Microsoft tries well worn 'tax' argument vs. Google Apps: Here's the real deal

Your mileage will vary so don't fall for the tax, lock-in and other chatter. Your time is better spent sharpening your pencils and laying out scenarios and gotchas that can snag an IT buyer.
Written by Larry Dignan, Contributor

Microsoft has a lengthy post on an alleged Google Apps tax in its latest war of words with the search giant. It would be easy to dismiss this FUD volley, but Microsoft's post illustrates a broader theme in the tech sector.

More on that in a bit.

Microsoft's Tom Rizzo writes that there's a tax on Google Apps because you need Postini, help desk support, Exchange to Google Apps Migrator and training. The not-so-subliminal message from Microsoft: Stick with Office people!

Rizzo writes:

On the surface, Google Apps may seem like acceptable replacements for enterprise-grade products such as Microsoft Exchange Server or Microsoft Office. But many IT organizations have found that Google Apps bring extra, hidden costs. Organizations that have evaluated Google Apps have found that the projected versus actual costs of switching to Google Apps greatly increase their total cost of ownership (TCO). In particular, these IT organizations have found that Google Apps are not enterprise-ready and are inadequate without costly add-on applications, even for most small- and medium-sized organizations. The three general areas where organizations feel the Google Tax most strongly are deployment, IT support costs and user training.

Rizzo argues that most folks run Google Apps next to Office so one is obviously redundant. Guess which one?

You can read the rest of Rizzos's argument, but speaking for our own Google Apps deployment I doubt the training costs were all that much. The Apps interface is the same thing you have on Gmail for the most part. And Apps kind of runs itself---although if there's a glitch there's a bit of a scramble to figure out what's going on. Our IT people call Google and there's a game of phone that happens. Those instances are thankfully rare. As for Office we run that along with Google, but those lines blur a lot too.

What's our TCO? I'm not privy to those numbers, but I suspect Rizzo is forgetting a key point. Apps makes old laptops run much better. Simply put, the PCs aren't choking on Outlook. My hunch is that internally Apps allows us to put off a PC upgrade cycle. That's just a guess, but Windows 7 machines aren't exactly falling out of the sky here.

In any case, there's a bigger picture. On-premise providers---Microsoft, SAP, Oracle etc.---will talk about SaaS taxes and lock in. And you know what? They have a point. As noted just the other day, you enter cloud computing for a low entry price, but once the deals grow the math gets more complicated. You get add ons. There's more usage. You can get hosed on cloud apps.

Cloud players will tell you how much cheaper they are to get started. But then you have to watch your usage closely and scale down or you'll get stuck for unused subscriptions. I find it very telling that Salesforce.com's top and bottom lines increasingly rely on enterprise wide license agreements. The enterprise gets a predictable expense, but it looks a lot like an on-premise deal to me.

SaaS providers counter that you don't get stuck with shelfware, consultants and botched implementations you have to live with forever. That's true too. ERP is a painful experience for many. NetSuite talks two-tier hybrid deployments. In fact, SAP and Oracle are talking the same game. The reality is you'll mix and match on-premise and SaaS and probably become just as complex and complicated as you are now.

Your choices: A company can get locked in on SaaS and pay by the month. Or you can get locked in on-premise and see your maintenance fees go up every year. Pick your poison.

Add it up and I conclude the following:

  • You can get crushed with on-premise deployments.
  • You can get crushed with SaaS deployments.
  • The reality is you'll mix and match and do what's best for you.
  • Everyone is trying to sell you stuff via add-ons and upsells (that never changes in tech). And yes everyone wants to lock you in as much as possible.
  • Do your homework because there are no blanket statements about total cost of ownership, taxes and lock ins.

Overall, your mileage will vary so don't fall for the tax, lock-in and other chatter. Your time is better spent sharpening your pencils and laying out scenarios and gotchas that can snag an IT buyer. And every vendor is trying to squeeze more revenue out of you.

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