Questions and Answers from Microsoft Product Manager for Exchange Stan Soernsen
Network Computing: What percentage of your large and midsized customers consider e-mail mission critical?

Stan Sorensen: This is anecdotal from talking to a number of large and midsized companies; basically, they all consider it mission critical. It started about four or five years ago when there were pockets considering it mission critical. For some companies, like Telstra, it was always mission critical. Then, about three years ago we saw the uplift when it crossed to more than 50 percent.

NWC: What percentage of your large and midsized customers do formal ROI [return-on-investment] studies as part of an acquisition?

Sorensen: A fairly small percentage. Looking at the last year or so, I'd say 5 percent or less. A larger number will look at some of the more formal studies out there, but they seem to take them with a grain of salt. There's really no uniform way of measuring TCO [total cost of ownership], so as customers look at these formal studies, it's very labor-intensive to analyze them and grind through the methodologies to determine what is actually being said. I really like some of them, even if they aren't always favorable to us. Creative Networks has a very interesting way of looking at the problem and Tom Austin at Gartner Group also has an interesting analysis. Some of the others aren't as powerful or as inclusive.

NWC: What about total cost of ownership?

Sorensen: TCO falls into this same bucket. It's probably around 15 percent.

NWC: Should users be paying more attention to TCO?

Sorensen: Users would benefit from having a better sense of TCO, but I wouldn't like to see it become the No. 1 decision-making criteria. It's now in about the middle of the criteria stack. There are other factors. I was brought in to help frame the discussion for a large telco [for its internal network]. Criteria No. 1 was reliability, robustness and scalability. No. 2 was standards. The third was interoperability with the current desktop and other messaging systems. No. 4 was value-added services. The fifth was support. Coming in sixth was TCO. I think their No. 1 criteria maps to what most large customers want and Nos. 2 and 3 flip-flop.

NWC: What is your best estimate of the cost of acquisition today for a 3,000 mailbox network assuming Exchange is used primarily for e-mail and Windows NT is the server, the desktops are Windows95 clients and the customer is coming from a mail system other than MS Mail. The price should include client and server software, server hardware, a one-year maintenance contract.

Sorensen: Anyone at 3,000 seats or above can probably cut a deal with a hardware vendor, so I can't venture a guess on the server hardware. As for the software, it's possible to run on a single Exchange server, but I looked at our large customers and the average number of users per server hits about 1,000 at corporate locations. This is from our early adopters list [for 5.5] including 25 or 30 customers. So, based on that you are looking at three Exchange servers at $4,557; we don't charge for the client software, but there is a client access license for each user with a mailbox and based on volume pricing it's $53 each or $159,000. We don't do one-year maintenance, but three years, and our standard maintenance contract, is $22 per client access license or $66,000. So the total price is $229,557.

NWC: How many administrators would you have for this at a headquarters location?

Sorensen: I wouldn't argue with two or three individuals. Microsoft has 43,000 mailboxes, 70 servers and at most seven active administrators. That's different from the helpdesk people and those fielding the support calls that ensure the servers are up and running and that create the accounts.

NWC: How much training does the typical Exchange user get?

Sorensen: I think the typical user is not even attending a half day of class. Users can pretty much figure out the basics on their own in about an hour.

NWC: How much is spent on the typical user for training?

Sorensen: It can vary from $50 to $125; it varies considerably.

NWC: What percentage of those migrating to Exchange are coming from cc:Mail versus MS Mail versus GroupWise or other systems?

Sorensen look at the early adopters, 70 percent to 80 percent have LAN-based systems they are moving off of like cc:Mail and MS Mail. About 50 percent are also host-based or a mix of shared file and host based and 5 percent to 7 percent have GroupWise. Anecdotally, we are pulling at least equally as well as Lotus for the cc:Mail base. It turns out we have a much cleaner migration path from cc:Mail to Exchange than exists from cc:Mail to Domino. We just announced a migration program that is getting quite a bit of attention.

NWC: What percentage of MS Mail users are leaving for another system?

Sorensen: Maybe 20 percent, but that might be high by 3 percent or 4 percent. I think the number leaving for Notes is low. One thing cc:Mail users tell me is that they need something easy to manage and Notes isn't easy. Second, they tell me that they need tools to quickly migrate data and the tools Lotus provides for cc:Mail to Notes aren't that great. The third thing they want is scalability and growth, and we have the scalability and growth.

NWC: How do you plan to keep the cc:Mail users coming?

Sorensen: We see the issue of migration as not being one of the price of the software, but fundamentally an issue of overall cost. The largest cost is hardware, and it's why we've partnered with [various hardware providers] to come up with compelling server offers for people. And, there's the labor cost of planning a migration, and sometimes the expertise to do that doesn't lie in-house. So, we have partnered with solution providers like Digital. To do the basic planning of the topology and the whens and hows.

NWC: Several analysts tell me that when it comes to pure e-mail the TCO associated with Exchange and Notes are at a par. What is your take on this?

Sorensen: It's basically true with some exceptions. If I am a company with four or five different messaging systems, and I have to deal with coexistence for a few years [the costs can be much higher with Notes]. IBM will say to use its hardware, software and consulting. If we are doing an apples to apples comparison and the transition is overnight, then what you say is true, but most customers won't do this. If they have 10,000 seats it's nearly impossible to move overnight, although Boeing is the exception to that rule. I think they're moving 5,000 people per week. But if coexistence is a requirement for a week to a year, we'll win every time because our connectors letting you talk to the other environments, are included in the base product. They aren't included in Notes.

NWC: If a company wants to build its own applications atop Exchange, Notes, GroupWise or Internet mail systems, what are the salary cost differentials for doing so?

Sorensen: It's hard to say. With Exchange the first place you'll look to do this is in-house because you are talking about using a development language, and object model someone will know, and you'll use the Windows API and Web developmentıHTML and writing script. Most customers have some familiarity with this in-house. Lotus would very much like for its apps to be written in LotusScript, which is something not everyone knows. With GroupWise, we hear they are moving to a model where you can use VB, but you don't hear of as many GroupWise customers doing value added applications largely because Novell has done a good job of baseline functionality requiring little development on top. You don't hear about GroupWise add-ons because there's no SDK and no object model.

NWC: How much does bandwidth typically increase a year after installing Exchange?

Sorensen: There are too many variables to give an answer.

NWC: At what version is MS Mail year 2000 compliant?

Sorensen: We are still testing mail. We expect to be able to say concretely whether MS Mail is or isn't compliant and which versions by summer. We know that some customers have anxiety about that. Exchange is definitely year 2000 compliant. I don't know if any level of MS Mail is.

NWC: Is year 2000 compliance a factor in mail consolidation?

Sorensen: It is in some respects and a factor we expect to rise on the priority list right into the October time frame when the light bulb goes on and people say: "We have only a year."

NWC: In what areas are midsized and large businesses most likely to over or underestimate TCO for e-mail systems?

Sorensen: Some smaller companies tend to overestimate training, they overestimate and overspend. Medium-sized companies may not plan as much up front and overestimate their deployment costs. Boeing can do 5,000 seats a week because they spent months planning the deployment. They know to the hour how long something is going to take.

NWC: Some analysts say that because of TCO Internet-based e-mail systems will ultimately leapfrog Exchange and Notes. What is your assessment?

Sorensen: It hasn't happened yet, and I think the Internet is a given now. We rarely, if ever, are compared to our competitors based on what protocols we support. It's taken for granted that we support Internet protocol. We had an interesting customer meeting recently. The customer had previously met with Netscape and had asked Jim Barksdale who would have the expertise to deploy and support their messaging system once Barksdale was out of the picture. Later, the customer told us that this issue of ongoing support was an important reason for talking to Microsoft.

NWC: To what extent do you see users establishing mailbox and file quotas?

Sorensen: Ninety percent are establishing limits on message size. Typically customers are setting limits on the size of the information store per user and the size of messages they'll allow users to send and the size they can receive. One to 10 megabytes seems to be a rule of thumb. Some will allow 10 for PowerPoint presentations.

NWC: Do you know what is happening with Notes in this respect?

Sorensen: It's different with Notes. The size of a Notes database can't be bigger than 4 gigs, but you can run multiple databases per machine, but the management model becomes more complex the more databases you add.. They will allow installation in a single instance storage model, and then the entire server is limited to 4 gigs. In Exchange there is no database limit and we, by default, set up single instance storage. I can globally set limits on messaging and mailbox size and do it one time. In Notes you have to do it individually per database, so it's more time intensive to establish these limits, and you have to do it multiple times.