAccess Gateway | 1 | $8,363 | $8,363 |
| Total Hardware Price | - | - | $41,815 |
Table 3: GroupWise 7 Hardware Costs
Products | Number of Licenses
Required | MSRP Per Unit Cost /
Total Required | CDW Per Unit Cost /
Total |
| 1 GroupWise 7 Full License | 5000 | $143 / $715,000 | $119.99 / $599,950 |
| 1 SUSE 10 Server License | 5 | $0 | $0 |
| Total Licenses/Price | - | $715,000 | $599,950 |
Table 4: GroupWise 7 on Linux Licensing Costs
Products | Number of Licenses Required | MSRP Per Unit Cost /
Total Required | CDW Per Unit Cost /
Total |
| 1 GroupWise 7 Full License | 5000 | $143 / $715,000 | $119.99 / $599,950 |
1 Windows 2003 Server R2 Standard Edition License
(+ 5 CAL's, 20 CAL's Total) | 5 | $999 / $4,995 | $959.99 / $4,799.95 |
| Total Licenses/Price | - | $719,995 | $604,749.95 |
Table 5: GroupWise 7 on Windows 2003 Server Licensing Costs
Lotus Notes 6x & Exchange 2003 Implementation (Source: Radicati Group & Nexus Secured Communications)
Microsoft Exchange and Lotus Notes are probably the most widely deployed email systems in the world. Similar to the above examples, if you are deploying Lotus Notes 6x or Exchange 2003, you will need to build the infrastructure, purchase the hardware and software, configure each system, purchase server and/or end user license(s) and purchase additional modules or pay third party providers for Firewall and Antispam services. This analysis depicts an enterprise model providing email, calendar and group scheduling services to a user base of 20,000 users. Migration, upgrade and storage costs have not been included in the tables below.
| Description | Lotus Notes Cost | Per User Cost | Exchange Cost | Per User Cost |
| Acquisition Costs |  | | | |
| Hardware | $2,918,600 | $145.93 | $2,968,000 | $148.40 |
| Installation & Configuration | $358,800 | $17.94 | $823,000 | $41.15 |
| Maintenance Costs | $588,600 | $29.43 | $654,400 | $32.72 |
| Administration Costs | $1,860,800 | $93.04 | $510,800 | $25.54 |
| Downtime Costs | $414,600 | $20.73 | $1,394,400 | $69.72 |
| Training Costs | $43,200 | $2.16 | $22,400 | $1.12 |
| *TCO 1st Year | $5,580,600 | $279.03 | $5,710,200 | $285.51 |
| **TCO 3 Year Average | $4,416,800 | $220.84 | $4,358,600 | $217.93 |
Table 6: Lotus Notes & Exchange Enterprise Model Summary, Messaging & Collaboration Costs
*TCO Year 1 excludes maintenance but includes acquisition costs.
**TCO 3 Year Average excludes acquisition costs but includes maintenance.
Google Apps Messaging & Collaboration Implementation
Microsoft Exchange and Lotus Notes are probably the most widely deployed email systems in the world. Unlike the above examples, if you are deploying Lotus Notes 6x or Exchange 2003, you will need to build the infrastructure, purchase the hardware and software, configure each system, purchase server and/or end user license(s) and purchase additional modules or pay third party providers for Firewall and Antispam services. The following table depicts typical Google Apps license and migration costs for an enterprise with a varied number of users. Google Apps includes messaging and collaboration solutions for email, calendar and group scheduling, integrated chat, documents, spreadsheets, presentations, sites, security, anti spam and anto phishing tools.
| Description | 5,000 Users | 10,000 Users | 50,000 Users | 100,000 Users |
Google Apps Licenses
($50 Per User Per Year, Recurring) | $250,000 | $500,000 | $2,500,000 | $5,000,000 |
| Acquisition Costs | | | | |
| Hardware | $0 | $0 | $0 | $0 |
| Installation & Configuration | $0 | $0 | $0 | $0 |
| Maintenance Costs | $0 | $0 | $0 | $0 |
| Administration Costs | * | * | * | * |
| Downtime Costs | $0 | $0 | $0 | $0 |
| Storage Costs | $0 | $0 | $0 | $0 |
| Upgrade Costs | $0 | $0 | $0 | $0 |
| Training Costs | ** | ** | ** | ** |
Migration Costs
(1.25x License Costs, One Time Cost) | $312,500 | $625,000 | $3,125,000 | $6,250,000 |
| Total | $562,500 | $1,125,000 | $5,625,000 | $11,250,000 |
| Estimated Cost Savings Year 1 ($250 Per User) | $687,500 | $1,375,000 | $6,875,000 | $13,750,000 |
| Estimated Cost Savings Year 5 ($250 Per User) | $4,687,500 | $9,375,000 | $46,875,000 | $93,750,000 |
Table 7: Google Apps Messaging & Collaboration Costs
*Administration costs are significantly reduced to one part time Admin or eliminated with Google Apps.
**Training costs are included in migration costs.
Additional Resources & White Papers
Excerpts from a Network World article reveals the challenge Microsoft has converting users to Exchange 2007:
"And Microsoft is likely to have a challenge converting users to Exchange 2007. According to Microsoft officials, nearly a quarter of its users migrated off Exchange 5.5 in the past year and either went to Exchange 2003 or to a competing platform. And those users that stayed with Microsoft likely won't be upgrading in the near future even if they have Software Assurance maintenance contracts that provide access to the Exchange 2007 upgrade."
"Microsoft said it still had 16% of its installed base on Exchange 5.5, a group that would be prime candidates for an upgrade but are also being tempted by IBM/Lotus, open-source e-mail vendors and others. The rest of the Exchange user base is spread across Exchange 2000 and 2003."
Read the full article here: http://www.networkworld.com/news/2006/060106-microsoft-exchange.html
This Network World article reveals that organizations are in no rush to adopt or upgrade to Exchange 2007:
"Corporate users, partners and analysts said upgrading to Exchange Server 2007 from previous versions also may be a lengthy and painful process for companies, which may want to take a wait-and-see approach to the new software.
New hardware requirements, incompatibilities with other Microsoft software and the complexity of the product's new architecture are just a few of the issues that will make a move to Exchange 2007 from Exchange 2003 or earlier versions costly and difficult for IT administrators, said Microsoft partners and analysts.
"There are about 6,000 pages of documentation that an IT administrator will have to wade through to deploy [Exchange Server 2007], said Keith McCall, a former Exchange director at Microsoft."
Read the full article here: http://www.networkworld.com/news/2007/020307-users-analysts-no-rush-to.html
The Radicati Group, Inc. | Nexus Secured Communications |
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