Calculating the fully loaded costs of corporate email: It's bigger than you think

Calculating the fully loaded costs of corporate email: It's bigger than you think

Summary: Since colleague Chris Voce and I published a pair of reports on corporate email in the cloud (one on the infrastructure and operations and one on the cost of running email on-premises or in the cloud), we have had dozens of discussions with our clients accompanied by detailed cost analyses of the true cost of running email on-premises versus running it in the cloud.

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TOPICS: Collaboration
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Since colleague Chris Voce and I published a pair of reports on corporate email in the cloud (one on the infrastructure and operations and one on the cost of running email on-premises or in the cloud), we have had dozens of discussions with our clients accompanied by detailed cost analyses of the true cost of running email on-premises versus running it in the cloud.

While the cloud-based cost of email is pretty transparent (many providers, including Microsoft and Google, publish their per-user per-month costs), the cost of running email on-premises is often a big mystery to everyone, including most CIOs. The big challenge is that the costs are spread throughout the budget: some in the hardware budget, some in the software budget, some in the storage budget, some in the cost of capital budget, some in the staffing budgets, and so on.

After dozens of these discussions and after a survey of 53 information & knowledge management professionals to ask about the cost of email, it is abundantly clear that few firms know their true cost of running email on-premises. And this matters if you're considering a move to cloud-based email.

But it an accurate calculation of on-premises email also matters if you are contemplating upgrading your email to a more current version that might support cheaper storage, higher automation, or reduced email database size due to eliminating redundant copies of attachments. You can compare your current costs against the fully loaded costs of the new system with its higher efficiencies.

So we spent four months building and vetting a detailed cost model to help our clients and the industry at large understand how to calculate their cost of running email on-premises. Here's a clue: It's more than you think.

When you factor in servers, storage, server software, software maintanence, hardware and software administration, power, archiving, message filtering, mobile costs, even financing, you find out that the cost of email for 15,000-person organizations can be as high as $40 per user per month, and even for a normal information worker without mobile email, it can cost more than $27 per user per month. Of course, you can and should segment your workforce into different tiers for example, mobile executives, information workers, and occasional users and provision them with different size mailboxes, email clients, and mobile email.

With all of that as input, you can calculate the fully loaded cost of email for each workforce segment.

Of course, the prices come down for larger organizations and not everybody needs all these services. And sure, we can talk about higher automation levels, cheaper storage, more efficient message filtering, and the lots more, but at the end of the day, you have to factor in all the costs of running email on-premises if you are going to make a decision about upgrading or moving email to the cloud.

Topic: Collaboration

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8 comments
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  • Or just use FOSS.

    I run the FOSS version of Zimbra in my corp. I have the cost of the server hardware and the electricity to run the hardware. So that's $1,500 plus electricity. This is my fully loaded cost for a fully loaded e-mail(with collaboration) solution.

    I truly can't understand why every corporation doesn't go this route. Paying for something like Exchange is crazy. It's like throwing money out the window.
    bjbrock
    • I love FOSS, but, you still have to figure in all of the labor costs for

      maintaining the server, capitol costs, patching,
      filtering spam, etc.

      Still cheaper to let somebody else do it.
      DonnieBoy
  • Less and less reason every day to run your own email server.

    You get it all with Google for less than $5 per user per
    month.
    DonnieBoy
    • More's the reason to do it yourself

      [i]You get it all with Google for less than $5 per user per month[/i]

      And they [i]own and control[/i] your email, not you.

      There's many reasons why companies do it themselves in house, the 2 biggest reasons being control and features, something outlook and exchange excell in, even many FOSS solutions are better feature wise then going with Google.

      and you own your emails, not Google.
      John Zern
      • 2 Biggest reasons

        Actually, the two biggest reasons people do it
        in house are:
        1. Up till recently there was no other feasible
        option
        2. Fear of change (also known as "nobody ever
        got fired for buying Microsoft")

        "Features" is wrong. Outlook and exchange excel
        in a lot of features no-one needs or asked for.
        I work for a large corporate where the majority
        of user improvement requests on our corporate
        email, are for things that exist in some of the
        better cloud solutions, mainly gmail.
        Control is the only area where you have any
        real point here, but even in this case,
        frankly, if you think you "control" your email,
        you probably shouldn't have anything to do with
        IT security.
        thelivo
  • RE: Calculating the fully loaded costs of corporate email: It's bigger than you think

    On major reason could be that if your ISP goes down your company can still function on its own network. Inter-office e-mail would still work. As compared to gmail.
    brantmessenger
  • RE: Calculating the fully loaded costs of corporate email: It's bigger than you think

    I don't think having email in the cloud allows you to have the ability to include integration of apps and services such as RightFax, Microsoft Office Communication Server, signature control.... The list can go on.

    If you are looking at basic email then outsourcing your email might be a good solution but if you are thinking of email as a collaboration tool then perhaps keeping it in house is a better idea.
    Voodoobones
  • RE: Calculating the fully loaded costs of corporate email: It's bigger than you think

    Where are the details behind the inflated aggregate monthly costs reflected in the chart above? By my calculation, these figures seem to equate to start up costs for year 0. What about subsequent years? On a five year outlay with a hardware refresh cycle of 4-5 years and ongoing maintenance costs, an in-house system for 15K users has great economy of scale. Sure, it may make sense for a small organization to outsource or perhaps a large company that doesn't have the infrastructure and/or talent to get it up and keep it going. Let's see the numbers accurately...compare the TCO to the ongoing flat, monthly fee of an email provider. I guarantee, on the basis of cost alone, the outcome will be in favor of keeping it in house.
    DiLLrOd