Detailed comparison a range of factors affecting Total Cost of Ownership (TCO) for Messaging and Collaboration products from key players like IBM, Microsoft, Oracle and Sun illustrate very interesting findings.

A detailed comparison of acquisition costs, administration costs, downtime costs and a range of other factors affecting Total Cost of Ownership (TCO) for IBM, Microsoft, Oracle and Sun illustrate very interesting findings...

Research and Markets have announced the addition of the "Messaging Total Cost of Ownership 2003 - in Enterprise and Service Provider Environments" report to their offering.

This survey of Global 1000 enterprises and Service Providers on a worldwide basis was conducted in late 2002 and early 2003, and provides an analysis and comparison of the Total Cost of Ownership of different Messaging and Collaboration platforms.

In the Global 1000 enterprise sector, 16 organizations were surveyed, deploying Messaging and Collaboration systems from IBM Lotus Software (ND6), Microsoft (Exchange 2000), Oracle (Collaboration Suite) and Sun Microsystems (Sun ONE Communications Platform).

In the Service Provider sector, 6 organizations were surveyed, deploying Messaging and Collaboration systems from Critical Path (CP Messaging Server) and Sun Microsystems (Sun ONE Communications Platform).

In addition to detailed Cost of Ownership information and comparisons for each of the messaging systems listed above, the study also provides extensive information regarding the overall messaging system infrastructure environments deployed.

For simplicitys sake, this study uses the terms Messaging" and Messaging and Collaboration" interchangeably.

The Enterprise section of the study was sponsored (in equal amounts) by IBM Lotus Software, Oracle Corporation and Sun Microsystems. While we also include a full survey and analysis of Microsoft customers, Microsoft was not a sponsor of this study.

The Service Provider section of the study was sponsored (in equal amounts) by Critical Path and Sun Microsystems.

The data and analysis in this report is based on primary research in the form of a specially designed questionnaire administered by phone, email or in person. Respondents interviewed were largely senior managers, high level administrators, telecommunications managers, and IT managers knowledgeable about messaging and collaboration within Enterprise and Service Provider organizations. A description of the survey population is provided in the Survey Profile sections of this study. The full questionnaires used for both enterprise and service provider environments are included in Appendix A and B, respectively, of this study.

All financial information shown in this study is in US$, unless explicitly noted. The TCO model used in this study makes the following assumptions regarding salaries:

1.$60/hour for Full-Time Messaging Administrators fully loaded (i.e. includes overhead, benefits, taxes etc.), or $124,800/year.
2. $60/hour for Part-Time Messaging Administrators fully loaded (i.e. includes overhead, benefits, taxes etc.), or $124,800/year. Note: Often, the salary of a Part-Time Messaging Administrator is lower than that of a Full-Time Messaging Administrator, but for simplicitys sake, our model assumes that they have the same salary.
3. $30/hour for Help Desk Staff fully loaded (i.e. includes overhead, benefits, taxes etc.), or $62,400/per year.
4. $35/hour for Messaging Users fully loaded (i.e. includes overhead, benefits, taxes etc.), or $72,800/per year.

ENTERPRISE MESSAGING TCO:

Enterprise Survey Sample:

The enterprise survey sample consists of 16 Global 1000 companies and organizations which were provided as customer references by each of the sponsoring messaging vendors reviewed: IBM Lotus Software, Oracle, and Sun Microsystems. The Microsoft customer sample was based on our own customer database. The sample profile includes:

- Global 1000 corporations (88%)
- Government organizations (12%)

The total interview sample presented in this study consists of the following:

- four (4) IBM Lotus Software ND6 customers,
- five (5) Microsoft Exchange 2000 customers,
- four (4) Oracle Collaboration Suite customers,
- three (3) Sun ONE Communications Platform customers.

The enterprise organizations surveyed (see Figure 1) represent a wide range of vertical industries including:

- banking and financial services (35%)
- education (6%)
- food services (6%)
- government (12%)
- health care (6%)
- insurance (18%)
- retail (6%)
- others (11%).

In terms of company size, the breakdown of the enterprise organizations surveyed is as follows:

- 58% of the companies surveyed are very large email deployments with more than 10,000 email users.
- 18% of the companies surveyed have between 5,000 and 10,000 email users.
- 24% of the companies surveyed have less than 5,000 users.

Enterprise TCO Model:

The Messaging and Collaboration Total Cost of Ownership Model for Enterprises has been built to assist organizations in assessing the effectiveness of their systems, reduce costs and make better decisions on how to invest time and money.

The Enterprise TCO model used in this study varies considerably from the TCO models used in similar previous studies conducted. To that effect, it is not valid to compare the final results presented in this study with those of previous studies.

The model looks at the following key components of cost:

1. Acquisition Costs - Acquisition Costs refer to the costs of purchasing all the hardware and software which makes up the Messaging and Collaboration Environment. In measuring acquisition costs within enterprise environments, we look at costs along two lines:

- Messaging and Collaboration Software Acquisition Costs -- which allows us to compare products.
- Platform and Messaging Infrastructure Acquisition Costs -which gives an idea of what companies are actually spending to provide messaging and collaboration to their employees.

2. Maintenance Costs - These comprise the cost of yearly support contracts for all hardware and software components. Similarly to Acquisition Costs, Maintenance Costs can be looked at along twodimensions:

- Messaging and Collaboration Software Maintenance.
- Platform and Messaging Infrastructure Maintenance.

3. Administration Costs - These include a series of tasks, on-going as well as corrective, performed by Messaging Administrators to ensure the efficient update and operation of the messaging system.

4. Migration and Upgrade Costs - Migration and upgrades represent a major cost component in most enterprise organizations. For the purpose of this model, we are assuming 1 major upgrade a year, and 2 minor upgrades a year. This is in line with what most organizations have told us in this survey, as well as many other corporate surveys which we have undertaken in the past two years.

5. Storage Costs -- Storage Costs represent the cost of email storage per user per year. This can vary greatly among organizations, and even within the same organization, with different tiers of users being allotted different amounts of storage space.

6. Downtime Costs - These include any lost productivity caused by failure (i.e. downtime) of the messaging systems. These include both scheduled and unscheduled downtime.

7. Training Costs - These include training costs for Messaging Administrators, and Help Desk Staff.

Major Findings -- Enterprises:

This section provides a side-by-side comparison of the Total Cost of Ownership for the four systems analyzed. It also provides our views on which key factors may be affecting each products overall cost of ownership.

In each environment surveyed, costs are directly related to the number of users in that environment. While we were striving for equal user populations across all four systems analyzed, this was effectively impossible to achieve. Microsoft Exchange had the largest population sample with 32,404 users, followed closely by Sun Microsystems with 31,667 users, Oracle with 13,338 users, and IBM Lotus Software with 12,571 users.

This difference in population size has a major impact on the level of hardware platform investment as organizations with larger user populations require either more servers or more powerful servers, thus driving up acquisition costs within those organizations.

On the positive side, however, the larger population size allows costs to be amortized over a larger number of users thus reducing the overall cost per user across all the cost components we analyzed.

It is also worth noting, that the size of the populations we encountered is closely tied to how long the particular versions of the products we were measuring have been on the market. Microsoft Exchange 2000 has been deployed for the longest time period since October, 2000. Sun ONE Communications Platform 5.2 was released March 2002. The Oracle Collaboration Suite and IBM Lotus Software ND6 have been on the market the shortest time, both products were released to customers only in Q3 2002.

SERVICE PROVIDERS MESSAGING TCO:

Service Provider Survey Sample:

The service provider survey sample consists of 6 Service Providers on a worldwide basis which were provided as customer references by the two sponsoring messaging vendors: Critical Path and Sun Microsystems. The total sample profile includes:

- Service Providers focusing on consumers (33%),
- Service Providers focusing on corporate business use (67%).

The total interview sample presented in this study consists of the following:

- 2 Critical Path customers (CP Messaging Server and Directory Server),
- 4 Sun ONE customers (Sun ONE Communications Platform).

The organizations surveyed (see Figure 4) represent a wide range of diverse Service Providers, reflecting overlapping and evolving business models in this industry, as follows:

- ISPs (33%)
- ASPs (17%)
- Telcos (33%)
- Wireless Providers (17%)

In terms of Service Provider subscriber population, the breakdown of the survey sample is as follows:

- 20% of the Service Providers surveyed are very large email deployments with more than 5,000,000 subscribers.
- 40% of the Service Providers surveyed have between 1,000,000 and 5,000,000 subscribers.
- 40% of the Service Providers surveyed have less than 1,000,000 subscribers.

Service Provider TCO Model:

The Service Provider TCO model used in this study varies considerably from the TCO models used in similar previous studies. To that effect, it is not valid to compare the final results presented in this study with those of previous studies.

The Service Provider TCO Model used in this study focuses on the operational costs of running each system over a three year period. It is based on as assessment of the following components of costs:

- Messaging
- Directory Services
- Calendar Services

1. Acquisition Costs - These comprise the cost of the messaging system platform including hardware and software, directory services hardware and software, as well as calendar/scheduling hardware and software.
2. Maintenance Costs - These comprise the cost of support contracts on an annual basis for maintaining both messaging-related, directory-related, and calendar/scheduling-related hardware and software.
3. System Integration and Customization Costs - These include any initial integration and customization work necessary to integrate the messaging, directory and calendar/scheduling systems with the Service Providers existing business and operational environment (such items as integration with the billing software, account provisioning, etc.).
4. Installation and Configuration Costs - These include initial installation and configuration costs of the messaging, directory and calendar/scheduling hardware and software.
5. Administration Costs - These include a series of tasks, on-going as well as corrective, performed by Messaging Administrators to ensure the efficient update and operation of the messaging, directory and calendar/scheduling system.
6. Downtime Costs - These include time spent by full-time administrators dealing with system failures (i.e. unscheduled-downtime) as well as scheduled downtime. We assume that both scheduled and un-scheduled downtime affects all full-time messaging administrators. We do not attempt to measure the effect on the subscribers, though here the impact of higher downtime probably translates into higher subscriber attrition.
7. Training Costs - These include training costs for Messaging Administrators, Help Desk Staff and Users. In measuring training, we took into account messaging administrator and help-desk staff training for the 1st year of operation, as well as follow-on years.

Major Findings -- Service Providers:

This section provides a side-by-side comparison of the Total Cost of Ownership for the two systems analyzed. It also provides our views on which key factors may be affecting each products total cost of ownership. In each environment surveyed, costs are directly related to the number of subscribers in that environment. While we were striving for equal subscriber samples across all four systems analyzed, this was effectively impossible to achieve. Critical Path had the largest subscriber sample with 2,650,000 subscribers, followed by Sun with 1,675,000 subscribers.

The difference in the size of the subscriber population supported, has an impact on the level of hardware platform investment made by the Service Providers, as Service Providers with large subscriber populations typically require more powerful servers, driving up acquisition costs within those organizations.

On the positive side, however, the larger subscriber population size allows costs to be amortized over a larger number of subscribers thus reducing the overall cost per subscriber across all the cost components we analyzed. Service Providers will typically over-provision their hardware and software investments to accommodate for planned future subscriber growth. This means that in all instances in this study, the customers surveyed have purchased somewhat more hardware and software than what is strictly necessary to support the number of actual subscribers they are servicing. To gain an accurate estimate of the actual cost of ownership per subscriber, however, this study amortizes all costs over the number of actual subscribers rather than the number of planned subscribers.

Conclusions:

In the Enterprise space, Oracle has the lowest Loaded TCO with $194.94/user, followed by Sun with $213.57/user, IBM Lotus Software with $406.56, and Microsoft with $438.75.

If we were to look only at the Messaging and Collaboration TCO costs, Oracle has the lowest TCO/user, with $64.88/user, followed closely by Sun with $96.42, IBM Lotus Software with $150.55/user, and Microsoft with $221.42.

In the Service Provider space, Sun Microsystems has the lower Messaging TCO with $0.50/subscriber, followed by Critical Path with $0.57/subscriber. Critical Path has the lower Directory TCO with $0.05/subscriber, followed by Sun with $0.10/subscriber.

Sun Microsystems has a Calendar TCO of $0.39/subscriber. Evaluation of a platforms TCO represents only one aspect of a Service Providers platform selection. The other side are the opportunities the platform gives the Service Providers to provide revenue-generating services that retain customers.

Overall, we were pleasantly surprised that both average TCO/subscriber results in the Service Provider space were under $1/subscriber. This confirms that messaging is a worthwhile value-added application for Service Providers, and in particular that it is cost-effective enough to allow Service Providers to expand on it in terms of additional premium services, such as unified messaging and unified communications.

This report provides An Assessment of Acquisition and Operational Costs of Messaging within both Enterprise and Service Provider Environments.

This study compares acquisition costs, administration costs, downtime costs and a range of other factors affecting Total Cost of Ownership (TCO) for the following Messaging and Collaboration products:

1. On the Enterprise side, it compares:

- IBM Lotus Software Notes/Domino 6 (ND6)
- Microsoft Exchange 2000
- Oracle Collaboration Suite
- Sun ONE Communications Platform 5.2

2. On the Service Provider side, it compares:

- Critical Path CP Messaging Server
- Sun ONE Communications Platform 5.2

3. Also provides valuable summary information on deployment of: Anti-Virus, Anti-Spam and Instant Messaging.

This report is intended for Corporate Organizations, Vendors, Service Providers and Investors who need to make informed decisions about the Messaging industry.

For a complete index of this report click on http://www.researchandmarkets.com/reports/35257

REPORT DATA SUMMARY:
Messaging Total Cost of Ownership 2003 - in Enterprise and Service Provider Environments
Number of Pages: 162
Category: Computing & Technology, Internet & E-Commerce
URL: www.researchandmarkets.com/reports/35257

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