What does it cost to host an e-mail account? It seems like a simple question, but a remarkable number of enterprises surveyed by Forrester had no idea of how to answer that question. A new report by the research company has taken a look under the hood of both in-house and commercial e-mail services, and put some numbers on the per-user costs associated with a variety of options. The surprise result was not so much that Google’s corporate services come out ahead, but rather how large a lead it has on every other option.
The title of the report, “Should Your e-mail Live In The Cloud? A Comparative Cost Analysis,” is actually somewhat misleading. The cloud implies a diffuse network of servers that hold partially redundant copies of information. Some of the services examined by the report don’t necessarily offer that sort of setup, although the report frequently refers to any off-site service as “the cloud.”
Semantics aside, Forrester surveyed over 50 IT workers at major enterprise companies to see how they handle e-mail, contacts, and calendaring services. They also discussed options and costs with 21 vendors of these services, and created some rough estimates of how much each portion of the various services cost.
One of the things they discovered is that the business community is largely unaware of the costs of running an e-mail account. Many of those surveyed gave guesses from $2 to $11 per user, although a detailed accounting showed that the costs were often several times that (Forrester came up with $25.18 per month, compared with $8.47 for Gmail). Part of the problem is that costs are often split among several cost centers, with software licenses part of a different department’s budget from the salaries of the people that support it. In some cases, the e-mail system was running on older hardware that had initially been bought for a different purpose and had been depreciated.
Despite the confusion, a lot of companies realize that e-mail has become expensive for two simple reasons: spam and malware. Nearly half of those surveyed were evaluating off-site solutions because e-mail costs had risen, while another 30 percent were performing the evaluation as part of an upgrade or service consolidation process. Fully 85 percent of these companies were leaning towards moving some of the services off-site.
The biggest reason for doing this seemed to be so that someone else could deal with staying on top of spam and malware; over half of those surveyed were planning on implementing a hybrid system where an external service filtered mail on its way into and/or out of the company’s internal servers. Reasons cited include the challenges of staying on top of the threats and up-to-date with the software, as well as the resource-intensive nature of combating mal-mail. Another 30 percent were leaning towards a complete outsourcing of the service, presumably in part because of these costs.
The author of the report calculated the monthly costs for the components of various systems, such as storage and client software. The biggest cost was clearly archiving, which is often legally required for a lot of positions. Beyond that, the software and filtering costs all came in at roughly 10 to 15 percent of the costs when they’re needed—off-site services, for example, eliminate separate purchases of server and filtering software, and lower staff costs in exchange for a monthly subscription. The overall conclusion is that any company with an employee count of under 15,000 would probably benefit from using off-site services.
The two examples of actual cloud services, Microsoft’s Exchange Online and Google Apps for Business, came out significantly ahead. Exchange Online provided significantly lower costs until somewhere above 30,000 seats, while Google Apps’ monthly cost consistently came in at half the cost of others, in part because its subscription cost is so low, and in part because the “client software” is a free web browser.
The author of the report cautions that there are a lot of variables to consider, such as how often the company adds and removes users, the frequency of large attachments, and the archiving requirements. Still, the results make it clear that Microsoft is now undercutting most of other services available, including those that rely on Exchange itself. But Google has managed to significantly undercut Microsoft. Although its solution is nowhere near as integrated as Exchange, an increasing percentage of the workforce is getting comfortable with managing their life and e-mail through a web browser.
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For perhaps the first time in its history, Microsoft made the case on Monday that businesses shouldn’t run its software. Instead, Microsoft argued that corporations should let it run the software for them.
During the past several years, Microsoft has been testing out the idea that it can host and run business software cheaper and more effectively than individual enterprises can do on their own. The effort started in 2005 with a single customer–battery maker Energizer–which had Microsoft essentially handle all of its PC desktops.
Over time, Microsoft narrowed the service to an option in which it hosts Exchange and SharePoint, runs the software in its data center, and charges customers on a monthly basis. Microsoft officially launched the products, known as Microsoft Online, at a customer event at the St. Regis hotel here.
“We can help you save money,” Microsoft Business Division President Stephen Elop told the crowd, saying Microsoft estimates that companies can save at least 10 percent by letting Microsoft run their messaging and collaboration software for them.
One of the early customers is video retailer BlockBuster, which has been using Exchange Online for about six months. Blockbuster CIO Keith Morrow said in an interview that Microsoft’s online services came at a good time for the company, which was on a several-generations-old version of Lotus Notes.
Morrow said the video rental company needed to make a change of some kind, and the option to move to Exchange without having to bring that skill set in-house was a key selling point, as was the ability to offer better mobile options, including Outlook Web Access and iPhone support.
Another Notes switcher in the crowd was Eddie Bauer, which has been a Microsoft Online customer for about five weeks. Chief Information Officer Rich Mozack said the clothing retailer wanted to move off Notes but couldn’t make the numbers work to run Exchange on its own.
“We just couldn’t justify the up-front investment,” Mozack said.
Microsoft’s Ron Markezich said about two-thirds of early customers are moving from Notes to Exchange. But even as Microsoft continues to target those moving from Lotus Notes, the company faces the threat of its own Exchange customers moving to other hosted options, including Google Apps.
Just last week, Serena Software said it was switching to Google from Exchange in a move it said would save it $750,000 a year, according to several reports.
At the event, Elop made Microsoft’s familiar case that, while the cloud is great, customers are better served by an option that allows software to run on customers’ own machines as well as over the Internet.
The software maker said last year that it would offer the hosted option for large businesses, later expanding the offer to businesses of all sizes. At last month’s Professional Developer Conference in Los Angeles, Microsoft also confirmed that it would offer Web-based versions of its Office applications, including Word, Excel, and PowerPoint.
While many of those at Monday’s event were the company’s early customers and partners, not everyone at the event was ready to sign off. I spoke with a municipality that was highly interested in Microsoft’s product, particularly as it plans to move from GroupWise to Exchange. Still, with a dearth of other governments to point to, this CIO told me that he still faced challenges in getting the city’s upper management and government to sign off on the deal.
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Today marks the launch of Amazon EBS (Elastic Block Store), the long awaited persistent storage service for EC2. Details can be found on the EC2 detail page and the press release.
With the launch of the Elastic Block Store we complete an important milestone in offering a complete suite of storage solutions as part of the Amazon Infrastructure Services. Back in the days when we made the architectural decision to virtualize the internal Amazon infrastructure one of the first steps we took was a deep analysis of the way that storage was used by the internal Amazon services. We had to make sure that the infrastructure storage solutions we were going to develop would be highly effective for developers by addressing the most common patterns first. That analysis led us to three top patterns:
1. Key-Value storage. The majority of the Amazon storage patterns were based on primary key access leading to single value or object. This pattern led to the development of Amazon S3.
2. Simple Structured Data storage. A second large category of storage patterns were satisfied by access to simple query interface into structured datasets. Fast indexing allows high-speed lookups over large dataset. This pattern led to the development of Amazon SimpleDB. A common pattern we see is that secondary keys to objects stored in Amazon S3 are stored in SimpleDB, where lookups result in sets of S3 (primary) keys.
3. Block storage. The remaining bucket holds a variety of storage patterns ranging special file systems such as ZFS to applications managing their own block storage (e.g. cache servers) to relational databases. This category is served by Amazon EBS which provides the fundamental building block for implementing a variety of storage patterns.
I have written before about the basic features of Amazon EBS:
- Amazon EBS will be offered in the form of storage volumes which you can mount into your EC2 instance as a raw block storage device. It basically looks like an unformatted hard disk. Once you have the volume mounted for the first time you can format it with any file system you want or if you have advanced applications such as high-end database engines, you could use it directly.
- Developers can create multiple volumes, in size ranging from 1 GB to 1TB. This volume will be created within a specified Availability Zone and will be accessible by your EC2 instances running in that Availability Zone. As to be expected with a volume abstraction only one instance can have the volume mounted at any given time. Volumes can migrate and be reattached to other instances if necessary for failure handling or application migration reasons.
- The consistency of data written to this device is similar to that of other local and network-attached devices; it is under control of the developer when and how to force flush data to disk if you want to bypass the traditional lazy-writer functionality in the operating systems file-cache. Because of the session oriented model for access to the volume you do not need to worry about eventual consistency issues.
However Amazon EBS isn’t just a massive volume storage array within an Availability Zone, it provides a unique feature that allows for the creation of novel storage management scenarios: the ability to create snapshots and store those snapshots into Amazon S3. These snapshots can then be used as the starting point for creating new volumes within any availability zone.
We see developers use this feature for long term backup purposes, for use in rollback strategies, for (world-wide) volume re-creation purposes. Snapshots also play an important role in building fault-tolerance scenarios when combined with managing applications using Elastic IP addresses and Availability Zones.
Congratulations to the EBS team for delivering a great service that will help a lot of EC2 customers managing their storage efficiently.
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