New IBM vs. Microsoft TCO studies from UK hosting provider Applicable

September 9 2009

Yesterday, UK-based IBM and Microsoft business partner Applicable published three studies on messaging total cost of ownership.  The first examines costs for high availability in Domino vs. Exchange environments using clustering; the second examines the costs to add instant messaging and/or collaborative applications to a basic mail environment; the third looks at a full deployment of a messaging system from each vendor and then the costs associated with adding collaboration services.

What I really like about these studies is that they are not based on data reported from some self-selected small sample of customer environments -- instead, Applicable has taken their experience with hosting both Exchange and Domino and applied it, along with various vendor inputs, sizers, and sources, to real-world but theoretical scenarios.  Some may quarrel with using theoretical deployments, but it is much better than some previous TCO studies which we have seen in the messaging market where there is no way to know how comparable the customer environments surveyed are.  Applicable has also done a very good job of factoring license costs two ways -- with the purchase of Microsoft Office and without.  That way you can either view it from the perspective of "we have to buy Office anyway" (which, of course, you don't), or "let's really look at the Microsoft tax".

The findings validate what IBM has been saying about Notes/Domino since we shipped version 7 -- IBM Lotus Notes/Domino is far cheaper to acquire, operate, and maintain.  In the category of availability, Applicable finds that "IBM Solutions are up to 52% cheaper based on Infrastructure costs and subsequent user support costs." (That's without the Office license costs)  In the category of adding advanced collaboration, Applicable finds that "IBM Solutions are up to 37% cheaper based on Infrastructure costs and subsequent user support costs."  And in the category of deploying a full IBM vs. Microsoft net-new stack, Applicable also finds a 37% advantage to IBM.

These percentages don't apply at every size customer -- they have done the detailed findings on 500,1000, 2000, and 4000 user organizations.  And in every case, the finding is that the cost of ownership for Notes/Domino is cheaper than Microsoft Exchange/Outlook.

As these reports were just published yesterday, I am sure I have not dived deep enough into the detail to understand every angle and wrinkle.  As anxious as I am to get these some visibility and discussion, I also want to make sure that they are accurate and reflective of the real world.  I can anticipate some of the holes that will be poked or attempted, but I think most of them can be addressed in a way that leaves the findings intact.  Finally -- a model that shows what we've known instinctively.  Take a look and let's discuss.

We believe the information will be helpful to any organisation looking to either invest in upgrading to the latest software versions or migrate to a competitor platform - most importantly, they demonstrate the significant costs variations dependant upon deploying high availability services and advanced collaboration (Collaboration 2.0) such as team workspaces, instant messaging and social computing.
Link: Applicable Publish TCO White Papers for FREE Download >

Ed Brill | Highland Park, IL USA Category:  TCO  Add/View Comments [41]

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  1. 1  Darren Duke http://blog.darrenduke.net | 9/9/2009 12:29:22 PM

    And those numbers are prior to the hordes of $harePoint(less) developers you will need to hire to make anything useful happen.

    And their site is .Net so this has got to be as impartial as you can get ;)

    Wonder how long before MS pull the Gold from them.

  1. 2  Thomas  | 9/9/2009 12:46:05 PM

    We all know about it for years - but we dont understand why companies are trying to follow the microsofts marketing if they have to pay more in the end. We all know about statements like "yes, but going to MS is 'strategic'... " - Dear CEO's around the globe : please wake up, you're wasting money, which means you're helping your company to die!!!

  1. 3  William Lefkovics http://hellomate.typepad.com | 9/9/2009 12:57:15 PM

    At first read through, these reports seem more logical and practical than a lot of the others you have pointed readers to before, and from a unique source. I look forward to reviewing them more later. And knowing things instinctively is hardly a solid marketing position. :) Glad this gives you the opportunity to move past that.

    I'm not sure what the 'Microsoft tax' is. Some products I will pay more for the look and feel and feature set. Adobe is a good example of that in my case. So is Microsoft Office.

    Thanks for posting this.

  1. 4  William Lefkovics http://hellomate.typepad.com | 9/9/2009 1:11:47 PM

    If money was the only issue, we would be using IMail or IceWarp (Merak) or Smartermail or, heaven forbid, Google Docs. It's about overall value to the customer in terms of cost, relationships, application features and more. Sometimes that answer is Lotus. Often it is not.

  1. 5  Brett H  | 9/9/2009 1:37:52 PM

    This is a great report, but someone better tell the City of Los Angeles that they've got it all wrong. They're looking at going to the cloud to "save money".

    { Link }

    The City of Los Angeles has come to the conclusion that they would save $8-10 million over 5 years, if someone (hint hint hint) can get them to look at the real facts on this kind of move, before it's too late... maybe they won't go through with it.

  1. 6  Flemming Riis  | 9/9/2009 1:38:55 PM

    looks resonable fair , cant see why edge is there is there isnt any domino filtering.

    but nice to see all calculations make its one of the best examples i seen so far not pubished from a vendor

  1. 7  Peter Presnell  | 9/9/2009 1:53:00 PM

    Lotus Knows just how many extra $$$$ there truly are in using M$

  1. 8  Brett H  | 9/9/2009 1:58:58 PM

    BTW I know this isn't about "The Cloud" but a TCO study like this could make them look at their current N/D infrastructure in a new way. Perhaps the TCO numbers they were given by Google, should be compared to the ones in this study?

  1. 9  Henning Heinz  | 9/9/2009 2:49:58 PM

    Brett, your link states that the city of LA is currently mostly using Novell Groupwise. Novell should give up on Groupwise anyway and form a partnership with IBM.

    It is great to have TCO stories like this. I still know of companies that don't care much about TCO. The money is there and it has to be spend.

  1. 10  Brett H  | 9/9/2009 4:51:46 PM

    Wow, dunno how I missed that, I've worked for the City of Los Angeles before, and they had Notes. Dunno where/when they got Groupwise, it wasn't there when I was...

    Hmmm.

  1. 11  Nick Halliwell http://www.comware.net | 9/9/2009 9:35:34 PM

    Ed, this is really good we need more of this sort of thing. I wonder if your presentation wiz kids could put it all together in a presentation that Partners could show to client/prospects.

    We all know that IBM is much cheaper than MS but its having some facts available that can help swing a sale. Especially in Asia where cost is a bigger factor than it is in N. America and Europe. The problem is the MS tells lies and people believe them and end up spending a fortune, which is hard to over turn.

  1. 12  Mike Brown http://www.browniesblog.com | 9/9/2009 11:01:17 PM

    The costs in the reports assume that "all operating systems are supplied from Microsoft".

    This gives Microsoft a massive free pass for that particular comparison. We all know that Microsoft products demand Microsoft OS's upon which to run.

    So, if you're running Linux on your Domino servers or even on your workstations, you can knock even more off the IBM figures. And that's without factoring in wages for the small army of reboot monkeys (Ed's phrase!) you'd need to keep the Microsoft stack running for more than two days at a time.

    Cheers,

    - Mike

  1. 13  Christer Eklundh  | 9/10/2009 3:29:00 AM

    Great info! I will try to spread this as much as possible to customers in Sweden.

  1. 14  Steven Roberts  | 9/10/2009 8:23:00 AM

    Migration talks have picked up serious momentum!

    The cause is not Money or Marketing. It is the Notes client. Pressure from end users, especially those who are more familiar with Outlook, bubbles up to IT Mgmt. Notes client has been all over the place in the past 10 years. As of R7 you still had to run a special tool (killnotes, zapnotes) just to recover from a crash. Ridiculous! The new client (8.5) which is much better in my opinion, is cumbersome. Outlook 2007 loads much faster and performs much better than Notes Client, although I still prefer the Full (not Standard) Notes 8.5 Client. I am hooked on it and usually do not keep the -basic switch for long. I Have had to add the -basic just to get it to run on the modern workstation.

    IBM, please do a better job competing for End User acceptance of this product. Users want speed 1st - features 2nd. Seperate the Applications client if you have to. You will loose this battle if Notes keeps getting fatter and more cumbersome.

    If you loose this battle, I loose my job.

  1. 15  Irv Shor  | 9/10/2009 9:19:32 AM

    Great source for the whitepapers, and completely at odds with a key link on their website that touts migrations from Domino to Exchange. I wouldn't mind getting a better insight into this...

    { Link }

  1. 16  Mark Dixon http://www.applicable.com | 9/10/2009 9:26:43 AM

    Hi Guys

    @1 Re the first comment from Darren Duke

    Our customers value our experience and balance in approaching Messaging and Collaboration engagements. We continue to deliver services based on technologies both Microsoft and IBM. We also migrate customers in both directions, based on the solutions which best fit their business and requirements - we've recently migrated a customer from Domino to BPOS!

    We have worked very hard to deliver value to our customers and partners -

  1. 17  Nathan T. Freeman http://nathan.lotus911.com | 9/10/2009 9:48:17 AM

    @16 - "we've recently migrated a customer from Domino to BPOS!"

    I don't think I would have admitted that if I were you.

  1. 18  Shaayn Bengaluru  | 9/10/2009 11:20:43 AM

    @14, I completely agree with you…Most of the users who used outlook once really get frustrated with notes client. As a Notes/domino support engineer I know how robust the domino server is. But it’s the notes client which really makes us suffers in this battle. Most of our team members (notes/domino support)have already started learning new platform technologies as they fear one day their skills will become irrelevant (there is rumor that one of our biggest customer may switch to Outlook/Exchange which will lead to head count reduction in the team).

    And we have a feeling that IBM is not giving much important to lotus professionals.For example just see how many redbooks that IBM published in 2008/2009 for lotus/domino compared to its other softwares (websphere,Tivoli, etc).

    Hope IBM and Lotus Community will overcome all these troubles :)

  1. 19  Steve Gold  | 9/10/2009 2:11:48 PM

    Though I don't doubt their results it then begs the question why is Lotus Live so much more expensive than BPOS? Why can't IBM provide a hosted solution that is price competitive with MS.

    @17/Nathan - Just curious, do you have some bad experience with BPOS it would be very valuable to me to hear.

  1. 20  Peter Wilson  | 9/10/2009 5:28:22 PM

    @14 @18 Both of you have hit the nail on the head. IBM just didn't GET IT on the client for years. Plus killing off a perfectly nice (leading market share) email client in cc:Mail was a mistake IMHO. I still think they approach the Notes client UI and priorities in their own particular way (ie. what's Workspace been doing since um, R4) but it's getting better. Heck, even Microsoft stuffed it up with Vista (OS designed by a committee) but seems to have learn't it's lessons with Win7.

    I guess once users lock in on a particular product it's hard to turn the tide. Just think about poor Zune. I mentioned it to some friends the other day if they had heard it, and they thought I was from another planet. How might Microsoft break into this market? I can only think it's possible via something incredibly cheap....or they take another approach and try getting Windows media on as many 3rd party phones as they can (see below) - changing the game.

    Since Email/collaboration is all heading to the web/virtual desktop/and mobile devices like the iPhone/Blackberry. Given IBM CAN create some nice looking products such as Connections, Quickr the organisation needs a laser focus on the end user in Notes 9. Please IBM don't think you've solved the UI and now focus on the back end again...

    If IBM could make iNotes 9's functionality as close to a full client, with hints of Microsoft OWA layout (skin/user switch feature?) + a some amazingly low prices (changing the game), then customers would have the best of both worlds and there would be much less user pressure on CxO's to change - particularly with users accessing their mail with different devices and web clients (hotmail, gmail etc., their ISP mail etc). The organisation could rightly say 'look, it's 40% cheaper and looks almost the same as your beloved Outlook.. get over it'. However, at the moment most CxO's are happy to rollover for a migration, if not initiate it themselves.

    Pete

  1. 21  Darren http://www.dadams.co.uk | 9/10/2009 5:31:11 PM

    @17 - at least by admitting that Applicable have shown that they are agnostic, which makes their reports all the more credible. They have experience of both vendors' solutions and qualifies them to author those reports.

  1. 22  Ed Brill http://www.edbrill.com | 9/10/2009 6:23:50 PM

    @14 @18 @20 I am somewhat amazed that a thorough TCO study that merits a detailed discussion and analysis has devolved into Notes client issues and Lotus marketing sucks. Honesty given how often that cost issues have come up in recent customer engagements -- every customer is looking at cost right now -- I expected more reactions like @11.

  1. 23  Peter Wilson  | 9/10/2009 8:34:44 PM

    @22 Cost is certainly a very important factor. Much like the car choice your currently making, I'm sure it's just one factor in your overall decision. The look and feel, style, user friendliness of the car is probably very important too.

    Pete

  1. 24  Edward Lee  | 9/11/2009 4:01:47 AM

    Good post Ed. One that I'll be sure to refer people too when they tell me how much they'll save switching to MS. I'm on a migration project now where we have gone from 4 Domino mail servers to 30 Exchange servers *gulp*. Not sure who that equates to a saving!

  1. 25  Henning Heinz  | 9/11/2009 7:54:39 AM

    @24 So why don't you switch back?

    For the cost thing customers also look at cost as an excuse to justify a move. It often is not based on facts.

    I am surprised that many comments about a migration is about moving away from Domino (to BPOS or Exchange or something else).

    Right or wrong but with this comments on a Lotus centric blog it always looks as if Domino is still under pressure (even if it isn't).

  1. 26  Charles Robinson http://www.cubert.net | 9/11/2009 1:30:39 PM

    @22 - This is very valuable information. In particular the guidance from Applicable concerning product selection is very helpful and I'd love to see more information like that. It would be really nice if vendors made it easier to choose the products I need. Every vendor I have looked at fails in that regard. Collaboration is fast becoming as complex and inscrutable as ERP.

  1. 27  David Bell  | 9/11/2009 3:20:47 PM

    @19 - Can you list here the services you included and your cost analysis to support how you arrive at this statement:

    "why is Lotus Live so much more expensive than BPOS? Why can't IBM provide a hosted solution that is price competitive with MS."

    I'd really like to see how you quantify "so much".

  1. 28  David Hablewitz  | 9/11/2009 3:22:33 PM

    Nice to see a document that reveals what we all know intuitively. However,

    TCO DOESN'T MATTER.

    In each migration I have witnessed, TCO was not seriously considered in the decision. This kind of decision is made based on how it makes the decision-maker feel. After that, the only facts they will consider as valid are those that support their position.

    I expect all the respondents to this post are IT guys. Too bad there aren't any CFO's and CEO's reading this post. I would love to see what they have to say about it. But then, their absence speaks loudly enough, doesn't it.

  1. 29  Nathan T. Freeman http://nathan.lotus911.com | 9/11/2009 4:22:34 PM

    @19 - Steve, email me at nathan.freeman@lotus911.com and I can discuss some of the issues with you. Thanks.

  1. 30  David Bell  | 9/13/2009 12:01:15 AM

    @28 - not that I don't disagree, but what CFO gets to that lofty position of responsibility for the judicious management of corporate finances and shareholder value by unscrupulously wasting money ?

    Surely a CFO does not feel good about wasting money ?

  1. 31  David Bell  | 9/13/2009 12:02:38 AM

    Hmm, maybe that should be "not that I disagree" in @30 :)

  1. 32  Henning Heinz  | 9/13/2009 6:14:31 AM

    A CFO normally does not know much about IT and you often have dirty deals. Get a budget for Sharepoint and deal the contract that it includes "free" Exchange. You finally spend more money but can tell the CFO that you can save IBM license cost. Combine that with some cost centre juggling and you will need a very clever CFO.

  1. 33  David Killingsworth http://domino.symetrikdesign.com | 9/13/2009 7:41:47 PM

    Glad to see that there is an UN-BIASED report out there that is free and widely available.

    This audience already knows the facts, it's the CIOs, CTOs, and the CFOs that should see this report.

  1. 34  SD  | 9/14/2009 9:20:19 AM

    This is my 1st post, so please be gentle

    True Story -

    Company A - 120000 Exchange users

    Company B - 40000 lotus notes users

    2006 - Company A buys & acquires Company B, Company B becomes 'integrated' with Company A

    The remit in 2007 by the Company A Board was to save 1 billion euros in IT costs alone over the next 7 years!

    Decision was made straight after the acquisition that Exchange/Outlook would be the preferred email client - CIO, Board everyone wanted all users around the globe to be on Exchange by 2009, Lotus Notes Applications however were not to be migrated and to remain as is for now. We did advise to do the apps 1st, email later, but this was rejected....

    2006 - 2008. Cost to move just 10000 lotus notes to exchange = £4million. (Reason it was 10000 was because only 1 'division' in the company 'had less of a dependency for lotus notes' therefore ended up footing the bill).

    The Migration team that was created to run the project were a complete shambles - project leader fired, costs spiralling, poor processes, lost data, etc etc, it was just a total disaster from start to fInish and took 2 years to migrate 10000 users.

    Migrations after 2008 were then all stopped due to the costs of migrating from lotus notes to exchange

    Fast Forward to 2010 - 130000 Exchange users, 30000 lotus notes users - the business units & CEOs of the BUs' continue to refuse to spend any money on migrations & are now having to pay for two sets of licenses due to the dependency on lotus notes applications still, despite the CIO & IT insisting it needs to be done...They calculated the ROI would be 30 years for the business now to do the remaining migration of all lotus notes mail & applications to the MS platform.

    This entire user community requires email, instant messaging, business critical applications, web services, all in a scalable, reliable, robust and clustered environment globally. Based on this, the costs of running the MS Solution at present as opposed to the IBM Lotus Domino solution is almost a third more! - That includes an entire Exchange community that doesnt have any form of IM Solution, whilst housing its entire Services in 'large data centres' in Eastern Europe and Asia.

    The fact is the real stats are not presented to the Board, they are given figures and 'facts' that have been completely manipulated/distorted to suit middle management's personal agendas and political games...(way of the world I guess in many corps now)

    I’ve worked with both Exchange and Lotus Domino for 10 years now. Its always been the same argument and only argument alone that Exchange wins hands down on…Its Outlook Client and Outlook web access is 'prettier and more user friendly’ compared to Lotus Notes.' And that is it!!. Its simply staggering how Microsoft pull the wool over so many companies and particularly the costs. Unfortunately there is a generation of senior/middle management in both the business and IT side (and I have seen this in other large corporates) who simply have no understanding of Messaging & Collaboration products. Email is treated as a small bit of software (despite being the most widely used application in the business) and who have no comprehension on costs, licenses, associated costs of deploying enterprise messaging and collobaration solutions and who all turn a blind eye at 'alternatives' to MS.

    FYI - I am a Technical Architect in IT for this Organisation

  1. 35  Edward Lee  | 9/15/2009 8:00:33 AM

    @25 Henning Heinz

    You asked why we don't switch back?

    Well the contract with MS is signed. There is no mechanism of individual (that I know of) willing to halt the project, not even to review progress and evaluate where we are. We just keep moving on.

    I'll be happy to talk about this off line.

  1. 36  Henning Heinz  | 9/15/2009 2:54:42 PM

    @35 Edward Thank you for the update. I assume that saving money was not the reason your company is moving to Exchange then.

  1. 37  Edward Lee  | 9/16/2009 3:45:25 AM

    @36 Henning Heinz. It was a prime reason!

    How will the benifits be measured? I don't know. I asked this question very early in the project and it was not answered. Blind faith I guess.

  1. 38  David Hablewitz  | 9/16/2009 11:24:51 AM

    @34. Edward, I feel your pain and you provide another example of my point. As computer people, we like to apply computer-like logic to what is really a social issue. In other posts I have made here on Mr. Brill's blog (Thanks Ed!), I have referenced a book that does a great job explaining the psychology behind decisions like the one you are experiencing, which are counter-intuitive to everything we are taught. While reading it may not give you the power to change their minds, it will at least give you solace in understanding why it happened and why human nature prevents them from reversing their decision.

  1. 39  John Vanderhoff http://v-and-m.com | 9/22/2009 10:53:34 AM

    Am I the only one having a problem downloading Scenario 3.

    { Link }

    The download button for Scenario 1 and 2, deliver the PDFs as expected.

    The download button for Scenario 3, actually downloads the Scenario 2 - AGAIN - just hover over the buttons.

    Any help would be appreciated.

    JV

  1. 40  Matthew  | 5/16/2011 7:44:18 PM

    For everyone of these articles against converting from notes to exchange, I can find 20 more that report just the opposite. I believe most of the responses here are minimizing the value of outlook as a user interface. How many of you are running Notes from your home PC for your personal email? Now how many of you are using an online service such as google, yahoo, etc and have connected that to your outlook client at home? I work at a company using notes and considering moving to exchange, the reasons? I can throw a rock and hit an exchange administrator, I could throw a hundred rocks and never come close to hitting a Notes admin. The same holds true for the number of users who are very knowledgeable of outlook versus notes. You cannot minimize the advantage that when you hire someone new to your organization, they will likely come with knowledge and even expertise with outlook, whereas in contrast, Notes requires significant user training. I agree the 8.5 interface is better than previous versions...but it's better because it is more like outlook. Too many organizations are using content management systems that are not IBM based and integrate seamlessly with Exchange but do not integrate with Notes. The reason is these CMDB systems do more than what notes can do and actually, yes, do cost less.

    User adoption and satisfaction cannot be ignored with email systems, because that is where most office workers spend the majority of their time. If they can do that more efficiently and effectively with exchange than Notes, then you cannot dispute that fact.

    We run Notes on an iseries and I agree stability and reduced viral attacks is very nice for the 3 people who admin that environment, but for the other 3000 uses, they really don't care, they care about being able to work in a familiar environment that integrates with more systems in order to make THEIR jobs easier, not IT.

    IT OPS Director - seriously considering moving to exchange 2010

  1. 41  Matthew  | 5/16/2011 7:55:55 PM

    By the way, we spend twice as much on notes maintenance per year than the exchange SA. We also are involved in a massive ERP project and recently brought in 50 developers.....guess what the biggest issue with starting on time came down to? Notes, they had never used it or seen it, so 50 developers at an hour each for training, the training staff and cost of delay to start the project? About 20k in cost we would have avoided if we were exchange.

    None of the 5 consulting companies we interviewed for our ERP project had notes experience. You cannot minimize the fact that there is more Microsoft out there than IBM.