05.17.04
 By
Tom Pisello
One of the core utilities IT provides to an organization is messaging
services, including e-mail, calendaring, task management and collaboration.
This utility is surprisingly expensive, especially if the organization
runs prior-generation e-mail platforms. A typical Microsoft Exchange
5.5 solution has direct costs of more than $350 per user, per year,
including hardware, software, IT operations, support and administration,
and overhead. Older versions of same generation e-mail solutions like
IBM Lotus Notes are similarly expensive.
Newer messaging solutions have important productivity enhancements,
and the high total cost of ownership (TCO) of these older generation
e-mail solutions offers a significant savings opportunity. As a result,
many companies are upgrading their e-mail infrastructure. The latest
platforms, such as Microsoft's Exchange 2003, are expected to grow
from 10% of the installed base in 2003 to more than 35% in 2004. |
Microsoft
Exchange 5.5 TCO - An opportunity for savings
In a recent study, Alinean modeled the current TCO for typical Microsoft
Exchange 5.5 environments between 100 and 500 users, and found that
administration and support costs surpass $299 per user annually for
a typical 100 - 500 person installation, and requires between one
and two full time equivalents (FTEs) to administer and support the
environment.
In fact, 90% of direct costs for Microsoft Exchange 5.5 are for administration
and support labor, placing a significant ongoing burden on IT operations
and support.
When service levels are considered in the TCO equation for Microsoft
Exchange 5.5, the costs increase dramatically. Most Microsoft Exchange
5.5 installations achieve, at best, only 98.5% availability. Each
messaging downtime hour in a 500-person organization amounts to $8,600
in real productivity losses - costing more than $400,000 annually.
In a 100-person organization, the expense exceeds $1,700 in productivity
losses per messaging downtime hour. With more than 40 hours of messaging
downtime annually in a typical Microsoft Exchange 5.5 installation,
downtime losses can easily surpass $800 per user, per year.
The TCO for a typical 100 - 500 user Microsoft Exchange 5.5 enterprise
is more than $1,100 per user, per year.
Reducing TCO with a Microsoft Exchange 2000/2003 migration
As a result of the high TCO of Microsoft Exchange 5.5 and the difficulty
in scaling Microsoft Exchange 5.5 to meet mailbox storage and user
growth demands, many organizations have been eagerly migrating to
Microsoft Exchange 2000/2003 over the past two years.
Assessments of Microsoft Exchange 2000 consolidations and migrations
indicate that the savings are indeed compelling. More than $100 can
be saved annually per user in direct administration, support and overhead
savings. Even more savings, $600+ annually per user, can be achieved
with gains in availability, improved service levels and reduced downtime.
Understandably, this consolidation and migration requires a significant
capital investment for new servers and software, as well as essential
technical resources to help setup, migrate and deploy the e-mail systems
and applications. Newer versions of Exchange require Active Directory.
Therefore the migration to Exchange is typically accompanied by Active
Directory implementations and server consolidations yielding additional
best practices and savings. However, this process does make for a
more costly and daunting (i.e. risky) project. For a typical 500-person
company, the deployment investment is expected to cost more than $240
per user. For a typical 100-person installation, the migration costs
are even higher, surpassing $370 per user.
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Consolidation and migration costs typically include:
New enterprise servers
Microsoft Windows 2000/2003 and Exchange 2000/2003 operating system
server and subscriber licenses
Storage area network, or direct attached storage
Storage management and backup software
Migration tools and systems management software, required particularly
to assure a manageable and reliable Active Directory setup and deployment
IT training
Internal IT systems administration labor for assessment, procurement,
setup, pilot testing, data migration and deployment
Professional services to assist staff on assessment and implementation
Book value/residual value write down on existing systems
Support resources for resolving deployment issues and supporting
user questions during and after migration
Hidden, indirect costs to recover from migration issues including
user support calls, finding and resolving security issues, and potential
data migration losses
A typical 500-user migration can easily exceed $120,000, and take
more than six months of planning, procurement, setup, migration and
deployment. A typical 100-user installation can top $50,000 and take
from two to three months.
Migration to Microsoft Exchange 2000 typically requires an investment
of more than $100,000 for a 500-user enterprise.
The migration or upgrade from Microsoft Exchange 5.5 to Microsoft
Exchange 2003 is compelling from a business perspective. While this
upgrade can be quite daunting to a resource-constrained IT organization,
the bottom-line benefits justify the costs: a typical 500-user organization
can achieve an ROI of more than 300%, and an expected payback post-deployment
of four months. As employees require richer messaging capabilities,
especially remote and wireless access, shared scheduling and calendaring,
task management and global address lists, newer generation messaging
software delivers an impressive ROI and frees up valuable technology
and staff resources.
About the Author:
Tom Pisello is the CEO of Orlando-based Alinean,
the ROI consultancy helping CIOs, consultants and vendors assess and
articulate the business value of IT investments. He can be reached
at tpisello@alinean.com
Read this newsletter at:
http://www.itmanagementnews.com/2004/0517.html |
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