And another thing...

Guy Creese, Research Director at my former post at Burton Group, blogged about Peter de Haas taking eWeek to task over a recent article estimating the savings that Serena will realize moving from Exchange to Google Apps. A third blog entry from Phil Wainewright on ZDNet also examines discrepancies and assumptions. A few more things jumped out at me while reading the eWeek article that I thought I'd add to the picture.

First, I'm wondering if the $562 Radicati per user cost of on-premises Exchange include the Office license to get Outlook? If it does then by going to GMail Serena has eliminated the need for Outlook but not Office. The article states that Serena will continue to use SharePoint and I'm assuming they use Office for productivity tools. So while Serena has eliminated the cost for Office from the e-mail budget they have not eliminated the cost for Office, they just put it into another budget. Eliminating Outlook from the SharePoint equation may actually be a poor move since Outlook 2007 is the currently the primary client for taking SharePoint information off-line and includes integrated calendaring, contacts and tasks. If SharePoint takes off at Serena then they may want those benefits later on.

Next, if, as the article states, Serena is using Google's Postini services then the cost is not $50 per user per year, it's really $75 per user per year. That increases the base cost for Google Apps and depending on how large the archives become, Serena may find itself paying for extra storage in the future. These costs may not align with what Serena may get from other cloud archiving services or managing the archives on their own storage. Bottom line, Serena will need to get good at e-mail records management to keep the archiving and storage costs at the $25 per user level.

What sort of business process applications does Serena use that integrate with e-mail? Depending on their apps, they may need to have some local servers and SMTP services to support workflow and other e-mail-based tools. It is not likely that they will be able to integrate or extend with GMail easily since they no longer have control over the mail servers.

I agree with Mr. Wainewright, that hosted Google e-mail is significantly cheaper and that it alleviates many headaches (cost and management) that on premises e-mail creates. Hopefully the savings and business case justify the migration costs.

I also agree with Guy, Microsoft has themselves to blame for the perceptions of the marketplace and the costs for Exchange. However, as Peter de Haas points out, the costs for on premises and hosted e-mail services vary wildly and it is up to the customer to do their homework to really understand if they are getting the best value from hosted services. Personally I think hosted e-mail is very cost effective but there are economies of scale and use cases where on premises messaging is still better. I've said it before, you get what you pay for and when buying hosted solutions you pay for the extras. In some cases more users, services, and special cases add up to more costly hosted services. As long as you stay within the lines hosted e-mail can be stable and predictable, cost and management-wise. But veer from the standard formula and your tolerance levels may go down dramatically.

So to quote Mr. de Hass:

My recommendation to Serena Software would be to do some homework, look into Microsoft Online Services and reconsider their options …