
Research the Subject
Because data is so scarce, some businesses rely on research houses to get a handle on TCO. The two most frequently cited general analyses are from Creative Networks Inc. (CNI) and the Gartner Group. CNI bankrolled its own study, while Gartner's research was funded through a joint agreement with key messaging providers. Both studies rely on extensive user interviews.
CNI estimates that businesses pay more than $1,370 per user annually for highly economical, but feature-poor, open systems; more than $3,355 for feature-rich client/server systems; and more than $4,178 for older, less reliable and harder-to-maintain file-sharing systems. The analysis, which assumes 3,000 users and a three-and-a-half-year system life, prorates desktop functionality devoted to e-mail (27 percent of each system) and incorporates assumptions for productivity and revenue lost to system downtime (an average of $5.35 per hour of downtime). CNI's downtime metric is especially interesting in that it can also be used to measure uptime value.
In contrast, Gartner puts the annual per-user range at $72 for a 5,000-person organization over three years, acknowledging that this figure probably accounts for only about 40 percent of actual TCO. The study is geared primarily to the staffing costs for planning, implementing and operating messaging systems. Even in this smaller slice of overall TCO, the pain of trying to generalize shows through. When those with the highest and lowest TCO are excluded to address the middle 50 percent, the annual per-client range swings from a low of $24 to a high of $528.
Why are CNI's numbers considerably higher than Gartner's? Primarily, it's because CNI attempts to derive metrics for areas that are difficult to quantify--including the cost of server and desktop upgrades, and revenue and productivity losses associated with system downtime.
Meanwhile, another study, conducted by the Radicati Group and funded by Lotus Development Corp., puts first-year administration and management costs (including configuration, maintenance and salaries) at about $388 per user for Notes and about $403 for Exchange. Fifth-year costs rise to about $1,532 for Notes users and $1,765 for Exchange. Further muddying the statistical waters, companies that attempt their own TCO analyses come up with equally wide-ranging results, primarily because there are no uniform metrics to evaluate TCO. Also, while messaging system costs should be projected out over three to five years, it's important to remember that their typical life span extends to about seven, says Tony Ioele, CEO of I/G OpenWare, a turnkey messaging system provider for a wide variety of systems.
So, should businesses simply toss up their hands and discard these divergent findings? No, because the studies confirm at least three important points. First, it's extremely difficult to generalize about TCO--the costs and business value of a messaging system hinge on individual business type, traffic, geography, existing infrastructure and other differentiators. Second, generalized studies can provide valuable guideposts and metrics to help a business determine not only TCO, but the best messaging value proposition. Third, while older Notes products may have sucked up administrative resources, most studies show that later versions have similar TCO as Exchange when similar application sets are compared. Businesses may commit more administrative support to Notes, but this typically relates to the larger number of applications the businesses run on it.
Ioele says Exchange probably still enjoys an annual $30 to $60 per-user cost advantage over Notes, but he expects the two platforms to reach "a dead heat" by year's end when Exchange carries many of the add-ons and collaborative features already in Notes. Similarly, many products that run native Internet-standard protocols currently lack rich features. When new functionality arrives in these products, servers, networks and administrators all will face greater demand, raising overall TCO, Ioele says.
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