Choosing Gmail over Microsoft Exchange : costly move

eWeek featured an article with the title : “Serena to Dump Microsoft Exchange for Google Gmail, the Cloud”.

The article ofcourse got my interest and when I started reading I thought this can’t be true. The article is one big confusing apples and oranges overview. I am quite sure that nor Mr Bister of Serena, nor the journalist has used Microsoft Excel to do their calculations …

Let’s have a look :

Serena Software expects to save $750,000 per year by shedding Microsoft Exchange Server in favor of Google’s Gmail application for its 800 employees, officials of the Web development software maker told eWEEK Nov. 12.

The move, slated to be completed by the end of 2008, is a coup for Google. The search engine provider has been struggling to entice customers to switch from the Microsoft Outlook e-mail client and Exchange Server on-premises application to its SAAS (software as a service) Web mail, word processing, spreadsheet and other applications.

These applications and data associated with them live on Google’s hosted servers, which customers access through the Internet. This method, also called cloud computing, is becoming more popular for cost-conscious companies, which may also be tired of maintaining the servers that house their data.

Ron Brister, senior manager of global IT operations at Serena, told eWEEK Serena has subscribed to Google’s GAPE (Google Apps Premier Edition) service, the paid version of Google Apps, for $50 per user, per year.

Brister said it cost Serena roughly $1 million a year to use Exchange once all of the CALs (client access licenses) and software assurance were factored in; he expects Serena to pay only a quarter of that to use GAPE. …

So an Exchange environment for 800 would cost $ 1 Million USD / Year ? Really ?

That’s $ 1250 USD / user / year ..

According to Radicati Group the average TCO per year is much lower :

Mid-size organizations (i.e. 1,000 email users) had a 3 year average TCO of $562 per user/year.

As the article suggests, Microsoft also offers Exchange Online. When using the calculator featured on the Microsoft Online site, The cost is much lower :


  • $ 7696 / month for 800 users
  • $ 92352 / year for 800 users
  • $ 115,44 / user / year.

    This is excluding the Microsoft Outlook client, so the customer would need to purchase a separate Outlook client, or MS Office version. If you’d assume $300 / user for MS Office then this would be an additional investment of
    $ 240.000

However, Brister said Serena so far is only using Gmail and the Postini assets to protect and serve Gmail, largely because Serena staffers are using Microsoft’s SharePoint collaboration software. While there is no current plan to jettison SharePoint, he conceded that that may change as Serena staffers get more comfortable with the cloud. Brister added:

What we’re finding is it’s becoming pretty viral and it’s getting used, taking less of an emphasis off of things like SharePoint, which becomes static and stale much more quickly when you have something much more collaborative in the cloud and as easy to use as Gmail. It’s become each of the users’ preferences rather than anything we’re dictating.

So they continue to use SharePoint. MOre good news. Serena could purchase the Business Productivity Online Suite, consisting of :

  • Exchange Online : email
  • SharePOint Online : Collaboration
  • LiveMeeting : Web / Video Conferencing
  • Office Communications Online : IM and Presence

All of this functionality will cost them :


  • $ 11544 / month for 800 users
  • $ 138528 / year for 800 users
  • $ 173,16/ user / year.

    This is excluding the Microsoft Outlook and Communicator client, so the customer would need to purchase a separate Outlook and Communicator client, or MS Office version. If you’d assume $300 / user for MS Office then this would be an additional investment of $ 240.000 .

All in all you would come no where near the $ 1 Million USD that the article suggests Not in an on Premise Scenario (the Radicati TCO hihlighted) nor in an Online Services Scenario (the 2 scenario’s shown above>

There have been some cases where Google Apps has wedged its way in the door, joining Microsoft Office. Capgemini’s embrace of Google Apps in September 2007 comes to mind.

Funny that they mention they alliance. The majority of info on the Capgemini site is over 1 year old. The site contains no success stories.

My recomendation to Serena Software would be to do some homework, look into Microsoft Online Services and reconsider their options …


Update 16-11-2008 : ZDbet has also picked up on this story with some additional (mis)calculations :

Peter de Haas
Peter de Haas

Peter is gedreven door de eindeloze mogelijkheden die technologische vooruitgang biedt. Met een scherp oog voor het herkennen van oplossingen waar anderen slechts problemen zien, is hij een expert in digitale transformaties. Peter zet zich met volle overgave in om individuen, teams en organisaties te begeleiden bij het ontwikkelen van nieuwe vaardigheden en het implementeren van innovatieve oplossingen.

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